2010-11 State Funding for School Districts- CASB

2010-11 State Funding for School Districts Taking Shape

We have known for some time that budgeting for fiscal year 2010-11 would be a rough one for school districts. With each passing quarterly economic forecast, the picture becomes bleaker and bleaker. Finally last week school boards began to get a better feel for the depth of cuts in 2010-11. Be mindful however that the following information is the Governor’s best guess; given the data we have at the moment. As we move into 2010, these figures will likely change, and of course, the legislature gets the final say. As we know, it’s a rare occasion for the legislature to take an idea and leave it as is. The General Assembly will surely make changes.

Despite the Governor’s hope to keep K-12 whole, the reality is that K-12 comprises 43 percent of the state’s budget. Given the cuts that have already been made to other areas of the state budget, there is little else to turn to for 2010-11. This being the case, the Governor’s 2010-11 proposal cuts $260 million from K-12, or 4.56 percent. This $260 million includes the $110 million that districts are currently holding in reserve and anticipate to be rescinded by the legislature in January. However, the Governor’s recommendation does not include per pupil funding changes related to enrollment projections for 2010-11. According to the latest spreadsheet distributed by Vody Hermann at CDE, the average cut will be closer to 6.12 percent, but some districts will be below, some at and some above that average.

The $260 million in cuts proposed by the Governor are taken from the cost of living factor. However, recognizing that this will hit some districts harder than others, there will also be an “equity” factor that will help equalize the cuts across districts.

CASB believes the intent of Amendment 23 was to increase total base funding—the base plus factors—by inflation plus 1 percent. In other words, our opinion is that base funding is all funding outside of categorical funding. In our opinion, therefore, the Governor’s proposed cuts violate Amendment 23 and the state constitution. However, in the state’s current financial crisis we are not certain how this issue will play out or if it will get elevated to a legal decision. As stated in previous Legislative Updates, we are approaching school finance in a strategic manner, working to get every dime possible for our schools but also ensuring that any cuts to funding that do occur are done as equitably as possible.

In addition to the cuts to K-12, the Governor is proposing a series of cuts to tax credits and exemptions to realize another $132 million in savings to the state. As explained by the Governor’s staff, the Governor’s plan is a delicate balance between K-12 and the business community. Should any of the cuts to tax credits and exemptions falter with the legislature, it is likely that K-12 will experience additional cuts.


How to plan

It is still CASB’s belief that boards of education should be prepared to look at cuts above the Governor’s recommended cut of 4.56 percent. A strategy of identifying optional cuts of 6 and 8 percent could prove wise—perhaps more if you are projecting significant enrollment loss in 2010-11.

It is imperative that school districts and board members engage the community in the budget cutting process. Those districts that have not already assembled community advisory groups for budget input should strongly consider it. At a bare minimum, it is vital that the community be informed of proposed cuts so they don’t come as a surprise to staff, parents, business leaders and other school stakeholders.

The process of communicating budget cuts to the community should include a background of the economic and governance issues that have lead to this challenge. Messages should also include how the board and administration (ideally with community input) determined what cuts to propose and the conflicts and trade-offs of selecting difficult budget priorities.