California Schools Brace for Severe Cuts
Massive cuts to education are a near certainty, as California faces an economic challenge of historic proportions. Although we don’t know exactly how much schools will lose, there are signals. And they’re “ugly,” writes EdSource’s John Fensterwald.
Newsom this week acknowledged overall state revenue declines would be in the “tens of billions.” The California Department of Finance pointed to a scenario in the January budget (page 228) of a “moderate” recession with revenue losses of $50 billion — $25 billion for each of the first two years — followed by further annual declines of $15 billion to $20 billion for years after that. In testimony on April 16 before the Senate budget committee last month (starting at 13:50), Legislative Analyst Gabriel Petek applied COVID-19’s financial equivalent of a coronary thrombosis to the Great Recession. His conclusion: a two-year, $35 billion hit in revenue, with 80% — $28 billion — falling in 2020-21 and only $7 billion in the current year that ends June 30. That’s because plummeting personal income taxes in calendar 2020, which account for about two-thirds of General Fund revenue, will wallop the 2020-21 fiscal year and beyond.
K-12 schools and and community colleges generally receive 40% of the General Fund annually. After a $28 million drop in revenue, we’re looking at $11.2 billion. After the 2008 recession, the cut was $7.4 billion.
In terms of percentages, the Prop. 98 drop in 2008-09 was 13%, about $1,200 per student. Prop. 98 has grown more than $30 billion since the nadir of the Great Recession and a loss of $11 billion next year would be 14 or 15%, about $1,700 per student. And that’s for a “moderate” recession; the COVID-19 recession is looking to be severe, at least for the next year or two.
Schools are hoping for more assistance from the feds beyond the first round of aid they’ll get on July 1 . One silver lining is current budget reserves, which are generally higher now than they were during the Great Recession.
“This is the time your school boards should bless those who stood strong and said, ‘We are not going to eat into our reserves,'” Sacramento County Office if Education Superintendent David Gordon told EdSource.
Schools will learn more about where they stand next week when Gavin Newsom issues his May budget revise. Stay tuned.