California Watch

The billions of federal stimulus dollars helping fund public education in California represent a double-edged sword.

There is no question that the funds have helped California's public schools avert fiscal disaster.

But it also means that in a very short period of time, the money will run out – in the case of colleges and universities, by next August – and when that happens, the state’s education institutions could find themselves falling into an even deeper financial abyss than they are in now.

Educators have worried for a long time about this "funding cliff," which is steeper, and higher in California than almost every other state.

That’s because California, with its massive size, has qualified for more stimulus funds than any other state. Because of California’s ongoing budget deficits, the state is also more dependent on the stimulus funds than almost any other state.

Just nailing down the exact size of California's funding cliff is a challenge because of the complexities of the state's budgeting process.

According to an analysis by Education Week, California's K-12 schools face one of the largest funding cliffs, which the analysis placed at $5.15 billion. This figure represents the gap between how much the state gave to schools in the 2007-08 fiscal year and how much it is contributing now.

The analysis points out that the “gaps have been filled to a great extent by federal State Fiscal Stabilization Fund monies,” but that, the "money runs out in the next two years.” Only Oregon and North Dakota face a larger cliff than California.

These figures are similar to those in a January 2010 report from EdSource, which points out that California's school's suffered a $5.7 billion reduction in state funds between the 2007-08 and the 2009-10 school year, due to Proposition 98.

The loss of those funds were offset by a $3 billion increase in federal funds. As a result, the schools "only" suffered a loss of $2.7 billion in direct state funding – about $470 per child. Funding from other sources, such as local property taxes, declined by another $1.7 billion, according to EdSource.

As for higher education, the UC and CSU each received $268.5 million in 2008-09 and expect to receive $448 million in federal State Fiscal Stabilization Funds for the 2009-2010 school year. Individual campuses will also receive additional hundreds of millions in research and infrastructure grants, according to figures supplied by the UC's Office of the President and the CSU Chancellor's Office.

“If these funds are not replaced in California, it is conceivable that nearly half of all the state budget reductions were concealed or masked through state stabilization funds,” wrote F. King Alexander, president of Cal State Long Beach in an article titled “The Second Fiscal Crisis: Preparing for the Funding Cliff.”

An analysis by the American Association of State Colleges and Universities found that most states will use all their stimulus funds by the end of the 2010 fiscal year. “States and their public colleges and universities face a potentially severe funding cliff in as little as 12 months,” wrote AASCU director Daniel Hurley.

Community colleges constitute the one sector of California's struggling public education system that may be relatively protected from the funding-cliff problem. The colleges received very little stimulus funds to begin with – some $35 million  (instead of the $130 million they had been expecting).

But knowing they will have to replace a smaller pot of stimulus funds than the other education systems in California provides little comfort to community college leaders. 

They are having to cope with massive state budget cuts totalling $840 million over two years, according to the California Community Colleges Chancellor's Office. The federal dollars they receive will barely make a dent in offsetting that daunting total.  

“We in higher education may not have been killed with a lethal blow, but we have been wounded with a thousand cuts,” Chancellor Jack Scott lamented at a legislative hearing last December.

There are many in public education who feel exactly the same way.