Schools face big budget holes as stimulus runs out

February 15, 2010 at 12:00a.m.

SAN FRANCISCO (AP) — The nation’s public schools are falling under severe financial stress as states slash education spending and drain federal stimulus money that staved off deep classroom cuts and widespread job losses.

School districts have already suffered big budget cuts since the recession began two years ago, but experts say the cash crunch will get a lot worse as states run out of stimulus dollars.

The result in many hard-hit districts: more teacher layoffs, larger class sizes, smaller paychecks, fewer electives and extracurricular activities, and decimated summer- school programs.

The situation is particularly ugly in California, where school districts are preparing for mass layoffs and swelling class sizes as the state grapples with another massive budget shortfall.

The crisis concerns parents such as Michelle Parker in San Francisco, where the school district is preparing to lay off hundreds of school employees and raise class sizes because it faces a $113 million budget deficit over the next two years.

“I’m worried they’re not going to have the quality education that’s going to make them competitive in a global society,” said Parker, who has three kids in district schools.

Around the country, state governments are cutting money for schools as they grapple with huge budget gaps triggered by high unemployment, sluggish retail sales and falling real estate prices. A recent report by the Center on Budget and Policy Priorities found that 41 states face midyear budget shortfalls totaling $35 billion.

“The states are facing a dismal financial picture,” said Jack Jennings, president of the Center on Education Policy.

The Obama administration’s $787 billion federal stimulus package provided roughly $100 billion for education, including $54 billion to stabilize state budgets. In October the White House said the stimulus created or saved 250,000 education jobs.

But many states have used most of their stimulus money, leaving little to cushion budget cuts in the coming fiscal year.

Experts say the looming cuts could weaken the nation’s public schools, worsen unemployment, undermine President Obama’s education goals and widen the achievement gap between students in rich and poor districts.

Wealthier communities are filling school budget gaps with local tax increases and aggressive fundraising, but could worsen inequality and undermine the larger system for paying for public schools, said John Rogers, who heads the UCLA Institute for Democracy, Education and Access.

In Michigan, which has the nation’s highest unemployment rate, school districts lost 2 percent of their state money this year and could lose another 4 percent next year because of a projected government shortfall of $1.6 billion. Most of more than $1 billion in federal stimulus money is gone.

Democratic Gov. Jennifer Granholm has proposed an incentive program to entice about 39,000 public school employees to retire, but that plan has been criticized by the state’s largest teachers union.

“Our districts don’t know what the next step is,” said Don Wotruba, deputy director with the Michigan Association of School Boards.

In Washington state, school districts that lost $1.7 billion in state money over the past two years are bracing for another round of cuts as lawmakers try to plug a $2.8 billion state deficit.

In California, school districts have already laid off thousands of teachers, increased class sizes and slashed academic programs.

But state officials are warning the worst is yet to come because the state has already handed out most of its $6 billion in stimulus money.