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The Great Recession Badly Hurt Kids’ Schooling; Today’s Recession Could Do Much Worse

Whenever our kids return to school, a severely diminished learning experience awaits them unless the federal government learns an important lesson from the past and significantly boosts state aid — and soon.

The last time that states faced a budget crisis, in the wake of the Great Recession of a decade ago, emergency federal aid closed only about one-quarter of state budget shortfalls. Once the aid was gone, states started cutting funding to K-12 schools to help comply with their balanced budget requirements. By 2011, 17 states had cut per-student funding by more than 10 percent. Local school districts responded by cutting teachers, librarians, and other staff; scaling back counseling and other services; and even reducing the number of school days. Even by 2014 — five years after the Great Recession ended — state support for K-12 schools in most states remained below pre-recession levels.

School districts have never recovered from the layoffs they imposed back then. When COVID-19 hit, K-12 schools employed 77,000 fewer teachers and other workers even though they were teaching 2 million more children, and overall funding in many states was still below pre-Great Recession levels.

Money matters in education. As my colleague Cortney Sanders recently noted, “Adequate school funding helps raise high school completion rates, close achievement gaps, and make the future workforce more productive by boosting student outcomes, studies show.” The Great Recession in particular hurt students’ educations, driving down test scores and the rate at which students attend college, Northwestern University economist C. Kirabo Jackson and two colleagues found.

Now, with the deepest economic downturn since the Great Depression closing businesses and sending unemployment soaring, state income and sales taxes — on which states overwhelmingly rely to fund education and other services — are drying up. As a result, we estimate that state budget shortfalls over the next three years will total $765 billion.

Federal aid to date, plus state rainy day funds, can close about one-fifth of those state gaps, leaving states $590 billion short.

Without significantly more federal aid, these gaps could prompt school districts to make far larger cuts than they did in the wake of the Great Recession, leading to larger class sizes, stagnant teacher pay, and outdated learning materials.

The impact on public education could be severe. Across the country, states provide 47 percent of all K-12 funding (with localities providing 45 percent and the federal government providing the rest). At the same time, education comprises about 26 percent of state budgets, making education a prime target for lawmakers looking to cut at a time of big state budget shortfalls.

Already, several states are announcing large education budget cuts that will harm children and families. Ohio Governor Mike DeWine has announced plans to cut $300 million in K-12 funding and $100 million in college and university funding for the current year. Meanwhile, Georgia’s top budget officials told the state’s schools to plan for large cuts for next year that will almost certainly force districts to make layoffs.

Additional cuts are likely at the local level, where governments and school districts face enormous budget gaps of their own.

Meanwhile, states face new, unanticipated costs due to COVID-19, including access to devices and connectivity for distance learning, additional food services for students from low-income families, and expanded learning time to offset the learning loss caused by school closures. Expanded learning time alone could cost districts $36 billion, the Learning Policy Institute estimates.

Every classroom in America is at risk; the danger may be greatest for low-income kids and children of color, for whom an excellent K-12 education is particularly important as they seek to overcome historic barriers to opportunity. While state funding typically reduces disparities between wealthy and poor school districts, funding cuts magnify those disparities — and that’s what happened with the Great Recession, when state funding fell as a share of total school funding. Today, high-poverty school districts — which face higher costs — receive more state and local funding than low-poverty districts do in only about a third of states.

With so much at stake for students and their families, the President and Congress need to provide significant fiscal relief to states, localities, tribes, and territories to minimize education cuts. The House-passed Heroes Act includes about $1 trillion in additional state, local, and education aid, including these must-haves:

  • An increase in the federal matching rate for covering Medicaid costs — a highly effective form of aid that quickly delivers direct savings to states, freeing up funds that they can reallocate to protect schools and other fundamental public services.
  • Direct, flexible funding to states, tribes, and territories to help them offset the loss of tax revenues.
  • Direct funding to local school districts, via increased state grants distributed according to the funding formula of the existing federal Title I program.
  • Additional direct funding to local governments, which are facing their own revenue losses.

Now that the House has passed the Heroes Act, giving states aid of this magnitude — and soon — should be a top priority for the Senate and President.

Whatever federal policymakers do, however, states likely will need to draw down their reserves, close tax loopholes, raise new revenues, and find other ways to protect education funding and other programs serving vulnerable children and families. The education of a generation is at stake.