How the coronavirus shutdown will affect school district revenues
Why? More than ever, school districts rely on state money. In many states, much of the state revenue comes from income and sales taxes—both of which abruptly collapsed when states shut down most business activity. While most districts will see little impact on their 2019-20 budget, it’s next year (2020-21) when leaders should expect state revenue shortfalls to hit district budgets.
Already, states are draining their rainy-day funds to address critical pandemic needs. Looking to next year, K-12 education will be competing for fewer state dollars against priorities like emergency public health, Medicaid, and higher education (which tends to see enrollment rise as the economy falls). At about $270 per K-12 pupil, the recently passed federal stimulus package will likely fall far short of filling the inevitable fiscal gaps.
It wasn’t always the case that school district funding was so tied to the economy. Local schools used to be fairly insulated from economic downturns because they relied largely on local property taxes, a highly stable revenue source. Of course, funding schools on property wealth makes for huge gaps between wealthy and poor communities. So, in the name of greater funding equity, most states now play a much bigger role in funding schools. The graph below demonstrates that in all but seven states, the share of K-12 revenue coming from state sources has grown during the most recent decade for which we have data. (Mobile users: Click here to open this figure in a new tab.) CONTINUE READING: How the coronavirus shutdown will affect school district revenues