Behind the Scenes of a Recession in K12

By now, you have probably felt or witnessed the effects of this global recession on your local community. As other industries recover, the impact on school districts will be much longer. We hope this article will help you understand the challenges facing your district’s leadership and how you might be able to help.

What are school districts facing?

Recessions affect K-12 schools differently than other industries. School districts tend to recover much more slowly than the rest of the economy - despite herculean efforts from their finance and leadership teams, you should prepare for extended effects on your district’s revenue.

In 2016, seven years after the Great Recession of 2008, education revenues were still lower than pre-recession revenues in 20 states, with almost half of those states at least 10% below previous levels.

Consider how your district is funded (we’ve got an infographic for that!) and how much of your district’s revenue comes from property taxes versus sales taxes. Any tax caps in place - which could mitigate a recession’s impact - might slow your district’s recovery. Though every state has a slightly different formula, you can learn more about how state and local dollars fund school districts here. 

Changes to your taxes could have a dramatic impact on your local school district. During a recession, sales and income tax revenue take the biggest hit - people are buying less because of reduced incomes. Though property tends to be more stable, any cuts in aid typically affect low-income districts most acutely. With less funding available from these taxes, schools will be forced to do more with less. As a consequence, cuts may be made to programs, perks, or even staff. Did you know that, on average, salaries represent 80-90% of a district’s spending? While layoffs are always a last resort, even small cuts in revenue might see school districts forced to consider this unfortunate possibility.  

Many districts facing these economic challenges also see a dip in enrollment as families look for lower costs of living, further lowering available aid

Decisions regarding the allocation of funds aren’t just up to your district’s Superintendent. Other administrators, policymakers, school board leaders, and county/district officials are involved as well. 

 

How can I learn more about what’s coming for my district, specifically?

If you haven’t already, use this time to familiarize yourself with leaders in your state and local budget offices as well as your local and state assessors. Budget officers will be your source of updates on short-term revenue projections, reductions in state aid and timelines for decision-making. Assessors will be evaluating revenue in the future if housing prices start to fall and property taxes are affected by the recession.  

Additionally, consider reaching out to local university economics professors via email or social media to ask for additional insights or explanations of common themes that are affecting your day-to-day activities. 

Most importantly, get to know your state and local policy-makers, who will ultimately make decisions about how to move forward. This group is generally required to be accessible for public comments and feedback on any major policy changes.

 

What can I do?

By staying active and engaged, you can help make sure that education funding is protected in the face of any cuts by advocating on your district’s behalf with lawmakers.

But first! Be sure to brush up on the basics of education finance. Here are a few resources to get you started:

Get involved with your local school board and parent/community outreach groups to stay informed on the budgeting decisions. While districts will not be able to solicit public input on all proposed decisions, being present and active when possible will ensure that your voice is heard regarding the decisions that matter most to you.

 

About the Author

Meghan Stanton

Meghan is a Business Development Specialist at Allovue, supporting districts all over the country as they face challenges and opportunities on the path to resource equity. Before joining the Allovue team, she spent several years as a marketing professional working with nonprofits in Baltimore City, and is still deeply involved with local arts community.