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5 States in Crisis: Budget Battles, Court Challenges, Political Bickering Leave Schools Millions Short

August 15, 2016

Talking Points

School funding nightmare: “Devastating” cuts in Okla., “one of the world’s worst messes” in Kansas

School spending never entirely recovered from ‘08 recession but in some states, it’s getting worse

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Chicago Schools are laying off 1,000 staff members. In Kansas, schools closed their doors early. And the situation in Oklahoma schools is truly grim.

In Oklahoma City Schools, leaders first cut 208 teaching positions, then 92 members of the administrative staff. Fine arts budgets will be cut in half for the upcoming school year, and there will be no money for new library materials.

Oklahoma’s Newcastle Public Schools will start charging $100 per student for extracurricular activities — and that’s after district officials have already eliminated most field trips, increased class sizes, delayed a major textbook purchase and moved to a four-day school week.

Celebrity talk show host Ellen DeGeneres helped one elementary school librarian in the state’s Union Public School District pay for a summer reading program.

Leaders in Tulsa are filling budget holes with a community fundraiser, forebodingly called “SOS” — Save our Schools.

The summer has brought a steady drumbeat of bad budget news in certain states and its crippling effect on schools. Places like Oklahoma, Kansas, Illinois and Pennsylvania are particularly desperate.

The most recent round of cuts stings even more because, unlike the post-2008 recession years when pretty much every state  had to tighten its belt, budget cuts this year weren’t the norm across the country.

“Overall, it’s been a sort of a net positive year nationally” for school budgets, said Mike Griffith, school finance strategist at the Education Commission of the States.

States budgets have, for the most part, rebounded from the deep cuts instituted in 2008’s aftermath though not in a particularly robust way, Griffith said.

There was a long way to go: 31 states were spending less per student in the 2013-14 school year than the 2007-08 year before the recession, according to the Center on Budget and Policy Priorities. In 15 states, that difference was greater than 10 percent.

“If you account for inflation, we are still below peak spending in 2008 and 2009. Essentially we’re still playing catch-up a little bit,” said Dan Thatcher, education policy principal at the National Conference of State Legislatures.

Where there has been budget growth, it isn’t leading to the creation of flashy new programs, experts said.

Most states that have additional money for education are using it to backfill ordinary purchases that were put off during hard times, like textbooks, computers, or buses and other vehicles. Legislatures that have found money to pay for programs above those basics are largely using them to expand existing initiatives — early learning in particular has been a big winner — rather than fund new ones, Griffith said.

And the modest increases that have made their way to school districts via the basic aid formula may be eaten up by demographic and economic factors — there are simply more students now and their schooling costs more, thanks to inflation. State policy initiatives, like adoption of the Common Core State Standards or new standardized tests, can also consume new dollars, Thatcher said.

Huge boosts in per pupil spending did not happen.

If most states are getting a C+ for average but not exceptional effort in funding schools, there are a few that receive much lower marks. Lawmakers in those states, hampered by falling revenues, court orders or just plain nasty political spats, would get an F.  

Oklahoma: Where the money fell short

School leaders in Oklahoma have faced years of budget cuts that have forced them to end non-core classes and extracurriculars, lay off dozens of staff, eliminate before- and after-school care and increase class sizes.

The most extreme scenario, the four-day school week, might mean students who rely on school breakfast and lunch programs go hungry an additional day a week, said Amber England, executive director of Stand for Children Oklahoma. “It’s really devastating.”

Just last year, state government officials, confronted with a 20 percent drop in oil prices, one of the state’s largest revenue sources, instituted across-the-board cuts that took 7 percent, mid-school year, from basic state school aid.

Gov. Mary Fallin eventually tapped the state’s rainy day fund to add back in $51 million to schools — less than half of the total cut — but it wasn’t enough to fill the holes in many districts.  

(It turned out those cuts ended up being larger than necessary, and there’s $140.8 million left from last year in the state coffers. Fallin has proposed calling a special session to use it all for teacher pay increases. Oklahoma’s teachers are paid much less than those in neighboring states. If that doesn’t happen and the money is equally rebated to all state agencies, the Board of Education will get about $40 million.)

