Putting the financial squeeze on schools: once sacrosanct, even K-12 is feeling the pinch of a stagnant economy.

• Author: Smith, Steve

It doesn't seem that long ago when many states had enough money to cut taxes, bolster rainy day funds and increase education funding.

But, oh, how times have changed. Education finance is currently facing a "perfect storm," with a combination of state budget crises, the costly No Child Left Behind (NCLB) requirements, and the threat of school finance lawsuits always lingering.

Many states cut K-12 during FY 2003, and forecasts for FY 2004 do not look promising. The storm also has resulted in fierce battles in and outside state capitols across the country as legislatures wrestle with hard choices over how to approach education in these new challenging times.

K-12 education, historically the "sacred cow" in budgets due to state constitutional language and the fact that it is a very popular public program, has not been immune from cuts during this worst economic time for states in decades. In FY 2003, at least 21 states cut K-12. Nationwide, the increase in K-12 spending is estimated to be less than 1 percent for the year.

When cutting education, the rule of thumb is to cut first what you can postpone. That means large textbook purchases, new facilities and even tests within accountability systems. As the budget crises continued, states targeted cuts that would hopefully not affect classrooms--getting rid of support staff in state education departments, regional consortiums and teacher bonus programs.

States pay for education in a variety of ways. Local districts in some states provide a large percentage of the funding, while in others most of it comes from the state budget. Different tax structures are used in every state. Nationwide, approximately 49 percent of education is paid by states, 43 percent from local sources and 7 percent to 8 percent from the federal government.

Some states were forced to make cuts that could be felt at the classroom level during the 2002-2003 school year. Headlines began to appear in newspapers across the country reporting school days cut in Oregon, four-day school weeks in Arizona and Wisconsin, and teachers also serving as janitors in Oklahoma.

"The facts are that the budget crisis is at least continuing and is likely to get worse. States are reluctant to raise taxes, and cuts that did not directly affect the classroom have already been made. The result is that many people are afraid that additional cuts will affect classrooms in a negative way," says R. Craig Wood, a leading education finance expert from the University of Florida.

Amidst all this discouraging news, the majority of states at least have maintained K-12 funding levels or increased funding slightly and have no future plans to make cuts. Some legislators want to take K-12 education off the table when it comes to budget cuts.

"In Illinois, I proposed funding education first. Find out how much of the pie education needs, and then fund everything else with what is left. The reason for such an approach is that public opinion polls, the governor and legislature have again and again said that education is our top priority and if that's true, then we need to fund education first. In addition, it's our constitutional...