This past year’s state budgets, as painful as they may have been for K-12 education, could have been worse according to some analysts. Yet as bad as things might be right now, the worst is still to come, they say.
The American Reinvestment and Recovery Act of 2009 (ARRA) had a positive effect on state budgets as spending and state service cuts in education and other areas would have been much deeper had the federal funds not been available, noted a February 25, 2010 report from the Center on Budget and Policy Priorities (CBPP), a policy organization that analyzes fiscal policy and public programs that affect low- and moderate-income families and individuals.
The ARRA gives states roughly $140 billion over a two-and-a-half year period to help fund ongoing programs, and the money is addressing approximately 30 to 40 percent of states’ 2009 and 2010 budget, the Center reported. But much of the money from the ARRA is for specific uses, and governors can only use a piece of their allotment to balance their budgets.
Several factors indicate an even gloomier outlook for 2011 state budgets. One is the continuing decline in tax revenue — the steepest decline in state tax receipts on record since the recession of the 1930s, according to the CBPP.
A February 2010 report issued by the Nelson A. Rockefeller Institute of Government states experienced sharp declines in tax collections in the last quarter of 2009 — a record fifth straight quarterly drop. The Institute said that states that already have slashed spending or raised taxes will need to do more to make up for losses.
Second, the funds from the ARRA were meant to be distributed over a two-year period, and those two years end in 2011. ARRA funds are permitted to be used to “backfill” budgets (make up revenue shortfalls) as long as a state, once the ARRA funding ended, does not cut below education funding levels from fiscal year 2006. However, such a “funding cliff” is indeed a reality for many states as the economy struggles to recover.
In mid February, nearly half the United States governors had submitted their budget proposals for the upcoming 2011 fiscal year (which begins on July 1, 2010 in most states). While state legislatures must approve (and may significantly change) the governors’ proposed cuts, more cuts in funding for K-12 education loom large in 29 states and the District of Columbia, the CBPP said in its analysis of these proposed budgets.
