Arkansas school districts are being encouraged to set back 10-12 percent of federal funds in preparation for automatic spending cuts that might occur as a result of sequestration – the so-called “fiscal cliff” that will arrive Jan. 2 as a result of the Budget Control Act of 2011.
The act was agreed upon last year during the standoff between Republicans and Democrats over raising the debt ceiling. The Treasury Department announced Oct. 12 that the federal budget deficit for 2012 was $1.1 trillion.
If a new agreement is not reached, state education officials are anticipating cuts of about 10 percent in federal programs such as Title I, which sends money to schools based on the number of students receiving free and reduced lunch prices. Bobby Lester, the Arkansas Department of Education’s director of federal programs, said he started telling districts in May to prepare to set back amounts equal to 10-12 percent of their federal funds. Districts can carry over up to 15 percent of their Title I money each year.
Because schools receive funding before the year begins, the cuts would take effect in the middle of the 2013-14 school year.
Dr. Benny L. Gooden, superintendent of the Fort Smith School District, said his district receives $9 to $10 million in federal funds and would lose about $1 million a year if sequestration occurs. His district’s annual budget ranges between $140-$150 million.
The district started planning for that possibility about a year ago and has set back about a million dollars, which would give it time to react to a cut in federal funds.
Gooden, who is serving this year as president of the American Association of School Administrators, said the potential cuts would be harmful both because of the amount and because they would occur in the middle of the year, when staff is already hired. He said most school districts spend 70 to 80 percent of their budget on personnel costs.
Gooden said he expected to know if the district would be losing the funds by late spring. He pointed out that many of the federal funds help pay for federally mandated programs.