Schools turn to mass layoffs to ease deficits

CHICAGO/SAN FRANCISCO Thu Mar 12, 2009 4:32pm EDT

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CHICAGO/SAN FRANCISCO (Reuters) - Some U.S. public school districts are turning to mass layoffs of teachers and support staff to ease ballooning deficits in the latest sign of how the recession is hurting ordinary Americans.

The looming layoffs contrast with President Barack Obama's pledge to improve education in the United States. On Tuesday, Obama proposed lengthening the school year and paying top teachers more. And the $787 billion federal stimulus package includes billions of dollars for schools.

On Friday, the Los Angeles Unified School District -- the nation's second largest -- will issue preliminary layoff notices to nearly 9,000 staff members, including teachers.

"The deficit we're looking at over the next 17 months is just over $700 million, so it's a significant, devastating cut we need to prepare to balance out this budget," Megan Reilly, the district's chief financial officer, said in a telephone interview.

The district's money woes arise from reduced state funding for local school districts, which rely heavily on California's general fund for their budgets, she said.

State officials recently closed a $42 billion state budget gap through July 2010 with the help of cuts to education spending from the general fund. California's revenues have tumbled as the recession and financial crisis worsened.

"We are waiting hopefully and anxiously on federal stimulus dollars," Reilly said.

An initial $44 billion in federal stimulus money will start flowing to states in 30 to 45 days, U.S. Education Secretary Arne Duncan said on Saturday.

MICHIGAN'S WOES

In Michigan, the Pontiac School District put all 774 of its employees, including about 560 teachers, on notice that they may be laid off at the end of the school year, according to school spokeswoman Georgette Johnson.

The move was part of a plan to address declining enrollment, a big contributor to an $11.6 million deficit in the district's $92 million budget.

Pontiac -- about 30 miles northwest of Detroit and the birthplace of General Motors' Pontiac motor division -- also plans to shutter about half of its 18 buildings and restructure the curriculum, Johnson said.

"We have 20,000 seats and only 7,200 kids, and projections are that's going to decline next year," she said.

The $27 million the district expects to receive in federal stimulus funds won't help because much of that money is tied to programs for poor students, Johnson said.

Even the Chicago Public Schools, the third-largest school district in the United States and Obama's home base, is not pinning its hopes on the stimulus program. The district faces a record $475 million projected fiscal 2010 deficit.

The school system's chief executive officer, Ron Huberman, said on Wednesday that the lion's share of the federal money will be used to fund state-mandated set-asides such as tutoring and after-school and summer school programs.

Federal stimulus dollars can't arrive soon enough for California school districts, said Rick Pratt of the California School Boards Association.

Pratt said, "I can't think of a school district right now that isn't thinking about how much it has to cut."

(Reporting by Karen Pierog in Chicago and Jim Christie in San Francisco; Editing by Jonathan Oatis)

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