Paul Ryan Budget Proposal To Cut Federal Spending Could Pull Millions From Some School Districts

A New America Foundation analysis has calculated that under Paul Ryan’s budget proposal to cut federal spending by 20 percent, 77 percent of the 1,500-plus school districts that rely on federal funds for 20 percent or more of their annual revenue could wind up losing millions.

The districts most at risk of losing more than 10 percent of their annual revenue are smaller ones -- enrolling between 100 and 2,000 students -- that rely heavily on the federal government for education funding.

These include districts that enroll high proportions of American Indian students or boast large numbers of low-income students. According to the report, districts that fall under the former category receive funds under Impact Aid, a federal program that provides funding to districts with high proportions of “federally impacted” students, like American Indians. Because these districts do not benefit from property tax revenue from people living on Indian reservations, the federal government compensates for the lost revenue.

As an example, the report’s author, Jennifer Cohen Kabaker, cites Arizona’s Sanders Unified School District -- 97 percent of whose students identify as American Indian. Just over $9 million of the district’s $15 million annual revenue comes from federal sources, so if Congress were to cut spending by 20 percent, Sanders Unified could lose as much as $1.8 million, or 12 percent of its annual revenue.

The cuts could prove even deeper in Chicago. According to the analysis, Chicago Public Schools, the third-largest district in the country, receives nearly 24 percent, or $1.2 billion, of its annual $5.1 billion in total revenue from federal sources. The funding stems from programs targeting low-income students, such as Title I (about $300 million), free and reduced price meals (about $140 million) and special education (about $90 million). A 20 percent cut to federal funding could therefore result in a $244 million loss for the district at a time when CPS is already facing a $700 million budget shortfall.

By comparison, over 2,100 districts receive 5 percent or less of their annual revenues from federal sources. These districts tend to be on the smaller side and serve wealthier, less diverse student populations. Thus, they don’t stand to be as negatively affected by a 20-percent reduction in federal education funding.

The analysis concludes: “We hope that Congress is able to target those cuts in such a way that protects the most vulnerable students that benefit directly from federal spending. While Title I and Individuals with Disabilities Education Act special education spending are often the most discussed, it is important that programs like Impact Aid also factor heavily into negotiations. For many of these districts, such a cut could mean millions of dollars or a substantial portion of their annual revenue.”