Time for an Education Bailout? California’s Schools Will Likely Need One

The latest numbers from California suggest that the state is running out of money so quickly that it may have to start to pay its bills with IOUs. It is uncertain what the impact of the state’s problem will be on schools, but it looks bad, and is getting worse by the day. In November, the state’s Legislative Analyst estimated a budget gap of around $28 billion between now and June 2010. The annual budget is just over $100 billion with around 40 percent of that going to schools (K-12 and community colleges) (see report here). The budget gap has jumped in the last week to $40 billion, and the urgency is mounting to act fast before the state runs out of money. The Governor has started a debt clock that ticks at $470 for each second of inaction (here) The State Treasurer has suggested that the state may have to stop all construction projects because it will run out of funding paying for its constitutional obligations.

The Governor called a special session in Nov with a lame duck state legislature to address a then smaller gap, and the session ended with no results. He declared a new special session with a new Legislature in December and started with generally the same mix of new revenues and cuts. The political battle is over how much of this gap will be covered with cuts vs. new revenues. The Governor and legislative Democrats (majority party in both houses) are proposing a mixture of new taxes and program cuts, with many differences between the two. In contrast the legislative Republicans are calling for programmatic cuts to solve the problem.

So What Does All of This Mean for Schools?
Schools have been waiting to see how bad the cuts will be. Today’s news suggests that it could be pretty bad. The Senate and Assembly Republican (minority party) weighed in with a proposal that was heavier on the cuts than on the new revenues (here). Combined their plan would address $22 billion of the $40 billion hole. And of that $22 billion roughly half ($10.6 billion) was reduction to K-14 education (K-12 schools and community colleges which are funded together through a constitutional minimum guarantee). In addition they propose significant reduction to early childhood programs. Since this year is already half over, there may not be a lot that schools can do to reduce costs significantly in the current school year, although they better save onto every unobligated nickel. And, while this proposal was quickly blasted by the Governor and the Democrats (here), it is important to recognize that this proposal only addresses half of the problem. So, if the state is going to solve the $40 billion hole, it may take this level of cuts to education or higher plus additional cuts and new taxes.

Why the Rest of the County Should Care.
One in every eight students in the US is educated in California. California current funding per pupil is already below the national average, and near the bottom if adjusted for cost of living. Because of its modest funding and high costs, California schools have smaller staffs than schools in other states – larger class sizes and fewer administrators and other support staff. Take off another $10 billion in funding, and class sizes will balloon even more. At what point does it become a national interest to keep schools from going under. Is it time for the federal government bailout for education? I think this would be a better investment in our future than many of the other bailouts being provided.