Quality Counts 2011: Education's New Economic Reality

Sean Cavanagh:
Welcome to our Ed Week’s live chat, which focuses on schools’ efforts to cope with the nation’s severe economic downturn. I’m Sean Cavanagh, and I cover state policy for our publication. I also wrote several of the stories for our new issue of Quality Counts, which focuses on the financial crisis and its implications for education – in such diverse areas as personnel and pensions, teacher pay, pre-K, technology, special education, and for overall state and local budgets over the coming years. Heading into this fiscal year, 46 states faced budget shortfalls, and that has meant that local schools are feeling the pain, too.

I’m pleased to be joined by two experts on state and local K-12 budgets, who can speak to how the budgetary pain is playing out in states and schools, and what’s likely to happen in next few years.

I’ll now ask them to introduce themselves

Don Boyd:
Hi. My name is Don Boyd. I am a senior fellow at the Nelson A. Rockefeller Institute of Government, which is the public policy research arm of the State University of New York at Albany. Among other things, we study the finances of state and local governments in the United States. I have worked on state and local government finance issues in one capacity or another for the last 30 years.

You can sign up for the Rockefeller Institute’s listserv at www.rockinst.org

Noelle Ellerson:
Good afteroon everyone. I am Noelle Ellerson, Assistant Director, Policy Analysis and Advocacy at the American Association of School Administrators. We represent more than 13,000 school admnistrators across the nation.

Thank you for the invitation to participate!

Sean Cavanagh:
I’ll kick things off by asking Noelle and Don to provide a bit of an overview.

What does the budget picture look like today for schools – and what’s the picture over the next two-four years. Noelle – can you speak to what we should expect to see from districts, and Don, can you speak to state budgets and the overall national picture?

Don Boyd:
I want to emphasize the depth, breadth, and duration of this decline.
It is the worst decline BY FAR in the post-war period. State tax revenue, even now, more than 6 months after the recession is technically over, is down more than 10% from its level of 2 years ago - despite increases in demand for services.

Virtually every state but North Dakota is in trouble.

And the fiscal troubles will continue for at least 2 more years despite the recovering economy.

Sean Cavanagh:
To follow up on Don’s earlier answer about teacher pensions, here’s the story that appears in Ed Week’s Quality Counts issue, exploring that question:

http://www.edweek.org/ew/articles/2011/01/13/16personnel.h30.html

Sean Cavanagh:
And for an overview of the crisis and it’s impact, please see this Ed Week Quality Counts story:

http://www.edweek.org/ew/articles/2011/01/13/16overview.h30.html

Noelle Ellerson:
I can answer that question very quickly.....AASA’s latest economic impact survey answers just that. You can access “Surviving a Thousand Cuts:America’s Public Schools and the Recession’ online. Here is the URL: (see page 7 for the specifics)

http://aasa.org/uploadedFiles/Policy_and_Advocacy/files/AASAThousandCutsFINAL121610.pdf

Don Boyd:
To Jim Schultz:

I’m not sure I have a great answer. The two main ways obviously are to address the number of staff, and the amount they are paid. As for numbers, I think careful examination of pupil-staffing relationships could help. In many states and districts there were very large declines in pupil/staff ratios during the good times. Perhaps some of them are less crucial to educational success than others. A sharp look at this may lead districts to conclude that small class sizes are a very expensive reform and that some of this might be undone with relatively little damage - returning us to where we were in the early 2000s.

As for pay, I think there are some painful contract negotiations ahead. A lot of districts have very steep salary schedules with pay rising sharply with experience. That may require close examination in future negotiations.

Noelle Ellerson:
This is a tough decision for school administrators. They hesitate to cut school personnel, whether teacher, counselor, or staff; unfortunately, the recession has put many, many districts in the position of having to cut all types of personnel. Counselors have been cut, and it is a tough cut to make, because many districts had very high student/counselor ratios before the recession began.

On a related note, I am interested in, when the recession ends and we start getting to have the discussion about what is being ‘refunded’, what gets refunded first? Will it be last cut, first refunded? Or a more systemic approach to putting funding in targeted areas? Will it be an opportunity to make policy decisions?

Sean Cavanagh:
For the last question from our “guest.” I’ve posted the following response from my Ed Week colleague and resident special ed expert Christina Samuels:

I can say that states are definitely using more early intervening services in order to reduce referral rates. Under federal policy, states must conduct “child find” services that require them to identify children from birth to age 21 who may benefit from early intervention or special education. Presumably, if someone could prove that a state wasn’t conducting child find properly, that state would be in trouble.

Noelle Ellerson:
In response to Guest:

I think the short answer is ‘yes’. A lot of it, at least at the local level, will depend on how the state pays for special education (do they use a system that funds based on disbility type? or a system that is census based?). Either way, our members have seen what early intervention can do, and I think the trend we have seen (a slowing in classification) will continue to grow.

