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Schools’ Financial Prospects: Good News and Bad News

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January 12, 2011 03:30 pm

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An event held January 11 to release the fifteenth annual edition of Education Week’s Quality Counts report provided some moderately good news and bad news about the financial picture in education. The moderately good news is that the American Recovery and Reinvestment Act of 2009—the $787 billion “stimulus package”—appears to have staved off drastic cuts in school budgets. According to the report, the stimulus saved or created 651,570 jobs, and more than half—52 percent—were linked to funds provided by the U.S. Education Department. Moreover, the Education funds were used more efficiently than those from other agencies; Education funds created or saved 4.2 jobs for every $1 million spent, compared with 2.7 overall.

That might be small comfort to the large majority of states and districts that have seen budgets cut and jobs shed over the past two years. According to the report, thirty-four states and the District of Columbia have made cuts in K-12 or early education spending since 2008. That’s why the news is only moderately good.

The bad news is that the worst might be yet to come. The stimulus funds have dried up, and state coffers are bleeding red ink. At the same time, districts face what one panelist at the event, Karen Hawley Miles, the president of Education Resource Strategies, called “autopilot increases” in pension and health insurance costs. The result will be even steeper cuts in education budgets. John W. Scanlon II, the deputy superintendent of administration for the Rochester (N.Y.) City School District, says that, because of declining revenue and increased costs, the district faces a $100 million shortfall in its $700 million budget this year.

One heartening sign is this crisis might create opportunities for real change. Over the past two years, as they have cut education budgets, states have increasingly provided greater flexibility to districts to innovate and try new approaches. Twenty-nine states provided districts with flexibility in at least one policy area, such as the use of available funds or the length of the school day or year.

And districts are taking a hard look at their budgets and concentrating resources on their most important priorities For Rochester, that means creating a “portfolio” of schools, redesigning high schools, and implementing the common core standards in English language arts and mathematics. They will be looking into ideas once considered radical, like eliminating seat time as a requirement and moving toward competency-based graduation. “No longer can we have a smorgasbord of options,” Scanlon said.

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