Schools fear budget crash

By Nancy Badertscher and James Salzer


The Atlanta Journal-Constitution

School systems in DeKalb County, Dublin and West Georgia’s Haralson County are offering a glimpse of the future for many districts across the state.

And it isn’t pretty.

DeKalb officials are considering big layoffs, program cuts and school closings as they grapple with a deficit budget that’s expected to top $88 million.

Laurens County schools in Middle Georgia laid off 45 employees last year as part of a strategy to keep their deficit down to a manageable $2.8 million.

And in Haralson County, teachers collectively chipped in $147,000 of their own money when the school system ran short on funds.

Last June 30, the end of fiscal 2009, a total of nine school districts were running a deficit. Another 10 would have been if not for federal stimulus money.

More are expected to be on the financial ropes by June 30, the end of the current fiscal year.

“It wouldn’t surprise me for there to be twice that many by the end of this year,” said Herb Garrett, executive director of the Georgia School Superintendents Association. He called the growing number of indebted school systems “unprecedented.”

After several years of steep state budget cuts and a drop in local property tax revenue caused by the recession, dozens of school systems, most of them rural, now find themselves in previously unthinkable straits. And school leaders are bracing for the situation to get worse. More state cuts will come in 2011, the same year that federal stimulus funding starts to drop.

For students, the growing fiscal crisis could mean shorter school years, more crowded classes, older textbooks and no field trips. For parents, it could mean higher property taxes. For school officials, it will likely mean managing systems perpetually short of money and, in some cases, laying off staffers.

“There is not much of a ray of sunlight right now,” said Gayland Cooper, superintendent of Rome city schools. “We’re just trying to survive a horrific budget crisis.”

State Department of Education officials warned lawmakers at budget hearings last month that the state may have to deal with districts facing the kind of money problems that they’ve rarely if ever seen before.

“There is no provision for the state to step in and take over (bankrupt systems),” said Scott Austensen, the state Department of Education’s deputy superintendent for finance and business operations.

“We are significantly underfunding education,” he said.

Rural districts struggle

In these tough economic times, school board deficits, like home foreclosures, are becoming more common.

“In the past, it was odd to see a board in a deficit,” said Ben M. Riden Jr., deputy director of the Georgia Department of Audits.

Districts with deficits are required to provide the state with “corrective action” plans to show how they will break into the black. They often borrow money to make ends meet. Officials say more districts than ever face that prospect.

Not all districts are in the same shape. According to reports filed with the state Department of Education, the city of Atlanta system had $153 million left over at the end of fiscal 2009. Others had tens of millions of dollars. In total, systems across Georgia reported a fund balance of $1.46 billion in the middle of last year, far larger than what the state had in reserves.

However, most of that money was in big-city or suburban districts, not in rural Georgia, where dozens of districts have been struggling to get by. And school districts have since then dealt with a new wave of state budget cuts that led to teachers being furloughed, jobs being eliminated and talk of cutting the school year to save money. Officials say they expect lawmakers to propose that the school year be cut statewide from 180 to 170 days to save money.

Stimulus money provided a financial cushion to all 180 school systems in Georgia in 2009, though the amount varied from about $28,000 in Middle Georgia’s Taliaferro County to $15.2 million for Gwinnett, the state’s largest school system. The same is occurring this school year.

Congress approved about $100 billion for education nationally in the stimulus package last year to make it easier for districts to fund schools as state and local revenue plummeted during the recession. However, officials in many states are already preparing for massive spending cuts that are likely when the federal money runs out in the next year or so.

Garrett, of the superintendent’s association, said no one will like what happens when the stimulus money is gone.

“Then the three choices the school systems have are pretty clear: It’s going to be raise local taxes, or larger class sizes, or fewer days of school,” he said. “This isn’t calculus. This is arithmetic.”

Some say rural school systems could have avoided some of the gut-wrenching cuts if local school boards had the political will to raise taxes when state dollars for public education started shrinking a few years ago. Others say some school systems were hamstrung by tax-rate caps or don’t have the tax base from which to raise enough money to offset the lost state money.

In small Webster County, near the Alabama line, for example, the school board could raise the property tax rate to the 20-mill ceiling and “still not meet the need,” said Sen. George Hooks (D-Americus), former longtime chairman of the Senate Appropriations Committee. He represents many poor school districts.

“Stimulus money is critical,” Hooks said. “Thankfully, it has infused money into some of those systems.”

The financial problems worry parents.

“It’s a cloud hanging over not only our school, but schools in general,” said Bill Armstrong, president of the Huntley Hills Elementary and Montessori School parent council in Chamblee.

He and other parents at Huntley Hills are fighting to save their school’s Montessori program from budget cuts. They’ve even suggested increasing class sizes and other steps they believe could save money, Armstrong said.

With its diverse student population, he said, Huntley Hills “should be the poster child for the system, not the target in a budget fight. It’s really frustrating.”

The parents are organized, teachers are worried, and students are mystified, he said.

“A lot of the kids ask: Why do we have to go to meetings to save our school?”

More cuts ahead

DeKalb County school officials are forecasting an $88 million deficit at the end of the current fiscal year and are making plans to close four schools and cut jobs, including those of 15 top administrators.

DeKalb is a bit unusual. Most of the other districts in big financial trouble right now are in small towns. Among metro districts, DeKalb had a relatively small fund balance — money left at the end of the school year — as the state headed into the recession. Plummeting property values and tax collections have had a profound impact.

Some other metro Atlanta districts cut potential shortfalls by furloughing teachers this year, as many systems did across the state.

More commonly, the big financial problems are in places like Laurens County, where Superintendent Jerry Hatcher said officials hope to have their $2.8 million deficit down to $1.8 million or $1.9 million by June 30.

“If the cuts will quit coming, we’ll be out [of the red] in three years, maybe two,” Hatcher said.

But it’s no easy task for a system that’s seen its state funding slashed $11 million since 2003 and already ranks among the lowest in the state in per-student spending. Hatcher said his system had to borrow $4 million last year on a $40 million budget and is expecting to be “back at the bank before the end of the month.”

Still, cuts were necessary. Besides staff reductions, the system’s put off buying new textbooks, packed more students in classes, shortened the school year from 180 to 175 days and is looking at a three- to four-mill tax increase, Hatcher said.

“We’re about to the point where the decrease in the revenues from the state‚ in my mind, (is) actually on the threshold of affecting student achievement,” he said.

In the spring of 2009, the Haralson County school board was looking at either cutting programs or staff to balance the budget.

Teachers came to the rescue, said Kersha Cartwright, school system spokeswoman. “Some wrote a check to the system, some did a payroll deduction.”

But plans for more cost-cutting are in the works, with a survey that’s gauging public support for a four-day school week or a 160-day school year, Cartwright said.

“We’ll be in big trouble next year if we don’t look at cutting somewhere else,” she said.