Free Fallin'

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July is here and that, to me, means two things. First, my wife and I are expecting our first child early this month. Because it coincides with the Tour de France, I decided that her name will be “Le Tour.” My wife has not signed off on this decision yet. Second, July 1 is only 91 days from September 30, 2011. As we discussed previously, this is the date of the “funding cliff”, the date by which school districts must “obligate” most of their stimulus dollars and fiscal year 2009 allocations.  (A defensive aside:  I’m not really counting the days until the funding cliff arrives. I’m a little more intellectually alive than that. But for the purposes of this blog, please suspend disbelief and pretend I’m that much of a wonk.)*

Check out the cross-post and great content over at Thompson's Title I-derland blog.

When the Obama administration passed the stimulus act in 2009, the administration hoped that the funding would help bridge the divide between the start of the economic downturn and its recovery. It was a Keynesiangamble that clearly has helped the fiscal situation for school districts over the last two years, but it may have been a bridge too short.  According to new report by the Center on Education Policy (CEP), approximately 85 percent of districts that experienced funding decreases in the 2010 – 2011 school year used stimulus funds to compensate for the decrease in funding.

Unfortunately, it appears that an even greater proportion of districts anticipate funding cuts for the upcoming 2011–12 school year and, unlike the previous year, Uncle Sam’s stimulus aid will no longer be available. Beyond that, school districts probably face another year or two of reduced state and local support as state budgets tend to lag market indicators. If the economy begins to revive by the fourth quarter of this year, district budgets may not benefit from that until the 2013-14 school year or later. For economists, “the waiting is hardest part” (let’s see if this draws a Tom Petty cease-and-desist letter).

Is there any upside to this? It all depends on the tint of your rosy idealism. It is an ideal time for school districts to begin a serious effort to clarify how they distribute and manage their revenues. The process for most districts is less than clear. When districts receive funds, they typically distribute their allocations to their schools based on per-staff allocations that are related to per-pupil-enrollment counts. Some funding sources also have particular eligibility requirements and restrictions, as Title I’s ranking and serving requirements illustrate.  The money goes out on the basis of these formulae, and the district leadership can fill gaps or meet particular school needs with additional discretionary allocations.  According to some education finance experts, the process makes it difficult to report how the funds are used in each school on a per student basis. For example, it is hard to report how much each school spends, per student, on extracurricular activities relative to core academic programs. It is harder, then, to connect such financial accounting to student academic progress in a way that informs the school’s stated academic’s priorities.

The dearth of such fiscal insight is unfortunate. Over the next few years, this type of information would be invaluable as district leadership faces critical decisions about their academic investments due to tight budgets. (I won’t even get into the issue of fixed-costs for a school district: salary and benefits. That, too, compounds the difficulty.) It’s likely that the next few years will drive superintendents crazy enough to demand clearer financial analysis. In fact, I’m sure it is already happening in many places, more than I realize.

That begs the question, though: Where? Is this information accessible via a link? How do we go about learning more and making such practices more common?

*Andy Brownstein over at Thompson make the point that, "The first stage is always denial." (Cute, Andy. Real cute).  


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