Newsom's Proposed School Budget Cuts Could've Been Worse, But They're Still In 'Great Recession' Territory

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In 2009, as the Great Recession decimated California's state budget, Scott Petri became one of the 40,000 public school teachers to lose their jobs.

The experience cost Petri dearly. He kept teaching -- but as a substitute, for much lower pay. He lost his house to foreclosure. It took four years for Petri to find a permanent teaching job again.

"We felt like we'd finally built back up to where we were before," said Petri, now a social studies teacher at Los Angeles Unified's John F. Kennedy High School. "Now, is it going to collapse again?"

It may be too soon to tell how much the coronavirus recession will feel like the Great Recession in California schools -- but on Thursday, Gov. Gavin Newsom said schools can't be entirely spared from the pain caused by sinking state revenues.

Newsom unveiled a new state budget proposal calling for $6.5 billion in cuts from California's main K-12 funding formula -- a 10% decrease -- to help offset a $54.3 billion shortfall.

The news could've been worse for schools. Because California law closely ties education funding with state revenues, schools could've lost billions more. But Newsom proposed a series of temporary measures -- including injecting another $4.4 billion of federal coronavirus relief money directly into district budgets -- to backfill some of the revenue loss.

Another silver lining: Newsom also refused to roll back a proposal for a 15% increase in spending on special education, which is funded separately from the rest of the K-12 program.

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INTO GREAT RECESSION TERRITORY?

Newsom said federal lawmakers could prevent COVID-19 era cuts from entering Great Recession territory "with a stroke of the President's pen."

If the federal government delivers on a new, trillion-dollar-plus aid package for state and local governments, Newsom's proposal would restore -- among numerous other items -- the $6.5 billion in funding for the state's Local Control Funding Formula for K-12 schools.

Even if the federal government does not come through, cuts to schools may not be inevitable.

On a conference call with reporters, state Assembly Budget Committee Chair Phil Ting (D-San Francisco) said lawmakers "have to look at some other revenue options" -- but Ting noted that, if recent history is any indication, lawmakers are likely to leave the final decision on a tax increase to the voters.

Already, an initiative will appear on the statewide ballot in November that would repeal Proposition 13 limits on commercial property taxes, which could free up billions in funding for local governments, including schools.

And school districts, labor unions and other advocacy groups have begun to push back against proposed cuts.

In a statement, California Teachers Association president E. Toby Boyd warned Newsom's budget "will lead to cuts to vital student programs, educator layoffs, furlough days and pay cuts just like it did during the last recession."

L.A. Unified School District Superintendent Austin Beutner has gone so far as to say drastic state budget cuts "would make it impossible for schools to safely reopen this fall."

"This budget would be insufficient in ordinary times," said California School Boards Association president Xilonin Cruz-Gonzalez, "and is less than what is required for most schools to reopen safely during a pandemic -- and if schools don't reopen, our economy can't fully reopen."

In fact, reopening campuses will likely drive up schools' operating costs -- particularly if staff must clean campuses more frequently or officials require masks or protective gear for everyone on campus. (During the Great Recession, nurses and custodians were cut.)

"Increasing class size this time around isn't going to be an answer. We're going to have to decrease further if we're going to maintain any physical distancing," said Michael Fine, CEO of the Fiscal Crisis Management & Assistance Team, an independent state entity that helps financially-troubled school districts.

All that said, if the legislature enacted Newsom's proposal, K-12 education and the state's community colleges -- which are funded through the same state formula, known as Proposition 98 -- would see a roughly 10% loss in overall funding between 2019 and next year.

At the outset of the Great Recession, Proposition 98 funding dipped by 13%.

With a similar amount of funding at stake, it's worth revisiting what happened to schools a decade ago. Even if the grim history isn't bound to repeat itself this time around, a look back might offer some context for what schools face going forward:

DURING THE GREAT RECESSION...

TEACHERS WERE LAID OFF -- AND MANY DIDN'T COME BACK

When the Great Recession hit, even six years in the classroom wasn't enough seniority to spare Scott Petri from a pink slip.

Most of Petri's classmates from UCLA didn't fare much better. Petri graduated from a teacher credentialing program in 2003 with 30 other new teachers. Most of them were laid off, too -- and today, Petri counts just three of his classmates who are still teaching.

"That's the sad thing about this," Petri said. "Sometimes these layoffs take the most passionate people ... and because they are interesting and passionate and engaging, they have other opportunities in other fields. Sometimes you lose your best people."

Between 2008 and 2010, more than 120,000 teachers nationwide left or were forced out of their jobs. Since then, only about 80,000 teachers have returned, according to a report from the Learning Policy Institute.

