Schools Should Start Preparing for Huge Budget Cuts Now

Coronavirus disease 2019 (COVID-19) has caused tons of problems. All around the country, businesses and organizations are closing their doors, rocked by the economic fallout of the virus. In an ironic turn of events, schools have been able to maintain some sense of financial stability. Districts aren’t missing payroll and most teachers have kept their jobs though they have been relegated to e-learning duty. Much has been made about how underfunded schools are, but for once, being funded by state and local governments has worked in their favor. With that said, this crisis is not over, and it’s not hard to see what is coming down the pipeline.

Schools need to be ready to slash their operating budget.

Schools are not directly impacted by the economics of the free market, but the states that fund them are. So, what hurts the state will eventually hurt schools. While the money currently being spent by schools is already accounted for, the money they are expecting to come next year is at risk. States are struggling for tax dollars. 

The most obvious gap at the moment is the loss of sales tax revenue. Depending on what state you live in, sales tax is anywhere from 14 to 45 percent of the total tax collections of your state. It’s important to note that no matter where your state falls on that spectrum, losing millions in tax revenue is a catastrophic loss. Unfortunately, many states skew to the higher end of that number, and the stay home orders, self-quarantines, and closing of businesses is wreaking havoc on the bottom line.

But, it’s not just a sales tax shortfall. Income tax tends to be pretty hard to collect from someone without an income. That’s the battle the states find themselves in now. Over 30 million Americans have lost their jobs since the start of the pandemic. Others have lost wages. If people are not earning an income, the state cannot withhold taxes. Additionally, most states have postponed or delayed the filing deadlines for the people who owe. States are actually having to borrow money just to pay unemployment.

In the face of all this, schools should not feel safe from the financial shortfall. During the last recession, schools were hit hard. That situation pales in comparison to this. Education budgets are always on the chopping block, and this will likely be even more the case in the coming year. Many states just recently adopted more education-friendly budgets on a wave of political will from the teacher walkouts and protests. Unfortunately, for many education advocates, some of that money and political will has evaporated during the COVID-19 pandemic. Everybody is hurting. The plight of the underfunded school and underpaid teacher is not going to be at the top of the docket in most sessions.

Schools better start preparing now.