No Easy Decisions
Dec 1, 2010 12:00 PM, By Mike Kennedy
As schools and universities embark on another year of tight finances, budget decisions become more difficult and painful. Here are 10 ways some are coping.
The pervasive financial difficulties that have besieged thousands of schools and universities for several budget cycles have forced administrators to look deeper and harder for places where they can find savings and minimize the damage done to educational quality.
The federal stimulus funds approved in 2009 have helped schools and universities survive difficult financial patches in the short term, but those funds are drying up, and the economy still hasn't rebounded sufficiently to pull education institutions out of fiscal distress.
Many of the steps schools and universities have taken in the past to trim expenses already have been carried out, and some actions no longer may have enough impact to make a dent in the deficits administrators must address. More and more institutions are looking at cost reductions that may disrupt communities and undermine student success: laying off employees, eliminating programs, shutting down facilities.
Here are 10 ways education institutions are coping with budget woes:
1. Consolidation
Leaders in many states view school district consolidation as an area where money can be saved by eliminating duplicated teaching, administrative and classified positions. Lawmakers often have tried to encourage school district consolidations, but the opposition from those communities that would lose their autonomy has made it a difficult proposal to pursue.
Some states have large countywide systems (and Hawaii has one statewide district), and many districts have been unified into larger entities over the years. But in other states, tiny systems with small numbers of students continue to operate. Federal statistics from 2008-09 show that more than 8,700 school districts had fewer than 1,000 students; and of those, 5,990 districts had fewer than 500 students.
A legislative audit earlier this year in Kansas suggested that consolidating some of the state's 293 districts could result in savings from $15 million to $129 million. A 2010 Brookings Institution report recommended that Ohio eliminate about a third of its 611 districts through consolidation. A Michigan State University study projected that if the 550 districts in that state were reconfigured along county lines, the state would save as much as $612 million a year.
2. Class size
Education reformers have for many years embraced — and some studies have provided evidence for — the premise that having fewer students in a class will lead to better student performance. But committing to smaller classes means hiring more teachers for the additional classrooms needed.
As budgets shrink, some are questioning whether having small classes is the most efficient way to allocate scarce education dollars. Former Microsoft chairman Bill Gates, whose foundation has poured millions into education reform, says class-size reduction is too expensive.
"One of the most expensive assumptions embedded in school budgets is the belief that reducing class sizes improves student achievement," Gates said in a speech last month to the Council of Chief State School Officers. "This has driven school budget increases for more than 50 years. We've gone from a student-teacher ratio of 26:1 in 1960 to 15:1 today. But smaller class sizes have not correlated with rising achievement. California spent $20 billion reducing class sizes, and student achievement did not change."
Gates suggests money saved by raising class sizes could be redirected to pay for high-quality teachers that are able to lead larger classes.
In Florida, many administrators and government officials were hoping that voters in the state would approve a change in the law that mandates class sizes and give school systems more flexibility in how many students are permitted in each classroom. But voters decided to keep the strict mandates for class size in place.
3. Layoffs
Salaries and benefits are the largest expense in an education institution's operating budget, so when sizable cuts are required, many begin looking at layoffs. In many cases last year, states were able to avoid school layoffs because of stimulus funds from the federal Recovery Act. But without that money, states and the education institutions they support are facing a "funding cliff" that could send institutions plummeting into a financial abyss.
In the Los Angeles district, the nation's second largest, layoffs have begun. The system has eliminated the jobs of more than 1,000 classified employees at the start of December. In North Carolina, state budget officials asked the office of public instruction to project the effect of statewide cuts of as much as 10 percent. Officials estimate such a reduction would result in 5,300 teacher layoffs, as well as 13,000 teaching assistants.
In higher education, the University of Phoenix, a for-profit, mostly online institution, announced that in anticipation of a large decline in student enrollment, it is laying off about 700 employees, mostly people working in admissions.
4. Closings
Shutting down a school can be devastating to a community, but many education institutions are finding that their financial condition is so dire that closing a facility is the only way to make the spending cuts necessary to balance a budget. Some institutions that have put off difficult closing decisions in the past have found themselves with underutilized buildings that they no longer can afford to operate.
Many schools are closing or considering closing numerous campuses. The Roman Catholic Archdiocese of New York has proposed closing 31 elementary schools and a high school next year; the Charlotte-Mecklenburg (N.C.) board has voted to close 10 schools.
Closing campuses enables institutions to operate the facilities that remain open more efficiently. Education institutions also can get additional revenue by selling schools they no longer need. Earlier this year, the Detroit district, which has closed more than 150 buildings in the last decade, ended a longstanding policy and agreed to sell unused campuses to charter school operators. In the Kansas City (Mo.) district, which closed more than 20 schools earlier this year, officials also have indicated that they have dropped their reluctance to sell or lease empty schools to charter operators.
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