(The 74: Why Oklahoma is Racing to Put Nearly 1,000 Uncertified Teachers in Its Classrooms)

Legislators managed to restore state funding to its pre-cut level for the upcoming year. That bump came at a cost, though: another pot of education money was cut dramatically, reducing funding for some programs and zeroing out dollars for others

State funding, excluding money for textbooks, was a little over $2 billion in fiscal 2008, to pay for the education of about 642,000 students, according to the Oklahoma Policy Institute. In fiscal 2017, it will be about $180 million less — for about 50,000 more children.

Oklahoma cut per-pupil funding by 24 percent from fiscal 2008 to fiscal 2016, the most of any state, according to the Center on Budget and Policy Priorities report.

“Schools are doing whatever they can to deal with it, and in the conditions in which this has forced the teaching profession in Oklahoma, morale is really low,” England said.

The cuts for the upcoming year will hurt, too.

The state Department of Education had to cut $38 million in funding from its “school activities” fund that pays for everything from the statewide teacher retirement system to early learning. The $92 million the state Board of Education received for the programs this year is down 33 percent from two years ago.

Aid for alternative education, training for AP teachers, and Teach for America were cut substantially. About a dozen programs were totally de-funded, including ones that provide incentives to create new charter schools, bonuses for school psychologists and speech pathologists, and a school agriculture program.

“We have made every effort to spare as much as we can in light of the significant size of this mandated cut, and we certainly recognize the importance of these fine programs,” Superintendent of Public Instruction Joy Hofmeister said in a statement. “In the end, however, we have no option given this year’s historic revenue shortfall.”

Separately, the state department will take a $6.6 million hit to its operations budget, and a $33 million textbook fund will go empty this year, which forced the state education department to recommend delaying the adoption of new textbooks tied to new state curriculum standards.

Voters will have a say on school funding this fall, though not money for the programs slashed in the latest budget round. Oklahomans will consider Question 779, which would amend the state constitution to raise the state sales tax by 1 percent, on Nov. 8. Advocates say it will raise $615 million per year. About 70 percent would go toward a $5,000 pay raise for teachers, with the rest divided among higher education, early childhood, and career and technical education.

The ballot initiative, though expensive and time-consuming, is “the only solution on the table,” England said.

Advocates had tried to get state legislators to add dollars for years, without success. They decided not to file a lawsuit, both because a court ruling wouldn’t necessarily result in a dedicated stream of education funding and because a lawsuit from several years ago to encourage reforms in the state foster care system hasn’t resulted in big changes, she said.

Oklahoma is one of eight states — also including Alaska, Arkansas, New Mexico, Texas, Louisiana, North Dakota and West Virginia — that faced steep drops in state revenues as the price of oil, natural gas, and coal has dropped in the last year, Griffith said. That meant not only reductions in taxes on extraction of those fuels, but also lost income taxes as jobs were cut in those states. Wyoming, too, had to cut $36 million from its education budget over the next two years.

(The 74: In the Shadows of Wyoming’s Oil and Coal HeyDey, An Education Funding Crisis)

Kansas and Washington: The courts have their say

Court fights in Kansas over school funding go back several decades. In the latest round, four school districts, including Wichita and Kansas City, sued the state in 2010, arguing that budget cuts instituted after the 2008 recession violated the state constitution and previous court rulings. The cases have raised issues of school funding equitability and adequacy.

Gov. Sam Brownback, a very conservative Republican, was elected in 2010 along with a number of similarly-minded state legislators. (In some strongly conservative corners of Kansas, public schools are called, derogatorily, “government schools,” The New York Times reported.)

Brownback and the conservative legislators had also enacted several large tax cuts that forced further rounds of cuts to school funding. State funding per pupil is down about $900 from 2008 to 2015, according to the Center for Budget Policy and Priorities Report.

In 2015, the legislature passed a block grant formula rather than a more targeted one, and the state high court the next year ruled that the formula was inequitable.

David Thompson, chair of the education department at Kansas State University, called the ongoing battle “one of the world’s worst messes.”

State legislators went through several rounds of plans to try and resolve the equitability question, finally agreeing in a special session in late June to add $38 million to a separate fund that supplements funding for property-tax-poor districts. The state high court had threatened to close schools starting July 1 if legislators couldn’t find a solution.

While the equitability question was settled for the time being, the adequacy issue remains outstanding.

