K-12 Public Schools Financial Crisis
3/30/09; Office of Superintendent of Public Instruction
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What is the extent and causes of the financial crisis for schools.
Districts are on the brink of financial crisis. Their reserves are low. Their costs are increasing
faster than their revenue. They face tremendous lay-offs even without state funding reductions in
the next two years.
•
For 2008-09,
36 districts appear close to a financial emergency. These districts, with a total
operating value of $2 billion, budgeted less than a 2% unrestricted reserve. In 2007-08,
districts with less than 2% in reserve had a total operating value of $1 billion. Large and small
districts have very low reserves.
•
6 districts are on Binding Conditions (the process where a district that cannot balance its
budget and is put under state-imposed financial and management conditions); 3 more districts
are evaluating whether or not they can balance their 2008-09 budget.
•
Districts have tapped out their levies. In the 90’s districts were using 75% of our levy capacity;
they now are using 92% of their levy capacity. Local funds (largely levy funds) are used up and
cannot continue to subsidize state responsibilities.
•
Districts are provided with unequal salary allocations from the state to hire staff; districts
must subsidize state allocations in order to attract and retain staff.
o
In 2007-08 the state paid between 59% and 84% of the salary cost of Principals and
administrators and 84% to 96% of the salary cost of classified staff that are ostensibly
“state funded".
o
Districts subsidize state salary allocations by about $370 million per year.
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Districts use local funds to subsidize their basic education non-staff operating costs (utilities,
insurance, supplies, textbooks and curriculum) by about $544 million. The state only pays for
about 50% of non-salary operating costs.
o
The state provides enough operating funding for districts to afford to buy new textbooks
or curriculum every 18 years (all grades, content areas).
o
For 46 districts and 17,000 students, the amount that the state provides for ALL non-
salary operating funding is less than they spend on utilities and insurance alone. Leaving
$0 in state resources for supplies, textbooks, technology, and all other operating costs.
•
Districts subsidize basic education (“to-from") pupil transportation by $125 million a year.
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Our class size is the third highest in the nation and state resources provide too few school
nurses, counselors, and librarians. The state funds a K-3 class size of 25.8 and a grades 4-12
class size of 28.6.
