“Unprecedented,” the adjective used time and again by media outlets and economists to describe COVID-19’s impact on people’s lives and the economy, may rightly be a contender for word of the year.
It certainly conveys the virus’ effect on education funding systems, which haven’t seen a greater disruption since the Great Depression.
State tax policy structures today are far more sophisticated and prepared for economic slumps than they were before the onset of the Great Depression—before the Great Recession, for that matter. But the nature of this downturn has left state budgeteers triaging critical state functions with imperfect, shifting information, and with less money.
“This isn’t a simple downturn,” Washington Senator Lisa Wellman (D) says. “This is a whole new education environment with challenges never before encountered.”
As states grapple with budget shortfalls, funding for elementary and secondary education—states’ largest general fund expenditure category at 35.6% in fiscal year 2019—will inevitably experience constrictions for at least the next two fiscal years. Although the full scope of state budget cuts to public education remains to be seen, spending on K-12 schools could decrease by as much as 10% in FY 21.
This isn’t a simple downturn. This is a whole new education environment with challenges never before encountered. —Washington Senator Lisa Wellman
Cuts to K-12 programs at the state level are all the more damaging because most states now provide more funding per student to schools than local property taxes do. For school districts with limited capacity to raise revenue locally, state funding plays a critical role in providing a high-quality education in every school.
Here’s why. States rely heavily on income and sales taxes. Both of these revenue sources are more volatile than the property tax, the revenue source most heavily relied on at the local level. When the Great Recession hit state income and sales tax revenues hard, many states had to take difficult budget actions that often included across-the-board cuts to elementary and secondary education, applied equally to all school districts.
School districts that enjoyed a strong local property tax base were able to mitigate losses by relying more heavily on their local wealth. These districts, by and large, have low rates of poverty among their student populations. School districts with limited local wealth, on the other hand, were unable to absorb cuts in state funding owing to their own limited fiscal capacity. These school districts disproportionately experienced cuts to funding and personnel compared with their wealthier counterparts. Student achievement in these districts—which tended to serve economically disadvantaged students and students of color—suffered.
The Great Recession taught us that across-the-board cuts in state funding disproportionately affect poorer school districts, students of color, students living in poverty and those who are otherwise struggling with extraordinary needs. But what other, fairer options do state budget writers have when the pandemic has eviscerated state revenues?
Making Equitable Cuts
Here is where the notion of equitable cuts or budget triage comes into play. Can state budgets be cut in ways that mitigate negative consequences for the most vulnerable students or for the school districts and neighborhoods disproportionately affected by the pandemic? Is it possible to decide policies based on the extent to which they benefit children and students?
Nonpartisan researchers at WestEd—drawing from the Great Recession’s lessons—suggest the potential harm to vulnerable school districts and students from state budget reductions can be avoided by considering these options:
- Applying a sliding scale to account for differential student needs.
- Accounting for differences in districts’ abilities to raise revenue.
- Considering the length of the economic recession, as well as the potential availability of funds from other sources.
NCSL’s review of legislative actions enacted over the summer indicates that, indeed, legislatures have moved away from across-the-board cuts toward more equity-attuned budget reductions.
Considering the Impact of Cuts
Investments in an education system bring myriad social and economic benefits, according to economists of all stripes. Eric Hanushek, a senior fellow at the Hoover Institution, a conservative think tank at Stanford University, has found a positive relationship between the average level of academic achievement of a state’s residents and that state’s GDP. Similarly, Rucker Johnson, a professor at the Goldman School of Public Policy at the University of California, Berkeley, has argued that investment in education yields long-term benefits. “[T]argeted public investments in pre-K-12 education and health pay for themselves down the road: communities spend less on remediation, public assistance, health care, crime, while benefitting from increased tax revenues from more productive adults,” he told NCSL’s Education Finance Fellows in August.
As districts receive updated revenue projections and subsequent warnings regarding possible K-12 funding cuts, officials are forced to make unpopular decisions. How school districts respond depends on the extent of the budget reductions.
According to the Edunomics Lab at Georgetown University, early responses include instituting hiring freezes, permitting contracts to expire and postponing maintenance projects, followed by trimming professional development days and other non-labor expenses like busing routes, extracurricular opportunities or athletics. In more extreme cases, labor contracts may be renegotiated.
The ramifications of budget decisions on schools, teachers and students can be considered from both short- and long-term perspectives. The immediate effects of budget cuts can be felt in myriad ways. Outdated textbooks, larger classroom sizes, fewer extracurricular activities and a lack of classroom supplies are several examples.
The long-term effects are less obvious. Student learning may suffer. A 2018 study analyzed education funding cuts during the Great Recession and found that a 10% decrease in school spending reduced National Assessment of Educational Progress test scores in math and reading. In addition, the study concluded that student cohorts that were exposed to a 10% spending cut during their high school years saw graduation attainment levels decrease by 2 to 3 percentage points.
Costs of Reopening
Budget decreases are an unwelcome setback for school districts in any year, but the coronavirus pandemic is placing unique new financial pressures on schools. The schools that welcomed students back in the fall for in-person classes face the added expense of adhering to health guidelines from the Centers for Disease Control and Prevention. The CDC’s Guidance for Schools and Child Care calls for schools to purchase personal protective equipment, implement cleaning and disinfecting protocols, and hire additional staff. One estimate pegs the average cost for a school district to reopen at $1,778,139.
The schools that began the academic year remotely have additional costs as well. Even before COVID-19 forced many schools to transition to a remote learning model, home access to high-speed internet was a barrier for more than 9 million students, especially those from lower income households. The Learning Policy Institute quantified the expense of providing a student with a device, high-speed internet subscription and training at $500 per pupil. Applying that additional cost to the 15% of households with school-aged children that cannot reliably access high-speed internet amounts to $1.8 billion.
Rachel Hise, an analyst with the Maryland Department of Legislative Services, believes that online learning is “redefining education—now connectivity (broadband) is a requirement as it never was before.” Although online education programs have been offered by higher education institutions for years and are becoming increasingly popular among students pursuing postsecondary degrees, K-12 schools were not prepared for the coronavirus-induced pivot to totally remote, web-based learning.
The changes to the delivery of education ultimately may be a “bright spot,” Oklahoma Senator Gary Stanislawski (R) says. But he has concerns. “How will schools embrace the technology moving forward?” he asks.
Legislators and school districts will have to address a growing list of requisites for online learning to be successful. “Connectivity that delivers a rich interactive educational environment, devices, cost of service, support for Title I ... professional development for educators and support for parents,” Maryland’s Hise says, all are financial concerns that legislators will have top of mind when considering increasing the use of technology.
The short-term costs of reopening schools may be mild compared with the potential long-run economic effects of lost schooling. An OECD Education Working Paper calculates that losing one-third of a school year may reduce students’ incomes by 3% while lowering the country’s GDP by 1.5% over the remainder of the century. The paper’s authors note, however, that learning losses are not inevitable if measures are taken to improve school performance. How to start? Here are two possibilities: Assign teachers to different modes of instruction depending on their strengths and, as much as possible, personalize instruction to better match where each student is at. Both measures would require increased investment.
When we emerge from this pandemic, we may look back and find that our systems for delivering education underwent an unprecedented paradigm shift. “Schools are no longer a place,” Wellman says, “but an experience.”
Elizabeth Romanov is an intern and Dan Thatcher is a director in NCSL’s Education Program.