The State Board of Education did what it—along with all other state agencies—was directed to do by Governor Rell in preparation for the upcoming state budget session. At its Wednesday meeting the Board adopted a budget resolution that included the required 10% reduction options from its current services level budget for 2008-09. The Board made it clear that it believed the reductions, should they occur, would simply pass the education share of the economic crisis on to municipalities. With local ability to again shoulder the additional burden very much in question, education budgets throughout the state will be in great jeopardy unless the cuts at the state level can be avoided or at least minimized.
A little simple math tells the story. I estimate spending in Connecticut’s local public schools for core programs—regular education, special education and transportation—to be around $7.2 billion. This estimate is based on 2006-07 actual figures, the latest published on the SDE website, with increases for 2007-08 and 2008-09 factored in based on the growth rate for these programs over the prior three years. The figure is probably low, but it’s close enough for our purposes. Keep in mind that these core services do not include things like capital construction, debt service and adult education.
Spending for these programs has been increasing between $220 and $250 million per year statewide. Let’s use $250 million as the likely increase necessary for 2009-10 to maintain existing services. My guess is that the average annual cost increase from local sources since 2004-05 has been between $125 million and $150 million. It would have been higher but for the significant increase in ECS ($260 million) over the past two years.
Now look what happens if the state cuts ECS aid in accordance with the worst case 10% budget reduction option. Towns would actually receive $191 million less in ECS than they are being paid this year. That means they would have to come up with that amount locally just to keep spending at the exact 2008-09 level. If local budgets in 2009-10 were to be increased to meet the costs necessary to maintain current service levels, an additional $250 million would be needed—all from local sources. Put those two numbers together and towns may be faced with a $441 million dollar increased price tag for education—3 times the figure they have had to meet on average over the past 4 years.
Anybody see a way for that to happen? I’m thinking no. If these cuts happen, there does not seem to be a way for most towns to make the cuts work. They may end up seeking relief from the Minimum Budget Requirement statutes—and if that law gets changed…well, that’s a good topic for my next post.
Hi Bob:
I wonder if you have any experience with early retirement incentives or salary freezes as an alternative to layoffs? My guess is that it only delays the inevitable. They may be better alternatives than laying off staff. Any thoughts on this catastrophic situation?
Kathy
Kathy,
I am on my way out the door for a brief trip and I don’t want to answer your question in haste. It is a good one and I do have a couple thoughts. I will give you a proper response late this week.. Thanks for writing in.–Bob
Kathy,
My main experience with early retirement programs is from my employment with the State Department of Education. In fact, when I left in 2003, it an early incentive plan was in effect. Critics of retirement incentives point out that most of the vacancies are refilled so that cost savings in the long run tend to be negligible. In addition the loss of so much experience at one time can be operationally disruptive in the short term. The key factor in favor of retirement incentives is that even though the salary cost savings may only be short lived, the savings occur at time they are needed most since these types of plans tend to be implemented during financial crisis periods. In the private sector of course, it may be more feasible not to refill vacancies until the economy warrants increasing production again. In education that is not realistic since the kids will all be back in September and positions must be refilled for the most part. As the desperate search for any savings that will help balance the upcoming budget intensifies, the willingness to consider ERIPs seems to increase as well, despite the downsides.
Bob,
Do you or any readers know of examples of cities/towns that have found innovatiove ways to reduce school (or municipal) spending without hitting quality of service hard?
I’m thinking that with the huge number of local goverments facing state funding cuts, SOME effective out-of-the-box ideas must have emerged.
Is there anything like a central clearing house for that kind of ino?
Thanks!