The economy has a rather strange impact on local government budgets, particularly school systems. While I can't say that commercial companies are out of the woods yet, everyone is at least predicting a mild recovery in 2010. Yet local school systems are facing incredible pressure because their "revenue", driven by all kinds of taxes derived from economic activities, is going to be down in 2010 and 2011. State government sometimes steps up to help, but in this case so many states are economically stressed that in fact there isn't a white knight out there (stimulus money aside).

While commercial companies can adjust their spending to match their revenue or borrow to make it to the other side, local school systems have to make do. In addition, their ability to make adjustments is controlled by a dizzying array of rules on the Federal, State, and local level in addition to dealing with negotiated agreements with much of their labor force. Much of their spending, up to 85%, goes to their workforce which is largely determine by the size of their student population. Their clients are students who don't go away as the economy goes bad and in fact have to be taught at a predefined pace that allows them to graduate.

So how does a school system save money to meet the new budget realities yet continue to preserve or even increase performance in their student population? It probably comes down making their workforce more effective and efficient. If a school system can increase class size by one student, the system can often realize significant cost savings. A recent article in the Washington Post about the Montgomery County Maryland proposed school budget showed that millions can be saved. But how do these savings impact student performance? What steps can be taken to help teachers deal with increased class size?

I would propose that school systems will have to turn to newer methods of teaching that incorporate blended learning activities. The traditional instructor led model has to be supplemented with newer eLearning activities using multiple modalities of delivery. It might also mean that more elaborate scheduling techniques be used. School systems will have to establish R&D activities to measure the impact of such approaches to determine what works in their systems.