Economy up, but school budgets still precarious
Forecast speakers recommend focus on human cost of cuts
Published: January 20, 2011
The economy seems poised to turn around, economist Christopher Thornberg predicted during CSBA’s Forecast Webcast Jan. 13, although most Californians probably won’t feel like a recovery is under way for a while yet. At best, school funding will stay level—but only if voters approve an extension of temporary taxes.
“It’s going to be kind of a wild ride again,” said CSBA Assistant Executive Director for Governmental Relations Rick Pratt, who, along with Thornberg, the founding principal of Beacon Economics, joined CSBA Interim Executive Director Jeff Vaca and Principal Legislative Advocate Erika Hoffman for the annual discussion of economic trends and Gov. Jerry Brown’s state budget proposal.
“The recovery—a real recovery—is here at last,” Thornberg concluded, basing his appraisal on solid economic growth nationally in the fourth quarter of 2010, rising exports, business investment and consumer spending that has returned to normal levels. In California, the housing market will remain sluggish while excess inventory gets absorbed, but a second wave of foreclosures now seems unlikely, he said.
Thornberg’s hopeful assessment tempered economic projections from the Department of Finance and the Legislative Analyst’s Office, both of which expect about 1 percent less growth in the GDP—the U.S. gross domestic product—than Thornberg and other economists do.
On the other hand, job growth remains troublesome, the economist said, especially for Californians who have been unemployed for a long time.
“Education now is more important than ever, and it’s certainly not the time for us to be slashing budgets in K-12 and the college level,” Thornberg insisted. “We need these educational institutions to help these folks reintegrate.”
Budget preserves K-12 funding
The budget proposed by Gov. Jerry Brown does adopt a balanced approach to solving an estimated $25 billion budget deficit, with 47 percent coming from spending cuts and 46 percent from revenue increases. “You can’t get any more balanced than this,” Pratt noted.
The budget holds K-12 spending at roughly the same level as in 2010-11—with one major caveat: Voters must agree to extend temporary taxes approved in 2009 for five more years. Should voters reject that extension—or should legislators fail to act soon to send the question to the ballot this June—schools will lose about $2 billion in Proposition 98 funding in 2011-12, the LAO surmised.
Given that uncertainty, local educational agencies may have a difficult time determining which teachers they can afford to retain before the March 15 deadline for sending layoff notices. “It would be prudent to have a back-up plan,” Pratt said, suggesting LEAs hope for the best but plan for the worst.
The governor’s budget also defers another $2 billion in Proposition 98 K-12 funding into the 2012-13 fiscal year to help with cash flow problems, making a total of $10 billion in late payments to K-14 schools since 2007. Many schools will again have to borrow until those funds come in, further exacerbating their budget woes, Pratt pointed out.
Advice for school leaders
CSBA President Martha Fluor e-mailed in to ask the panel for three practical ways school board leaders can educate legislators and other stakeholders about the impact of the fiscal crisis.
First, Pratt advised, when discussing budget cuts with legislators, board members need to convey the human cost of those cuts on students. “It can’t be just a matter of numbers,” he said, because legislators will say “See, you can make the cuts. … We have to share the numbers, but we also have to share the stories, what’s behind the numbers. What’s the human impact of the decisions that have been made?”
Hoffman suggested local boards can engage decision-makers through ongoing conversation with parent groups, who also need to understand the impact of proposed cuts. “They’re actually going to be your best advocate in approaching that member of the Legislature,” Hoffman said. “They can relate their story of what’s happening to their child at a school site because of what the Legislature’s done.”
Thornberg urged education advocates to help change the rhetoric about education funding. “Education is not an expense, it’s an investment,” the economist reminded his listeners.
California remains a desirable place to live and operate a business, Thornberg continued, but employers need access to a highly skilled work force. Finding qualified employees remains a problem in California due to large numbers of under-educated migrant workers and high school dropouts. Turning that condition around through education will be key, Thornberg said: “If you want to make this economy grow, stop worrying about tax incentives and start worrying about workers.”
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