Why is it that across-the-board budget cuts in education tend to disproportionately affect low-income students? That’s something I didn’t fully understand until I attended a virtual seminar hosted by the Education Writers Association last month. The answer has to do with union labor contracts that force districts to layoff the most junior teachers first and the ability of wealthy communities to offset state budget cuts.  

Here are the school finance lessons from the 2008 recession as we head into another devastating round of budget cuts triggered by the coronavirus pandemic. States have already cut budgets 15 percent.  Deeper cuts are expected in the fall. 

• A team of three economists led by Kirabo Jackson of Northwestern University found student achievement suffered in proportion to how much funding was cut after 2008. Specifically, they calculated that a $1,000 reduction in per-pupil spending after the 2008 recession reduced reading and math test scores by about 1.6 percentile points and college going by 2.6 percent.  

• Teachers union contracts often specify that layoffs must start with the most recently hired teachers, protecting veteran teachers with more seniority. Poor schools, where the conditions are more challenging, tend to have more junior teachers and fewer veterans so low-income communities bore the brunt of the teacher layoffs. 

• Before resorting to layoffs, district administrators canceled ancillary programs, such as summer school and after school, programs that especially help low-income children.  

• Wealthy communities were more able to offset the state funding cuts by digging into reserves, raising taxes or charging fees.

1. C. Kirabo Jackson, Cora Wigger, Heyu Xiong. “The Costs of Cutting School Spending,” Education Next Summer 2020. 
2. C. Kirabo Jackson, 2018. "Does School Spending Matter? The New Literature on an Old Question," NBER Working Papers 25368, National Bureau of Economic Research, Inc.