The revised general fund revenue update released April 13 from the Fiscal Research Division of the General Assembly forecasts a $391 million revenue shortfall for the remainder of fiscal year 2009-10 and a $702.9 million gap for fiscal year 2010-11. To help fill the gap, Gov. Bev Perdue’s budget proposal asks local public school districts to prepare to receive perhaps $135 million less in direct state aid for the remainder of the 2009-10 fiscal year.
State economists do not expect the revenue outlook to improve any earlier than late 2011, blaming persistent economic weakness for suppressing growth in employment and consumer spending. While lawmakers raised taxes by nearly $1 billion last year, personal income tax and sales tax collections continue to fall far short of expectations. Instead of a projected growth rate of 2.4 percent in personal income for fiscal year 2010-11, economists have cut the forecast rate by nearly half to 1.3 percent.
Department of Public Instruction officials already are warning schools they may face a much larger budget gap in fiscal year 2011-12, expected to exceed $1 billion, as millions in federal stimulus funds will no longer be available to help offset losses in state revenue.
Instead of undertaking much-needed education reforms, such as lifting charter school caps, instituting pay-for-performance, or eliminating programs with marginal results, states have relied on funds from the American Recovery and Reinvestment Act to prevent teacher layoffs and backfill budget shortfalls, writes Lindsey Burke, a domestic policy analyst at the Heritage Foundation in Washington, D.C. The stimulus funds may be detrimental to future reforms because, Burke said, “they sustain policies and practices antithetical to long-term improvement.”
Proposals to address additional cuts
A number of school systems around the state have developed a graduated response to the budget crunch based on the level of cuts they may be asked to make. Projected reductions for school systems range from $1.1 million to more than $20 million.
Last year, most school districts avoided significant layoffs by reducing operating expenses, providing furloughs, reducing hours, allowing vacant positions to remain unfilled, and cutting local supplemental salaries for some employees. Districts also have been reluctant to increase class size, arguing it would reduce academic performance. However, Terry Stoops, director of education policy studies at the John Locke Foundation, said there’s no evidence that increasing class size by one or two students degrades academic performance.
For fiscal year 2010-11, school districts essentially are offering the same approaches to a tight fiscal outlook as in prior years. A few districts, notably Durham Public Schools and Guilford County Schools, are soliciting outside funding in the form of corporate and business sponsorships of individual schools and school events. Corporate solicitations reflect a growing trend nationwide as school systems struggle to find new sources of revenue.
Although school district budget documents typically list the number and types of positions that would be eliminated from budget cuts, school spokespersons indicate most reductions would result from attrition rather than actual layoffs. Stoops said this tactic can mislead the public into believing schools are reducing staff. Even when districts cut positions, Stoops added, they often eliminate instructional staff rather than central office positions.
For fiscal year 2010-11, the budget proposal for Guilford County Schools shows 25.65 full-time administrative positions would be eliminated to achieve the requested 3 percent budget cut. However, a district spokesperson said few, if any, would actually lose their jobs because these reductions would be achieved by attrition, retirement, or vacancies remaining unfilled.
Mike Gilbert, public affairs spokesperson for Orange County Schools, said Orange County has reduced central office staff by 20 percent over the past three years. “We’re trying not to cut instructional staff because we’re already doing double duty. We’re leaving open positions vacant and trying to preserve small classroom sizes,” Gilbert said.
Greg Thomas, director of communications for the Wake County Public School System, said the district is proposing a $20 million reduction in central services to be achieved by eliminating 37.5 full-time vacant administrative positions and 63 full-time filled administrative positions. Other reductions would be in contracted services and non-personnel expenses.
Durham Public Schools is facing not only a reduction in state funding but also a 3 percent cut in county operating funds. Staff positions eliminated in fiscal year 2009-10 included 61.3 central services support positions, 138.9 teachers, and 74 teacher assistants, but unclear is whether these were actual layoffs. Decreased overtime for administrative staff is one recommendation for fiscal year 2010-11, but no specifics in possible staff reductions are provided.
Charlotte-Mecklenburg school leaders are considering reorganizing Title 1 schools and cutting 25 learning community staff positions. Other options presented to the board but not supported include additional staff reductions, increased class size, and employee furloughs.
Mary Hazel Small, chief financial officer for New Hanover County Schools, said it may have to cut 98.5 positions, most of them teachers (41.5) and teacher assistants (40.0). Only two central office administrators and one pre-K principal position would be eliminated. Other reductions might include contracted services, including nursing services, supplies, and staff development.
Streamlining services, schools, calendars
Some districts are considering streamlining bus routes, consolidating or closing schools, or offering furloughs. Guilford County Schools, for example, said it might have to reduce up to two days’ salary for staff making more than $25,000 a year.
Several districts support reducing the school calendar to four days a week, but current state law would not allow such a change. New Hanover County Schools implemented a four-day summer schedule last year that saved money on utilities. Kerry Crutchfield, director of finance for Winston-Salem/Forsyth Schools, also supports going to a four-day week, saying the district desperately is trying to avoid layoffs.
Joseph Coletti, director of health and fiscal policy studies at the John Locke Foundation, said districts should re-examine priorities and direct more money to the classroom instead of the central office. More At Four, Learn and Earn, and dropout prevention grants are examples of programs that research has shown to be ineffective. Yet the state spends millions each year funding them.
Whether school districts and the state legislature will take the steps to restore fiscal long-term discipline remains to be seen. The North Carolina Association of Educators, the state’s largest teacher union, already is lobbying the General Assembly for another major tax hike and a restoration of all the education cuts from the past few years.
Karen McMahan is a contributor to Carolina Journal.