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The Honolulu Advertiser
Posted on: Thursday, February 14, 2008

Schools worried about economy

By Nancy Zuckerbrod
Associated Press

WASHINGTON School budgets have seemed to defy gravity in recent years going up steadily without ever coming down. But school board members from across the country say that's likely to change soon, and they're bracing for leaner times forced by the nation's economic downturn.

Board members in Washington last week for an annual conference said shortfalls in state budgets coupled with pessimistic predictions about local revenues are forcing them to look for ways to trim next year's budgets, which they are working on now.

About half of the states are facing projected budget shortfalls, according to the Center on Budget and Policy Priorities, a Washington-based research group.

The downturn in the housing market has led to a drop in state revenue from sales taxes associated with construction materials, furniture and other goods, said Liz McNichol, senior fellow at the center. She said recent job losses around the country also could lead to a reduction in income taxes collected by states.

At the same time, economists predict local revenues will drop over the next few years as real estate values decline, generating less in local property taxes for school budgets.

Board members from Virginia to Alaska attending the National School Boards Association's legislative conference said they were considering rolling back benefits to school employees, reducing staff and limiting tutoring and extracurricular activities available to students.

Among the most worried were board members from California, where Gov. Arnold Schwarzenegger proposed more than $4 billion in cuts to schools.

"It would decimate education as it exists right now," said Paul Chatman, a school board member from Ocean View, Calif.

Other desirable school programs are on the chopping block as well. Chatman said efforts to reduce class sizes will probably be slashed. A block scheduling program, in which students study subjects for longer periods, may be scrapped altogether because it relies on extra teachers to make it work.

A projected shortfall in Minnesota's budget also has education officials there worried, said Jackie Magnuson, a school board member from the Minneapolis suburb of Rosemount.

She said school districts around the state would likely try to persuade voters to approve increased taxes for school funding, but she said those kind of ballot initiatives wouldn't pass easily.

Minnesota and California state governments heavily fund local schools. Nationally, about 47 percent of money for schools comes from state governments, 44 percent from local taxes and 9 percent from the federal government.

Even wealthy school districts are feeling the pinch.

It's all a reversal from recent years, when home values in many parts of the country skyrocketed and schools pocketed extra money in property tax revenue.

It's unclear how much property values could come down, and the timing could vary nationwide, since homes are reassessed on varying schedules.

"The watchword right now is wait and see," said Michael Griffith, a school finance analyst at the Education Commission of the States, based in Denver, Colo.

School budgets typically grow at rates higher than inflation.