Justices could decide the state has to add $500 million annually to its base school funding, on top of the roughly $3 billion it’s already spending every year.

That half-billion dollars might not seem like a lot, particularly when compared to larger states’ budgets, but it’s “a pretty significant chunk of money, particularly as the state has been slashing and slashing and slashing school districts,” Thompson said.

Finding that money could be difficult. “I think every trick in the book has been overused, every accounting trick that’s possible,” Thompson said. “There’s no place to go.”

Lawmakers had to sell a state-owned bioscience organization and use money from a 1990s settlement with tobacco companies to find the $38 million this year. Allocations to state universities have already been slashed, and money for highway repairs has been bled nearly dry. It’s likely to require a re-imposition of the income taxes that had been cut, Thompson predicted.

The court will hear arguments on the adequacy issue in September, but the court that makes the decision could be different than the one that issued the previous rulings: Five of the seven state high court judges will have to face voter approval this fall.

And should justices decide that Kansas has to add the half-billion dollars, new faces will decide where to find that money. The entire state legislature is up for re-election this fall. Nearly a dozen conservative Republican state senators, who had backed the governor’s tax and funding cuts, were defeated by more moderate Republicans in August primaries.

Elsewhere, Washington state is also in a protracted school funding fight with its state Supreme Court in a case known as McCleary. There, the high court has fined legislators $100,000 per day since last August – now totaling over $36.5 million, a year after the fines began – for failing to adequately fund schools.

The latest session of the state legislature adjourned without a remedy, and outgoing Superintendent Randy Dorn has said the court should consider shuttering schools — like the Kansas court’s threat — to force legislators to comply. 

(The 74: Washington State’s Schools Chief Is So Fed Up About Underfunded Schools He Might Run for Governor)

The issue will head back to the high court in September, when judges will consider whether the state is making adequate progress toward sufficiently funding schools. 

Other pending court decisions, in Texas and particularly in Colorado, could have had big impacts on state budgets, but justices sided with states, Griffith said. The Texas Supreme Court upheld the state’s school funding formula, which had been challenged on adequacy and equity grounds, while the high court in Colorado  said several years of cuts to school funding didn’t violate the state constitution.

Illinois and Pennsylvania: The partisan battlegrounds

When Illinois lawmakers passed a partial budget in late June, it was far from a joyful occasion. The state went the entirety of fiscal 2016 without a budget, the only state in decades to do so, and this year’s deal only funds state operations through December.

There, Republican Gov. Bruce Rauner and a Democrat-controlled legislature couldn’t agree on a budget, though many programs were funded during last year’s impasse through a combination of court orders and existing mandatory funding laws.

Under the late June deal, K-12 schools will be funded for the whole year, to the tune of $11.1 billion. Chicago Public Schools, faced with potentially cutting school operating budgets by 40 percent for the upcoming school year, will get another $600 million, from a combination of state aid and additional local property taxes. Another $200 million from the state could come down to help fill a huge gap in the city schools’ pension funding if the legislature can pass a pension reform law by the start of the new year.

(The 74: Chicago Public Schools 101)

The funding influx wasn’t enough to spare the staff: Chicago schools officials sent layoff notices to 508 teachers and 521 support staff in early August, though most teachers will be hired elsewhere within the district.

Pennsylvania, which like Illinois has split-party state leadership, though with a Republican legislature and Democrat governor, also remained without a budget as of mid-July.

State leaders agreed, several days past deadline, to raise education funding —  another $200 million for K-12, plus bumps of $30 million for pre-K and $20 million for special ed. It took another week to agree how to pay for it.

(The 74: Apocalypse Now: Budget Impasse Leaves Broke Pennsylvania Schools Weeks from Shutting Down)

The delays were something of a Groundhog Day for the Keystone state: lawmakers blew past their June 30 statutory deadline last year, too. Some school funding was sent to states at the start of 2016, though a final budget wasn’t completed until March 24, nearly nine months past due.

“Political bickering and irresponsibility led to last year's historic nine-month budget impasse,” the Philadelphia Inquirer said in a July editorial. “By agreeing to a compromise spending bill and allowing the legislature to decide how to fund it, (Gov. Tom) Wolf has given lawmakers a chance to leave that reckless recent history behind.”