Across the nation, districts are only enduring the first phase of what is likely a several year stretch of tough budgets. Why? First, property taxes account for so much of school spending, residential real estate prices are only now bottoming, commercial properties will be falling into 2011, and states adjust valuation on a rolling basis. This means the impact of the real estate bubble likely won’t fully play out until 2014 or so.

Second, thus far, districts have been cushioned by more than $100 billion in stimulus funds. Third, going forward, K-12 is going to be competing with demands for Medicaid, transportation, public safety, and higher education--all of which have been squeezed and will be hungry for fresh dollars when the economy recovers. And, fourth, massively underfunded state and local pension plans will require states to redirect dollars from operations. All of this means that the funding “cliff” looming in 2010-11 is steeper and likely to be with us longer than most district leaders have publicly acknowledged.

Early responses to this situation have been inadequate, to put it mildly. Districts first took out the scalpel and turned up thermostats, delayed textbook purchases, and reduced maintenance. Now they’re boosting class sizes, raising fees, and zeroing out support staff and freshmen athletics. It’s going to take a lot more for districts to thrive in their new fiscal reality. It would behoove them to take a page from the playbook of new Kansas City superintendent John Covington.

Faced with a slew of half-empty schools in the 17,500 student district, Covington decided to not just continue the strategy of passively managing the district’s decline. Instead, USA Today’s intrepid Greg Toppo reported last week that Convington decided it’s better to tackle the challenge in one fell swoop than to play catch-up for the next decade. This has not been the way most school systems have addressed budget crunches or shrinking enrollment.

Covington has called for closing half of the district’s 61 schools, and for letting go a quarter of employees. Harsh? You bet. But imagine if earlier leadership in Detroit or D.C.--or Kansas City--had responded proactively. They could have lifted a page from Obama chief-of-staff Rahm Emanuel’s playbook and seized the opportunity that crisis can offer.

Downsizing gives smart, aggressive, unafraid district leaders the opportunity to shut down dilapidated or poor-performing schools, reduce maintenance costs, and potentially push out less effective teachers (if they slip the paralyzing clutch of last-hired, first-fired). Instead of spending years trying to catch up with events, Covington’s proposal would free the district to concentrate resources on a smaller number of schools and fewer faculty.

As Covington told Toppo, “The bottom line is the quality of education we’re offering children in Kansas City is not good enough. One reason it’s not good enough is that we’ve tried to spread our resources over far too many schools.” Covington’s proposal would not itself improve teaching and learning, but it can help create the organizational and financial preconditions for improvement.

Now, Covington’s necessary but heavy-handed meat cleaver is certainly not the only strategy, nor is it even an appropriate strategy for most other districts. But it reflects a commitment to getting ahead of the curve that school boards and superintendents across the land would do well to emulate. Going forward, I’m hoping to occasionally flag some of the more far-sighted strategies district leaders are using to cut spending and get out ahead of the budget picture. Because no one should expect that, if districts can struggle through 2010-11, school revenues are just going to bounce back.