More than a decade later, thousands of school districts still have not recovered from the aftermath of the Great Recession, and many remain especially vulnerable should another recession happen soon, according to two recently released studies.
The economy remains especially strong right now, and states are on track to increase their K-12 budgets by hundreds of millions of dollars this next school year. But even with this year鈥檚 increases, some still have a long way to go before they鈥檙e funding schools at the same level they were before the great recession that peaked in 2008, .
The Great Recession, which sparked a steep decline in sales, income and property tax revenue, wreaked havoc on school districts, forcing mass layoffs, hiring freezes and the shuttering of extracurricular programs.
Despite years of states pumping more money into schools, at least 22 states plus Washington D.C., up through 2017, still had not reached pre-recession funding levels, according to the CBPP. The think tank frequently advocates for more school funding.
In Alabama, Georgia, Oklahoma, North Carolina, Nevada, Arizona and Florida, funding remains more than 10 percent below pre-recession levels, according to the study.
鈥淚t鈥檚 important that we fund our schools adequately,鈥� said Mike Leachman, CBPP鈥檚 director of state fiscal research. 鈥淥ur schools are educating the workforce of the future. There鈥檚 lots of evidence pointing toward the importance of boosting educational outcomes for economic growth. And the evidence is clear that funding matters for the outcomes for kids.鈥�
The threat of another recession has school to judiciously spend any extra money they get this year. Set aside money in an emergency fund, they advise, and think twice before giving teachers permanent raises that might be unsustainable.
Separately, released this week argues California districts could lose anywhere from $4 billion a year in a mild recession to $15 billion a year in a severe recession.
California鈥檚 school districts are disproportionately dependent on sales and income taxes which are more volatile than property taxes, according to the study.
"[Our school districts] are typical in the sense that we鈥檙e very dependent on the economy,鈥� said Patrick Murphy, the policy director and senior fellow at PPIC. 鈥淲e ride the rollercoaster, but the slopes on our roller coaster are a lot steeper.鈥�
California has close to a $22 billion surplus, and the state legislature is in an entrenched debate over whether to spend the money or save it. Many in the state are urging the state to set the money aside in an emergency savings account in the case of another recession, but there have been teacher strikes throughout the state over stagnant teacher pay and other cost-cutting measures and several district administrators have asked that the governor use the money to pay down districts鈥� pension debt.
The PPIC warns that the federal government, considering its recent tax cuts and climbing deficit, may not bail school districts out in the next recession the way it did under the American Recovery and Reinvestment Act .
It urges the state to continue setting aside reserves, adding to the $30 billion currently in that account, create 鈥渨hat if鈥� scenarios in case the state falls into another deficit, and look for strategic investments that may be available during a recession.
Murphy said it鈥檚 widely known that California鈥檚 school districts would be badly damaged in the case of a recession. 鈥淲e鈥檙e just simply trying to put some scale around it and shine some flashlights around at spots that haven鈥檛 gotten much attention,鈥� Murphy said.
Illinois and New Jersey might actually be worse off than California. A from the Moody鈥檚 Investors Service found that the two states are the least prepared to weather a recession and risk fiscal insolvency. The analysis points out that the state鈥檚 pension obligations exceed the amount of money it has in reserves. Louisiana, New York and Pennsylvania also have little money in their savings, the report found.
Image: Getty.