"We permanently damaged the teaching profession, in my opinion," said John Gray, who runs the lobbying and consulting firm School Services of California.

Could the COVID-19 recession bring similar job losses back to California schools? State officials said that decision will be up to local school districts -- and Gray and Fine say it's probably too soon to tell whether layoffs are coming in the immediate future.

The normal deadline to begin the teacher layoff process was March 15. Severe budget distress is supposed to open a new layoff window in August. But during the Great Recession, Fine and Gray said state lawmakers sometimes took specific action to close that window.

SCHOOLS CLOSED OR ENDED PROGRAMS

Fine ticks off a depressing laundry list of Great Recession impacts: School campuses were closed. Fine arts programs were slashed. Access to Advanced Placement and gifted programs was limited.

"You cut any and every extra program -- and 'extra' here is a term of art, not a term of science," he said. "What's extra to some is not extra to others."

"Our cuts were so deep," added Gray, "that most school districts had to pretty much stop doing anything that wasn't required by law."

Even sports teams were reduced, Fine remembered, with schools fielding perhaps only a varsity and maybe junior varsity squad: no middle school or freshman teams.

"The 'extra' stuff," Gray pointed out, "gets a lot of those kids to come to school."

TEACHERS WHO WEREN'T LAID OFF FACED NEW BURDENS

During the Great Recession, many schools shortened their calendars by as many as five days -- to the minimum of 175 instructional days required for teachers to qualify for a year of service on their pensions.

Teachers experienced those days as unpaid furloughs. They also found themselves digging deeper into their own pockets to purchase books or classroom supplies.

And teachers remember these impacts hitting hardest in the highest-need schools, which often had the least-experienced teachers -- who were most vulnerable to be laid off.

Could the coronavirus recession hit the highest-need schools harder?

In Sacramento, there will be debate about whether to tweak the state's method for distributing K-12 dollarsn during the shortfall. California's Local Control Funding Formula essentially funds schools on a per-student basis -- but also provides extra "supplemental and concentration grant" dollars to schools serving more low-income students, English learners and foster youth.

During Newsom's press conference announcing the budget, the governor suggested his proposal would cut only the base funding amounts while leaving the supplemental and concentration grant amounts alone -- though the documents his team released does not include language describing how this would be accomplished.

"The state should continue to honor its promise of doing more for the neediest students and otherwise cut only from base funds so that all districts will experience cuts to the core equally," read a statement from the Partnership for the Future of Learning, a coalition of California advocacy organizations.

But Fine said there are risks to this approach.

Wealthy districts rely almost entirely on the base grant, and "they'll go under quickly" if the cuts aren't evenly distributed, Fine said: "There has to be a balance here."

Michael Ramirez, a first-grade teacher at 20th Street Elementary School just south of downtown L.A., teaches a lesson in his bungalow classroom on Dec. 6, 2017. (Kyle Stokes/LAist)

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THE STATE BENT A LOT OF THE RULES FOR FUNDING DISTRICTS

The proposal Newsom unveiled Thursday features the return of a state budget tactic schools saw often during the Great Recession: payment deferrals.

Dozens of times throughout the crisis 10 years ago -- and well after it, in fact -- the state basically decided to put off its monthly payments to school districts.

While this may have eased a cash-flow problem at the state level, it passed that cash-flow problem to school districts, who were basically forced to put some month-to-month operating expenses onto a giant credit card -- and to cover the costs of borrowing that money.

Still, Gray said schools preferred this to a permanent funding cut because it saved jobs.

"Even though it's a pain," Gray said, "and you have to go through a lot of rigamarole to get it done, I'd rather have to go out and borrow money for cash flow purposes than laying off ... teachers or ... classified staff."

This time around, Newsom proposes $5.3 billion in payment deferrals through 2021-22. This is part of how he proposes to close the gap in Proposition 98 revenues.

Some schools are entering this crisis with money stashed away.

Collectively, California schools have a total of $12.8 billion in unrestricted reserves. The state's Legislative Analyst's Office reported, though, that "not all of this funding would be available for schools to maintain a higher expenditure level of revenues declined."

Some districts are already likely dipping into these reserves because of the coronavirus response. LAUSD already faces an estimated $200 million in unbudgeted COVID-19 costs, and for weeks, Beutner has been pestering federal, state and even fellow local governments for reimbursement of the district's crisis costs.

"Today," Fine said, "we have a revenue challenge and an expense challenge in that we have extraordinary expenses going on as well that we didn't have as we entered the Great Recession."