College of Education > News and Publications > News: July - Sept. 2011 > Ailing Financial Conditions of School Districts Likely to Continue, Says Hartman

Ailing Financial Conditions of School Districts Likely to Continue, Says Hartman

Expect financial hardships of school districts to continue, says Penn State's Bill Hartman.

by Joe Savrock (July 2011)

UNIVERSITY PARK, Pa. - School districts nationwide are experiencing unprecedented financial hardships, and the situation is likely to worsen in the coming years, says a Penn State researcher.

William_Hartman.jpgWilliam T. Hartman, professor of education leadership at Penn State, gave an analysis of the critical fiscal crisis facing Pennsylvania’s school districts during a recent presentation at the National Education Finance Conference in Tampa, Fla. In his paper, titled “Train Wreck Ahead: Financial Conditions Facing School Districts,” Hartman provided an overview of key economic, political, and educational factors that impact school districts' financial operations.

On the revenue side, Hartman pointed out that all three major sources are limited or declining. “Local tax increases will be difficult due to tax limitation measures and local resistance from taxpayers,” he said. “State funding for education is now being driven by lack of state revenues from state deficits, a political ideology to cut spending, and a general hostility to public education from some politicians. Extra federal funding from the stimulus money is now gone and will not be replaced.”

Without adequate revenues to maintain or expand programs, districts are forced to turn to expenditure reductions to balance their budgets. While this would be difficult enough in normal economic times, many of the district costs are mandated by the state and federal government. “Costs of required pension increases alone will consume most of new district revenues in the coming years,” Hartman said. “This necessitates both educational program and staffing cuts, which can be painful and have serious implications for availability of adequate education for all students.”

All the while, there is no letup in the state and federal mandates for student achievement. No Child Left Behind requires districts to have all of their students at a proficiency level in basic subject areas by 2014.

“The rising and somewhat uncontrollable expenditures and the limited or reduced revenues have led to a serious structural fiscal imbalance for many districts,” said Hartman. “Continuing on the same path, annual deficits are inevitable and will increase beyond manageable levels in very short order. Any fiscal reserves the districts have will be quickly consumed. The result will be district bankruptcy.

“Administrators and school boards are faced with new realities, the likes of which they’ve never had to deal with,” continued Hartman. “It’s a whole new ball game—it’s no longer business as usual. The focus is on survival.”
What is needed, said Hartman, is a concept he calls RESET—that is, to reset a district’s expenditure level down to available revenues. “The concept is easy to understand, but it is extraordinarily difficult to achieve while maintaining the educational integrity of the district, reaching mandated student achievement levels, and meeting community expectations,” he said.

“Of necessity, the focus will be more on what is required under the school code, rather than what has been offered in the past,” said Hartman. “The list is both surprising and disheartening if even partially implemented.”

Among the academic areas that are not mandated are vocational education, business education, home economics, computer science, art, and music. The list for potential elimination goes on: elective courses not required for graduation, libraries, student services (guidance counselors, school psychologists, school nurses), extracurricular activities (athletics, band, chorus, student government), and any limits on class size.

“For each area,” said Hartman, “a series of questions can be asked: Do we want to offer the program at all? Can we offer a different amount—for example, less often or to fewer students? Can we provide it in a different, more efficient, less costly way? The first round of budget cuts and adjustments for the 2011-12 school year introduced this new reality to most school districts.”

In future years, the primary concern for school districts will be to determine their educational and fiscal future. “This means looking forward to what is possible, not backwards to what used to be,” explained Hartman. “On the fiscal side, this means finding efficiencies and cost savings to meet budget limitations and operate within available funds. On the operations side, it will encourage school administrators to look at restructuring instruction and support services. This is best achieved through a careful and inclusive process to establish district priorities and plan their resource allocation decisions.”

At the conference, Hartman was presented with a Distinguished Fellow Award. This lifetime award is given to individuals who have gained national visibility and who have distinguished themselves by their exemplary research and/or practice in the field of public education finance, both at the elementary and secondary level, as well as in higher education.