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Ed Money Watch

A Blog from New America's Federal Education Budget Project

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Sequestration Will Mean Significant Cuts for Needy School Districts

Published:  September 14, 2012

Last Friday, the Office of Management and Budget at the White House released a sequestration report, confirming the impact of the automatic, across-the-board funding cuts scheduled for January 2013. Sequestration resulted from the “supercommittee’s” failure to find $1.2 trillion in 10-year cuts to federal spending (or tax increases) last year. According to the report, the majority of Department of Education spending programs will face an 8.2 percent cut as a result of the sequester. Unless Congress and the President agree to turn off the sequester, school districts across the country will face some difficult budget decisions starting in January and continuing into the 2013-14 school year.

To get a better idea of what these cuts will mean for schools, Ed Money Watch used Census data on school districts’ total annual revenue and federal revenue for the 2009-10 school year to calculate the percent of each district’s revenue made up of federal funds, as well as how much each district stands to lose under a 8.2 percent cut. (We did a similar analysis recently looking at the impact of Congressman Ryan’ proposed 20 percent cut.)

It is important to note that not all cuts will happen at the same time. Specifically, cuts to Title I and Individuals with Disabilities Education Act spending will not take effect until next school year because the programs are mostly forward funded (due to something called “advance appropriations”). Other programs, such as Impact Aid, will face immediate cuts in January 2013. School nutrition programs, however, are exempt from the sequester. Unfortunately, the Census data do not disaggregate by funding source, so it is not possible to include this exemption in our calculations.  

Unsurprisingly, the districts that rely the most on federal funds for their annual revenue will take the greatest hit due to a 8.2 percent cut as a proportion of their total revenue. For example, Shannon County School District in South Dakota relied on the federal government for 67.9 percent of its annual revenue in 2010. If that funding were to be cut by 8.2 percent, Shannon County would lose $1.5 million, or 5.6 percent of its $18.1 million in annual revenue. Shannon County serves over 1,100 students, 98 percent of whom participate in Free and Reduced Price Lunch and 99 percent of whom identify as American Indian.  The district receives nearly $5 million in Title I funding for disadvantaged students and over $8 million in Impact Aid funding to replace revenue lost from the lack of property taxes derived from Bureau of Indian Affairs land.

Similar stories can be told for numerous districts with high proportions of low-income, American Indian, English Language Learner, or other high-needs students.

But even districts that do not rely on federal funding for large portions of their annual revenue stand to lose significant funding. Forty-eight districts stand to lose more than $10 million should the 8.2 percent cut become a reality. These large districts include New York City Public Schools, which would lose about $168 million, Los Angeles Unified School District, which would lose $111 million, and Chicago Public Schools, which would lose $100 million.

But it also includes many lesser-known districts like Gwinnett County School District outside of Atlanta, GA, which would lose over $16 million, or Cypress-Fairbanks School Districts outside of Houston, TX, which would lose over $10.5 million. Though these figures represent less than 2 percent of each of these district’s budgets, finding savings to accommodate these cuts will surely be a challenge.

The 8.2 percent cut from the sequester will also have a dramatic impact on districts that serve particularly fragile communities like students with the most challenging special education needs or districts that have recently experienced natural disasters. For example, the Los Angeles County Office of Education, which serves nearly 9,000 students with severe special needs, would lose nearly $37 million, 3.6 percent of its annual revenue. The Recovery School District in New Orleans would lose nearly $12 million, 4.0 percent of its revenue.

Sequestration is a blunt instrument that prevents Congress from targeting spending cuts to the programs that are best equipped to face such cuts. Limiting federal spending may be a worthy goal in this austere time, but the current method stands to hurt the school districts and students that need the extra funding support the most. This is not an argument for increasing federal spending, but rather an argument for ensuring that any decisions to cut such spending are done thoughtfully and with an eye towards equity.

To download these data for every school district in the country, click here. 

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