Giving Compass' Take:

• Marguerite Roza explains that school districts should prepare for the squeeze of a financial downturn as signs of trouble loom. 

• What do districts need in order to prepare for a financial downturn? 

• Find out how donors can help prepare grantees for financial downturns

Back in 2008, it’s a fair bet that most school systems didn’t know they were in a financial boom before the Great Recession unleashed the bust, filling subsequent years with program cuts, furloughs, school closures, and fights about seniority-based layoffs. Today, signs suggest we’re once again at a peak, with a likely financial stumble headed our way.

Just like the years leading up to 2008, the last few years have yielded stronger growth in funds for schooling. And just like in 2008, there are signs of trouble ahead. For districts, a fiscal downturn can trigger the equivalent of a debilitating migraine: Pain comes from every direction and little seems to quell it.

While we can’t predict how an economic downturn will affect every district, we can anticipate some big-picture trends, and in doing so potentially tweak the script.

State revenues will likely stumble: This will hurt districts in some states more than others

Where districts may have been benefitting from a higher growth rate in state revenues in the last two years, that trend is likely to wane as tax revenues slip in a downturn.

District obligations climb when the economy takes a hit

As counterintuitive as it seems, costs go up during an economic downturn. That’s because when the private sector curbs hiring, fewer teachers leave their districts to pursue jobs in the private sector.

Read the full article about school districts by Marguerite Roza at Education Next.