School Officials Fret Tight Budget Timelines

It's been a crushing year for local school districts around the country as they confront the end of the federal stimulus program, state budget cuts and tax-weary residents. Now, as superintendents work on their spending plans for next year, they must deal with another obstacle: the calendar.

In all but four states, the fiscal year begins on July 1, which means that state lawmakers are supposed to have their budgets finalized by then. But many local governments and school districts — which rely on state funding — also use July 1 as the start date for their budget year. This makes timing difficult: How do you write your local budget when you don't know how much money to expect from the state?

In more normal fiscal times, this isn't a big problem for schools. Funding for education is usually among the safer line items in state budgets. So even during periods of economic weakness, schools could count on getting at least the same amount of state aid as they did the year before.

But now state budgets are so dire that once-unthinkable cuts to education are on the table, creating a degree of budget uncertainty that local school officials are unaccustomed to. Contentious state budget deliberations drag on for weeks during tough times, making it harder for districts to plan. Recently in states such as California, Illinois and New York, lawmakers haven't been able to agree on a budget until after the start of the new fiscal year, prolonging the uncertainty.

"The main way of solving that problem is not to change the fiscal year but for the state governments to enact their budgets on time," says Roy Meyers, professor of political science at the University of Maryland Baltimore County.

Late budgets leave local officials hoping for the best but preparing for the worst. Often, that requires telling staff that their jobs will not be renewed unless more money becomes available. Last year, education advocates warned that up to 300,000 teacher jobs could disappear nationwide until an influx of federal money in August spared districts from having to make most of the cuts.

Layoffs likely

This year, however, there is little expectation that Congress will step in again. And as layoff notices begin showing up in mailboxes, all eyes are on state lawmakers.

Already in Marion, Illinois, an early-childhood education agency has laid off all 45 of its staff members because of budget uncertainty. The Williamson County Early Childhood Cooperative receives all of its funding from a state grant that may — or may not — be renewed this year.

Last year, the whole staff was laid off, too, but the agency was able to hire everyone back in July, barely four weeks before the start of school year, when Illinois passed a budget that spared its funding.

"We tell our employees to prepare for next school year — and prepare to not be here," says Linda Drust, director of the cooperative. "This is impacting everyone, from the top down. It's from myself as the director of the entire program to our custodians."

The cooperative serves about 600 preschoolers in rural Williamson County as well as 55 teen mothers who meet with staffers to learn parenting skills and to get help in order to stay in school.

"One of the frustrations is that we can't officially tell parents if we're going to be here or not," Drust says. "We tell parents that we'd like to be here, but we encourage parents to have a plan B also."

Growing state role

The status of the state budget wasn't always such a pressing concern for local school officials. But over the past 30 years, state governments have become increasingly important players in school finance. Many legislatures have passed restrictions on property-tax increases. That's had the effect of limiting the power of municipalities and school districts to raise revenue themselves, while placing more of the funding burden on the state budget. At the same time, lawsuits brought by school districts have forced state governments to maintain or boost school funding. Today, state funds account for almost half of the revenue for school districts.

In California, schools have to tell teachers by March 15 that they could be laid off. For the past few years, between 20,000 and 25,000 teachers have received the notices. Although most of them are eventually hired back, the process is disruptive and costly, according to Mark Hittleman, president of the California Federation of Teachers.

"They've been passing budgets later and later," Hittleman says, pointing to last year's state budget, which lawmakers didn't pass until October — more than three months into the new fiscal year. "It makes everything difficult. If you don't have a budget, you can't plan."

To remedy that, the union put its fundraising muscle behind a successful campaign to pass Proposition 25 in November. The measure made it easier for the Legislature to pass a budget by reducing a requirement for a two-thirds majority vote of lawmakers to a simple majority.

"This year, we expect the budget to be on time," Hittleman says.

Still in flux

But even an on-time budget in California won't necessarily bring more certainty to school officials there. Democratic Governor Jerry Brown is pushing for a referendum to extend temporary increases in income, sales and vehicle taxes. If he succeeds, the tax proposal will go before voters in June, which means that budget writers won't have definite revenue projections until the summer.

New York's fiscal year begins on April 1, partly to give local governments and school districts enough time to prepare their budgets. But the state perennially struggles with late budgets — five out of the last 10 budgets haven't passed until May or later.

That doesn't help school districts, most of which are required to put their budget proposals and the property tax rate up to a vote in May. In practice, district officials use budget figures from the governor's budget plan. They assume that the Legislature will not cut the education budget beyond what the governor has proposed. And if the Legislature increases school funding, districts have cut the property tax rate accordingly.

Now, Governor Andrew Cuomo, a Democrat, is proposing capping local property taxes starting in 2012. That would make it still more difficult for schools to recoup lost state revenue.

"Ideally the state budget would be in place before school districts have to go out before the public," says David Albert, a spokesman for the New York State School Board Association. "It would really be helpful to know."

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