Is There a “Fiscal Cliff ” on the Horizon for California School Districts? Planning for Financial Sustainability in an Uncertain Time
California school districts have received unprecedented funding in recent years through a windfall of state and federal pandemic relief funding. But as school districts invest in expanding programs and supports for students, they must consider how to sustain effective programs beyond the duration of this one-time funding.
Through a survey and interviews with K–12 education leaders, as well as descriptive analyses of district budgets, this paper explores funding sustainability and investigates whether school districts are likely to face a “fiscal cliff” when pandemic relief funding expires. The paper also highlights specific barriers to funding sustainability that state and districts have faced from pre-pandemic times until the present. Drawing from interviews with local education leaders, the paper shares insight into how leaders have been approaching funding sustainability and the use of short-term funds.
Some of the paper’s key findings include the following.
- Although they show wide variation in sampled districts’ projected fiscal health, multiyear budget projections, on average, project deficit spending and staff cuts on the horizon.
- Budget data and interview data suggest that many districts may face more of a gradual “fiscal slope” than a “fiscal cliff,” likely due to state-level actions to promote year-to-year local budget stability as well as district-level anticipation that pandemic relief funds will soon be gone.
- Districts are employing a range of strategies to avoid a fiscal cliff.
- Given districts’ reported barriers to using short-term funds for long-term systemic improvement, state policymakers may want to adjust some of the ways in which they distribute new funds to California schools and districts when funding is available.
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