A Looming Financial Meltdown For America’s Schools

Austin Beutner looked haggard, his face a curtain of worry lines. The superintendent of the second-largest school district in the nation sat at a desk last week delivering a video address to Los Angeles families. But he began with a stark message clearly meant for another audience:

Lawmakers in Sacramento and Washington, D.C.

“Cuts to funding at schools will forever impact the lives of children,” Beutner said less than a week after California’s governor called for emergency cuts in education spending. The harm children face from these cuts, Beutner warned, “is just as real a threat to them as is the coronavirus.”

Similar alarms are sounding in districts across the country. With the nation’s attention still fixed on the COVID-19 health crisis, school leaders are warning of a financial meltdown that could devastate many districts and set back an entire generation of students.

“I think we’re about to see a school funding crisis unlike anything we have ever seen in modern history,” warns Rebecca Sibilia, the CEO of EdBuild, a school finance advocacy organization. “We are looking at devastation that we could not have imagined … a year ago.”

“Really shocking declines”

Schools receive nearly half of their funding from state coffers. But with businesses shuttered in response to the pandemic and the unemployment rate already nearing 15% — well above its 10% peak during the Great Recession — state income and sales tax revenues are crashing.

For April, the first full month of the coronavirus lockdowns, states are now reporting “really shocking declines” in tax revenues, says Michael Leachman at the Center on Budget and Policy Priorities. Some states have lost “as much as 25% or a third of their revenues compared to the previous year in the same month,” Leachman says.

In early May, for example, Ohio Gov. Mike DeWine unveiled $300 million in K-12 budget cuts — and that’s just through June 30, when the current fiscal year ends. In Cleveland schools, according to Cleveland.com, that amounts to about $100 less per student with the possibility of more cuts in the new fiscal year.

A few days earlier, Georgia’s governor asked state education leaders to prepare for a 14% cut in funding starting in July. And in Michigan, a top Republican in the state Senate warned superintendents they could see their school funding slashed by as much as 25%.

In many states, these cuts will hit vulnerable, low-income communities the hardest. That’s because of how America funds education. On average, the bulk of a school’s resources comes from a roughly even split between state and local funding, the latter largely from local property taxes.

But differences in property wealth between districts have created decades-old disparities that many states have tried to alleviate with additional state money. As a result, “when state funding starts to drop,” says Michael Griffith at the Learning Policy Institute, “what we see is a separation between the haves and have-nots.”

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Staff cuts, for example, have already skyrocketed.

“We know that in April, school districts nationally furloughed or laid off nearly half a million workers,” says Leachman at the Center on Budget and Policy Priorities. “That is an astonishing number. It’s many more than lost their jobs through the entirety of the Great Recession. It’s all happened in one month.”

Leachman says many of those affected have been bus drivers and school staff who were laid off as schools closed their doors for the remainder of the academic year. A lot of them obviously hope to return. “But, given the collapse in state revenues, it’s likely that unless the federal government steps in … many of these workers will never get their jobs back.”

Griffith estimates that if states slash education spending by 15%, schools could be forced to shed more than 300,000 teaching positions — almost 10% of the national K-12 teacher force.

Other school budget experts are singing a similar refrain, as are district leaders such as Austin Beutner, who warned in his video address that schools would need the same emergency infusion of resources that hospitals and many businesses have already gotten.

“We’re looking at the same challenge in public education, and we need the same full-throated response,” Beutner said.

Thus far, Congress has offered just a whisper.

Little bipartisan appetite for more spending

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So far, though, Congress has shown little bipartisan appetite for more school spending. In mid-May, House Democrats passed the HEROES Act, which would provide K-12 schools with an additional $60 billion, but House Minority Leader Kevin McCarthy, R-Calif., dismissed the move, saying, “this is a political messaging bill that has no chance of becoming law.”