Don Boyd:
People who study state budgets generally have understood for quite some time that the states’ fiscal problems, and by implication school district fiscal problems, were going to be deep and long, lasting well beyond the federal stimulus aid.

In general, I think states and districts would make better plans if they were done within the context of this longer outlook. This might have made them develop multi-year plans for staffing declines, or might have made them change capital plans, or made them tougher in salary negotiations, or considered multi-year plans to share services with other districts, or done any number of things that could produce outyear savings even though the near term benefits are small.

They might have treated the ARRA money as transition aid rather than as a way to prop up budget until the good times returned (which we knew weren’t coming back quickly).

But politically this is extraordinarily hard to do. So I think yes, they could have done better, but the system makes that very hard to do.

Sean Cavanagh:
We address this in one of our Quality Counts stories. One approach we look at is being used by the Council of Great City Schools, which has developed a model to allow districts to compare how they spend money:

http://www.edweek.org/ew/articles/2011/01/13/16savings.h30.html

Sean Cavanagh:
Sorry, the report referenced above is from the Council of THE Great City Schools.

http://www.edweek.org/ew/articles/2011/01/13/16savings.h30.html

Don Boyd:
To Howell:
I’m not sure I have great ideas about that and I’m hoping Noelle can chime in with closer-to-the-ground thoughts. I think districts will have to address retiree health care issues because in most places these costs are (a) large, (b) likely to grow rapidly, and (c) legally possible to cut back. It won’t be pleasant. It means changing the expectation for compensation.

I think beyond that, you need to be closer to school budgets than I am to have good, constructive ideas. I think that as administrative staff retire it makes a lot of sense to explore sharing of services with other districts (and sometimes even without retirements), but a lot of times you have to spend money first (e.g., to make systems compatible). I think districts should do all of the things that good business managers undoubtedly already are doing - examining transportation scheduling closely, looking for energy efficiencies, and so on. Perhaps most important is to make sure you’ve defined your mission clearly so that you can cut out spending that is not crucial to that mission.

Noelle Ellerson:
Roxanne: The only trend I can document around any decision to cut/modify a curricular offering (whether a remedial course or AP) was that they were safeguarded as much as, and for as long as, possible. That said, the general practice was that LEAs held on to these programs for as long as they could.

Check page 8 of the AASA survey above. It documents how my members have described the cuts they made this school year, and anticipate for next year, for a host of classes (summer school, academic, high-cost, electives, etc....)

Sean Cavanagh:
Katie -- Please see my collegue Ian Quillen’s Quality Counts story on this topic (and his past Ed Week stories). One issue we discuss in the report is the pressure districts face to use technology in ways that save money, as opposed to simply being an add-on.

http://www.edweek.org/ew/articles/2011/01/13/16technology.h30.html

Don Boyd:
To Sean re: K-12 shielding. Yes, academic research and armchair political observation both have confirmed that in general, states have shielded K-12 education from the worst of state spending cuts. And this is hard to do because K-12 spending (school aid, primarily) is usually the largest or second-largest spending item in the typical state budget. It is a testament to the political support for education and perhaps to legislative commitment to investment in the economy.

I think as a general statement, this will remain true. That is, RELATIVE to other items in the state budget, K-12 education will do well. Even though demand for higher ed actually rises in recessions, state support for higher ed often falls (and tuition rises) perhaps because people old enough to be in the workforce are less sympathetic to legislators than are elementary and secondary school children. And demand for Medicaid also goes up in recessions; states have not scaled it back much, but may start to do so after federal stimulus is gone. But I think K-12 will have relatively greater support. But “relatively” will mean it is being cut in many places - just not as much as other items in the budget.

And I do think - picking up on the point one person raised about teacher bashing earlier - that the citizenry are somewhat less supportive of the people actually providing education than they were in past recessions.

Noelle Ellerson:
To KC: This refunding question is a wonkish one that I hope we can start to have sooner, rather than later. The cuts that came should, in theory, translate into an opporutnity to reinvest dollars as they once again become available. I think it would be a missed opportunity to automatically place every dollar where it had been, instead of allowing LEAs to target the dollars to need.

I think you nailed it on the head when you called for a systemic dicussion around refunding. That said, the systemic approach that works in a small Montana town will be different than what would work in even a less-small Montana town. I think the most effective discussions around reinvestment will be more local, with state and federal policy being more general and flexibile.

Flexibility can be as good as new money, so if districts find themselves with increasing coffers and flexibility, I think education could be in a good position. Please note, flexibility by no means waives accountability. It is clear to me that AASA’s members have very very few qualms about accountability.

Sean Cavanagh:
To Noelle’s point above about K-12 budgets being protected from the budget ax. See California Gov. Jerry Brown’s budget, unveiled this week, which called for sweeping reductions in state spending -- but left K-12 relatively unscathed.

http://blogs.edweek.org/edweek/state_edwatch/2011/01/browns_budget_brings_massive_cuts_but_spares_k-12_education.html

Noelle Ellerson:
Thank you for your questions, and thank you for hosting, Sean.