State Budget Cuts

Complete report

Of 46 states that publish education budget data in a way that allows historic comparisons:

* 37 states are providing less funding per student to local school districts in the new school year than they provided last year.
* 30 states are providing less than they did four years ago..
* 17 states have cut per-student funding by more than 10 percent from pre-recession levels.
* Four states— South Carolina, Arizona, California, and Hawaii — each have reduced per student funding to K-12 schools by more than 20 percent. (These figures, like all the comparisons in this paper, are in inflation-adjusted dollars and focus on the primary form of state aid to local schools.)

State-level K-12 spending cuts of this magnitude have serious consequences for the nation.

* State-level K-12 cuts have large consequences for local school districts. Some 47 percent of total education expenditures in the U.S. come from state funds (the share varies by state). Cuts at the state level mean that local school districts have to either scale back the educational services they provide, raise more revenue to cover the gap, or both. In particular, cuts in state aid may particularly affect school districts with high concentrations of children in poverty. States typically distribute general education aid through formulas that target additional funds to school districts with large shares of low-income and other high-need children and/or with lower levels of taxable wealth. As a result, reductions in "formula" funding may result in particularly deep cuts in general state aid for less-wealthy, higher-need districts unless a state goes out of its way to protect them.
* The cuts have extended the recession and slowed the recovery. Federal employment data show that school districts began reducing the overall number of teachers and other employees in August 2008, when the first round of budget cuts began taking effect. The job losses have accelerated in the last year as the cuts have deepened; by August 2011, local school districts had cut 293,000 jobs nationally compared with 2008. These job losses have reduced the purchasing power of workers' families, in turn reducing overall consumption in the economy and thus extending the recession and slowing the pace of recovery.
* A further negative economic consequence of the cuts is that they counteract and sometimes undermine education reform and more generally hinder the ability of school districts to deliver high-quality education, with long-term negative consequences for the nation's economic competitiveness. Many states and school districts have undertaken important school reform initiatives to prepare children better for the future, but deep funding cuts hamper their ability to implement many of these reforms, particularly in areas like teacher training and early childhood education. At a time when the nation is trying to produce workers with the skills to master new technologies and adapt to the complexities of a global economy, large cuts in funding for basic education threaten to undermine a crucial building block for future prosperity.
* Local school districts typically have little ability to replace lost state aid on their own. Given the sorry state of many of the nation's real estate markets, it is difficult for many school districts to raise more money from the property tax without raising rates, and rate increases are often politically very difficult. As a result, property tax and other local revenues were actually lower in the 12- month period ending in June 2011 than they were the previous year. However, at least some localities are considering and in some cases enacting property tax increases — a sign of the challenges that schools face.

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