The one-time appropriation was intended to help governors avoid cutting budgets for education and other essential services “to save and create jobs.” Congress required states to obligate the money by Sept. 30, 2011. Governors who accepted the money had to agree to education reforms, including improving teacher effectiveness, creating a data system to track students' progress from pre-kindergarten through college, and establishing rigorous college- and career-ready standards.
So what's the problem?
A funding “cliff.” That occurs when one-time funds are used to pay for recurring expenses — like using your tax refund to make the first payment on a new car. After that, you have to dip into your household budget for the monthly payments. When the stimulus money runs out, states will have to replace it with tax revenues — primarily from state sales and income taxes. But during a recession, those revenues drop off as people make fewer purchases and some lose their jobs.
Did anyone see this coming?
Yes. Federal officials advised states to invest the one-time stimulus funds “thoughtfully” to minimize the cliff, using them in ways “that do not result in unsustainable continuing commitments after the funding expires.”
Wasn't the learning community of Douglas and Sarpy Counties supposed to make sure the Omaha Public Schools had enough money?
If the property tax redistribution of the learning community common general fund levy works as expected, Omaha Public Schools should, in theory, get more property tax revenue for 2010-11 than what the district could generate by itself. The recession has slowed the growth of property values, however, so districts won't likely see the big boosts in property tax revenue that helped them in times of plenty.
For the first time this year, the state has calculated state aid differently for learning community districts. Omaha Public Schools and other urban districts are lumped in with outlying “property rich” districts within the learning community, basically treating Douglas and Sarpy Counties as one giant school district for calculating aid. That triggers some changes, both minor and dramatic.
Because OPS can tap the property tax base from other metro districts, it doesn't get as much state aid as it otherwise would have.
The joyless job fell to Bob Broomfield.
Laying off teachers is a sober chore for any school superintendent, but in a town of 5,400 like Harlan, Iowa, it can be particularly disheartening.
Young, eager teachers breathe life and hope into small communities, but under union contracts, they're the first to go when money gets tight. Often, Broomfield said, that means laying off “someone who you just selected as the cream of the crop.”
Running out of federal stimulus money this year and facing shrinking state revenues, Iowa school districts are coming to grips with the realities of economic recession: layoffs, pay freezes and a host of other cuts.
They're also giving Nebraskans a preview of the harsh cuts that might lie two years away in their school districts.
Nebraska, which applied its two-year dose of stimulus spending differently from Iowa, appears to have prevented widespread teacher layoffs in the fall.
Of the 11 school districts in the Douglas and Sarpy Counties' learning community, only the Omaha district so far is proposing laying off teachers or other staff for the 2010-11 school year.
Across the nation, the percentage of school districts laying off personnel rose from 8 percent in 2008-09 to 31 percent in 2009-10, according to a member survey by the American Association of School Administrators.
Most learning community districts, however, and several districts contacted outside the Lincoln and Omaha metropolitan areas, plan pre-emptive budget cuts this year: freezing budgets, cutting field trips, hiring fewer teachers than normal, deferring maintenance, postponing textbook purchases and delaying capital projects.
They're preparing for what has been called the funding “cliff effect.”
That's the 2011-12 funding drop when the $234 million that Nebraska received to buoy school budgets through the federal stimulus program runs out. Early state estimates project a shortfall of about $200 million in state aid to schools that year.
The stimulus funding is “a Band-Aid that's about to be ripped off,” said Noelle M. Ellerson, policy analyst for the school administrators association.
The State of Iowa is facing a projected budget gap of at least $400 million, even after 10 percent across-the-board cuts were made last year.
While the Iowa Legislature is working to make the cuts needed to balance the budget, Gov. Chet Culver has proposed providing nearly $2.5 billion to education. That's a slight increase over last year, although schools would still get less than full funding under the state's formula.
In the Harlan school district, which has 1,600 students, Broomfield notified 12 teachers they would lose their jobs.
The Shenandoah district offered early retirement incentives of a $6,000 stipend and a payout of remaining sick leave to try to reduce its staff. The district had some takers but still needs to cut several positions to take $650,000 out of its budget, said Superintendent Dick Profit. Who will be cut hasn't been decided, but all departments will be affected, he said.
Nebraska districts, meantime, are preparing for the worst and hoping for the best.
Lincoln and Grand Island school officials don't plan layoffs or significant budget cuts for 2010-11, but they are planning for the possibility of leaner years after that.
“I think the handwriting's on the wall,” said Grand Island Superintendent Steve Joel, who this month was named superintendent in Lincoln. “We're going to prepare ourselves so we have a chance to live through what will be coming.”
Because staffing makes up about 80 percent of most school budgets, trims elsewhere go only so far.
Douglas County West Superintendent George Conrad said he could cut the district's entire supply budget and save $100,000. A teacher in the district long enough to receive a longevity bonus makes $70,000 when including benefits.
“You begin to understand that asking people to turn off the lights, while it's important, is not going to solve the problem for you,” Conrad said.
Conrad said students likely will see larger class sizes at the elementary and middle schools and fewer elective course options at the high school. Some of those changes will be obvious next year.
For the 2011-12 budget, he said, layoffs are “a real possibility.”
Ellerson from the school administrators association said there's no talk of a second education stimulus of the magnitude of the first. Superintendents also are concerned that much of President Barack Obama's proposed federal spending increases would be for competitive grants rather than for increased funding for existing federal education programs that serve special education and low-income students.
Kyle Fairbairn, fiscal administrator for the Bellevue Public Schools, said the stimulus “kept us alive for a couple of years,” but he doesn't see how the state can make up the money when it runs out.
The Bellevue district usually hires between 60 and 80 teachers a year, but with fewer teachers retiring, officials expect to have about 30 open teaching positions. They'll replace those but not add to the staff.
The Ralston Public Schools, like several other districts, will look at cutting field trips and teacher training, possibly waiting on several building upgrades and delaying textbook purchases. The district also is likely to eliminate positions through attrition for fall.
For growing districts such as Elkhorn, Gretna and Bennington, positions must be added.
The Bennington school board recently approved $500,000 in new staff spending for fall. Elkhorn, opening two schools in the fall, will add $3 million in new staff positions for fall.
This summer, the Omaha district is preparing to lay off teachers for the first time in its history. It is expected that support staff also will be cut likely food service, transportation and teacher aides.
Details on the number of positions are still being worked out.
The district has pledged to stick to policies related to class size, staffing levels in schools with mostly low-income students, and the expansion of early childhood classes.
Cutting positions, although painful, is the most effective way to make up for disappearing state funding. That funding, several superintendents said, was originally intended to buffer the burden placed on taxpayers.
Going forward, however, districts may find it tough to make up for state aid through property tax increases. Many can't go higher because their levies have already reached the state's lid of $1.05 per $100 of assessed valuation. Some superintendents said the Legislature might have to consider raising the limit.
The recession has slowed the vigorous valuation increases that districts relied on in years past to increase tax revenues. State projections foresee only slightly increasing property values for several years.
Nebraska City Superintendent Jeff Edwards, who is considering layoffs for next fall, said raising taxes in a recession “isn't going to get you a lot of Christmas cards this year.”
Property values are not certified until Aug. 20, but over the past two years, property values in his district have come in under his district's 10-year average.
Enrollment has declined, and so has state aid, he said, “so we're kind of facing the cliff right now.”
World-Herald staff writers Michaela Saunders, Paul Goodsell and Elizabeth Ahlin contributed to this report.
Contact the writer:
444-1077, joe.dejka@owh.com
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