For California’s K-12 districts and federally funded preschools, the “fiscal cliff” that is now consuming politics in Washington is more like a distant canyon.
The abyss refers to an across-the-board 8.2 percent cut in federal discretionary spending, including defense, that will go into effect Jan. 3 if President Obama and congressional leaders don’t reach a deal on taxes and spending to reduce the federal debt by $1.2 trillion over the next decade. Federal student loans, most child nutrition programs and the Children’s Health Insurance Program would be exempt from cuts.
The full cuts to most education programs would be painful indeed if they were enacted: $334 million alone in Department of Education funding for California, plus $75 million less for Head Start and $19 million less in child-care subsidies, according to estimates by the staff of Democratic Sen. Tom Harkin of Iowa, who chairs a subcommittee of the Senate Appropriations Committee. But the cuts would not take effect until the next fiscal year begins, on July 1, according to Erika Hughes, the federal policy liaison for the California Department of Education. Thus, districts would not only gain time to plan for the impact of less funding in their budgets for next year, but Congress and President Obama would also have some breathing room to reach a compromise if the Jan. 3 deadline passes. That compromise might still include cuts, though not as large.
Although the federal government contributes less than 10 percent of K-12 spending in California, funding is concentrated on special education and low-income children. Title I grants to districts with low-income students would be cut $139.6 million – the equivalent of serving 296,000 students; for Los Angeles Unified alone, the cut would be $30 million. Special education, including services for preschool-aged children, would be cut $107 million statewide, according to the Harkin report.
Other cuts would include:
- $23 million in funding for professional development for teachers, cutting services for an equivalent of 24,000 teachers;
- $15 million for career and technical education;
- $12 million for programs for students learning English.
The one education cut that would take effect Jan. 1 affects Impact Aid, which involves payments in lieu of property taxes to districts where federal facilities are located. The biggest recipient is San Diego Unified, the home of Naval Base San Diego. The district gets about $10 million in Impact Aid, so an 8 percent cut would be a little less than $1 million, according to Bernie Rhinerson, chief of staff and district relations for the district. However, payments from the federal government are always a year or two behind, so there would be no immediate impact, he said.
Personal income tax cuts affecting 90 percent of Americans that went into effect under President George W. Bush, plus a temporary reduction in Social Security payroll taxes and other tax credits, also expire at the end of next month, and economists have warned that the combination of higher taxes on most Americans and federal spending cuts would plunge the nation into another recession. Obama and congressional leaders have expressed optimism that they will avert this.
The consequences for California’s economy and the state budget would be severe if no deal is reached. Assuming an impasse over budget and taxes on Jan. 2, the nation’s economic growth would decline 0.6 percent instead of growing 1.8 percent, according to a budget forecast released this month by the nonpartisan Legislative Analyst’s Office. State revenues would decline about $11 billion, the LAO said, lowering the Proposition 98 guarantee for K-12 schools and more than negating any revenue increases that districts were anticipating from the passage of higher state taxes under Proposition 30.