At the end of April, Bruce Baker of Rutgers University and Matthew Di Carlo of the Albert Shanker Institute published a new report, The Coronavirus Pandemic and K-12 Education Funding. They begin: “The most terrible and lasting effects of the coronavirus pandemic will of course be measured in loss of life. But a parallel tragedy will also be unfolding in the coming months and years, this one affecting those at the beginning of their lives, an unprecedented school funding crisis that threatens to disadvantage a generation of children. It currently is difficult to make any precise predictions about the magnitude of the economic recession caused by the coronavirus pandemic, except to say that it has already started and is likely to be severe. The revenue that funds public K-12 schools—almost 90 percent of which comes from state and local sources—will see large decreases. There will be cuts. Making things worse, school districts in many states have yet to recover from the last recession….”
On Tuesday, the magnitude of immediate cuts to K-12 education in Ohio became clearer. The Columbus Dispatch‘s Randy Ludlow explains: “The ordered closure of nonessential businesses during the pandemic and the accompanying loss of nearly 1.1 million jobs has devastated Ohio’s economy while also increasing demand for social services such as Medicaid.”
Ludlow describes the impact of business shutdowns and job losses on the tax revenues needed for the state to provide necessary services: “State tax revenue through April was $776.9 million below the fiscal year estimates on which the state budget was built.” Consequently, “Ohio Gov. Mike DeWine announced immediate cuts in state spending totaling $775 million on Tuesday as the financial fallout from the coronavirus pandemic devastates state tax collections… Among the cuts, basic state aid for K-12 schools will be reduced by $300 million. That’s a 6% cut out of the total annual foundation funding for public, charter and private schools… The first year of the biennial $69.8 billion state budget must be balanced by the end of the fiscal year on June 30.” The state has $2.7 billion in a rainy day fund. Ludlow reports that DeWine plans to use the rainy day fund to shore up the budget during the second year of the biennium.
Why are K-12 public schools being hit with such sizeable budget cuts right at the end of the fiscal year and threatened with further cuts in the second year of the biennial budget, which begins July 1? Ludlow breaks down the relative size of specific state budget lines: “Slightly more than three-fourths of the general revenue fund is spent on only four areas: primary and secondary schools (35%), Medicaid (24%), higher education (11%), and prisons (7%), what the governor called ‘big-ticket items.'”
Cleveland.com’s Andrew Tobias adds that these budget cuts could not have been predicted: “As recently as the end of February, the state was running ahead of its estimated revenues by $200 million. But as of the end of April, state revenues now are below estimates by $776.9 million…”
In a recent commentary, one of the authors of the new report, The Coronavirus Pandemic and K-12 Education Funding, Matthew Di Carlo explores the implications of what we are watching not just in Ohio but across all the states. There is, in the short-term, an urgent need for far more substantial federal assistance to education than the CARES Act last month provided: “To be clear, federal funding will be absolutely crucial in smoothing the large decreases in revenue that will occur. Without this federal help, there will likely be cuts to school budgets (and those of other public services) so severe that recovery in many states may be a matter of decades rather than years. Moreover, districts serving larger shares of disadvantaged students will bear a disproportionate amount of harm. Accordingly, we recommend that federal funds be drawn out in two ‘phases’ over a 5-7 year period, and that states be required to distribute them in a manner that targets assistance to those districts that need it the most.”
Shanker continues: “But this won’t be enough. Federal assistance can go a long way toward smoothing out the gaps in the short term, but the longer term responsibility will rest with states. Almost 90 percent of public K-12 education funding comes from state and local sources (mostly income, sales, and property taxes). By investing larger shares of their economies in education (i.e. raising revenue), as well as by taking other steps, such as building up budget reserves, funding schools more progressively, and balancing their revenue ‘portfolios,’ states will be in a position to recover quickly as well as to deal with the next crisis when it comes.”
The Center on Budget and Policy Priorities Senior Director of State Fiscal Research, Michael Leachman presses the need for federal relief for states as the severity of the current economic crisis continues to become clearer: “State budget shortfalls from COVID-19’s economic fallout could total $650 billion over three years, we estimate based on new economic projections from the nonpartisan Congressional Budget Office (CBO) and updated projections from Goldman Sachs. The new figures—significantly higher than estimates we recently issued based on economic projections of a month ago—increase the urgency that policymakers enact additional federal fiscal relief and continue it as long as economic conditions warrant… States must balance their budgets every year, even in recessions. Without substantial federal help, they very likely will deeply cut areas such as education and health care, lay off teachers and other workers….”