‘Fiscal cliff’ approaching for some districts in California as costs soar and enrollment falls

As Covid relief funding expires, school districts in some parts of the state are faced with steep shortfalls.

Credit: Alison Yin/EdSource

For many school districts in California, the flush years of budget windfalls are decidedly over.

Declining enrollment, expiring Covid funds, inflation and ballooning staff costs have combined to lead some districts — particularly those in urban areas — to make painful budget cuts.

“This is the impending fiscal cliff we’ve known was coming. It’s a perfect storm,” said Carrie Hahnel, senior policy and research fellow at Policy Analysis for California Education and senior associate partner at Bellwether, a nonprofit education consultant. “Some school districts will have to make difficult choices.”

Even as state lawmakers are hammering out the final details of the 2023-24 budget, revenue shortages appear inevitable for some districts. Oakland Unified, Stockton Unified, San Francisco Unified and West Contra Costa Unified are among those facing steep cuts to staffing and programs. Overall, state lawmakers are working to close a $4 billion funding gap in the TK-12 and community college budgets, although so far the state still plans to give schools an 8.3% cost-of-living-adjustment.

Layoffs are likely as districts grapple with these uncertainties. Already, some districts are laying off teachers, aides and other staff hired with one-time federal Covid relief funds. Overall, California schools received more than $32 billion in state and federal Covid relief funding during the pandemic, intended to help students catch up academically after remote learning. But the money must be spent by specific deadlines; the deadline for the second round of the Elementary and Secondary School Emergency Relief grants is Sept. 30, and the final deadline for staffing-related spending from all ESSER funds is a year later.

Districts used their Covid funds for everything from field trips to new reading curricula to after-school programs. But they spent a lot of the money on staffing. Marguerite Roza, director of the Edunomics Lab at Georgetown University, said the hiring spree was unprecedented.

“Never have we seen such a rapid expansion in staffing,” she said.

In some districts, the staffing boom came even as enrollment declined. In Los Angeles and Orange counties, for example, enrollment fell by 18% over the past decade while staffing rose 19%, according to Edunomics. In San Bernardino County, staffing rose by about 10% since 2016-17 while enrollment dropped almost 6%.

Teacher shortages still exist in certain parts of the state and in certain subjects, including math, science and special education, but overall, schools have more staff than ever before.

Teacher raises have also played a role. Los Angeles Unified recently agreed to give its teachers a 21% raise over three years, a move that inspired teacher unions to press for hefty raises in other districts across the state. And while some districts planned for the expense, others are dipping into their reserves or cutting programs to afford it.

Teachers unions dispute the assertion that they’re to blame for district budget cuts. With the extra funding schools have received the past few years, districts should have planned for the dip in revenues, said Claudia Briggs, a spokesperson for the California Teachers Association.

“It’s not at all a fair attribution,” she said. “Districts have received record funding for the last four years in a row and are getting another record cost-of-living-adjustment this year. These record investments are intended to help attract and retain quality educators that our students need and deserve as we grapple with the shortage crisis.”

In Oakland Unified, the board voted to cut special education programs at six schools, in part to afford teacher raises, said board President Mike Hutchinson. Although the cuts were originally proposed in March, two months before the board agreed to a 10% raise for teachers following a strike, the board anticipated boosting its teacher pay and was planning ahead, Hutchinson said.

“We took some money from several places to offer our teachers these raises, which was historic,” Hutchinson said. “We didn’t have that money sitting around someplace. We had to find it. … These budget adjustments free up resources for us.”

The district hopes to save $2.4 million by consolidating a handful of self-contained special education classrooms at five elementary schools and one middle school, and not filling open positions for eight teachers, 12 specialists and 29 paraeducators. The classes were under-enrolled, according to the district, leaving only 31 students affected.

But that’s little consolation for the parents of children affected by the cuts, who say the changes will harm some of the most vulnerable students in the district. Children with special needs often develop close relationships with their teachers, and a disruption — new schools, new classmates, new routines — can lead to severe setbacks and possible violations of their individualized educational programs, some parents said.

“Regardless of how many students are impacted, this kind of displacement can be traumatic,” said Anna Realini, a mother of two children with autism in Oakland Unified. “And there’s the inequity of removing only students who are disabled.”

West Contra Costa Unified is expecting to make major cuts over the next few years, after years of declining enrollment and the approval of raises for teachers in order to avoid a strike.

Robert McEntire, associate superintendent of business services in West Contra Costa Unified, at a June 7 school board meeting, laid out a grim picture of the district’s future financial position over the next few years if it doesn’t follow a “fiscal solvency plan” approved by Contra Costa County’s Office of Education. If the school board doesn’t follow the plan, McEntire said, it will exhaust district reserves and go into state receivership.

The fiscal solvency plan calls for the reduction of 145 full-time employees, including 54 teachers, through attrition or layoffs before the 2024-25 school year, and more the following year.

School board President Demetrio Gonzalez-Hoy said losing this many employees will unquestionably have a major impact on schools, where leaders regularly tell him that they currently don’t have enough staff. But by not making the cuts, the district may be forced to close schools.

“We have to keep the state out of our business, because they’re going to come in and close our schools, because we have some smaller schools, because that’s our choice and a priority we have,” Gonzalez-Hoy said. “The reality is, we have no money anywhere. So we’re going to have to make some tough choices, and everybody needs to be involved.”