For the sake of argument, let’s assume that the Great Recession is over and a recovery is starting. How will that affect our state and local governments, particularly school systems, many of whom are in dire financial straits?
Absolutely no one predicts a speedy recovery. In fact, the phrase “jobless recovery” is often used to describe a situation in which many of the people who lost jobs during the recession will not get those jobs back. What that means is local governments may not see further revenue cuts, but they also should not expect the revenue flow to return to pre-recession levels anytime soon.
If that is the case, local governments face not just a temporary reduction in revenue, but also possibly years of operating with considerably less money than was expected before the recession started. That bodes particularly ill for school systems.
School systems are dipping into their reserves as a stop-gap means of getting by until there is a recovery. However, if the revenue languishes at or near current levels stop-gap measures won’t work. School systems will have to continue to make do with less revenue.
For this fiscal year and the next, some federal stimulus money allowed school systems to avoid layoffs or reduce the number of layoffs. When that money runs out, it will have the effect of another revenue cut at a time when many school systems are already in crisis.
Hopefully, the Great Recession will teach state and local governments the dangers of expanding services and programs. Revenue we took for granted can shrink like the water level in Lake Lanier during the last drought, causing budget deficits, disruption of services, layoffs and very angry constituents. But the immediate problem is that while the recession may, technically, be over (then again, maybe it isn’t), but its effects will be with us for some time in terms of lost jobs, reduced revenue and governments and school systems in financial distress. Some worrisome decisions remain as governments and school boards adjust to the new reality.
The grim economic reality is that government and schools are still living beyond their means. Just as while it is difficult for one to lose weight, the harder part is keeping the weight off, so too, governments and school systems will find that it’s one thing to deal with decreased revenue for a year or two and quite another when the cuts are permanent.
