Lynn, Mass. - The Fallon elementary school is a joyous place. But last week, some parents, students, and staff felt as blue as the hallway walls. On Friday, the small school in Lynn, Mass., shut its doors – not just for the summer, but for good.

In districts across the United States, budget shortfalls are resulting in locked-up schools, flurries of pink slips, and empty shelves where new books and computers should be. In cities from Los Angeles to Detroit, and in rural towns from Louisiana to New Hampshire, schools, like other sectors, are caught between skyrocketing prices and dried-up funding streams.

"You have the perfect storm forming," says Chuck Essigs, director of government relations for the Arizona Association of School Business Officials. "You have costs going up ... for energy and fuel and health insurance ...

and a loss of revenue from the state. [That is] creating certainly a lot more of a challenge than school districts have faced in many, many years."

Twenty-nine states are facing a total of about $48 billion in overall shortfalls for fiscal year 2009, nearly a 10 percent drop, according to the Center on Budget and Policy Priorities in Washington, and education will bear some of the burden.

California, Arizona, and Florida are among the hardest hit (down 21 percent, 18 percent, and 11 percent, respectively). Conditions could worsen, the National Governors Association predicts, since states tend to feel the pinch for a while after economic recovery begins. For some areas, the declining housing market will bite into local revenues as well.

Like the downturn of the early 1990s and the period following the 9/11 attacks, "it's going to be a very lean couple years," says Paul Houston, executive director of the American Association of School Administrators in Arlington, Va. "As a superintendent, you're trying to figure out, 'Where are the edges? Where can I do this [cutting] that's going to have the least impact?' "

With fuel costs, a four-day week?

Miami-Dade County Public Schools are taking measures to cut $284 million, about 10 percent of their current budget, says spokesman John Schuster. Health insurance costs are going up about $36 million, electricity $16 million, and bus fuel nearly tripled to a projected $16 million for next year. Funding from the state dropped by $69 million.

Out of 50,000 employees, about 2,000 positions are being cut, half of them teachers, though Mr. Schuster says some teachers should be able to find places in schools where there's attrition. Teachers protested this weekend a proposal to save nearly $48 million by withholding raises.

"I've been with the district for about 20 years, and in talking with all of the old-timers this is probably the toughest season we have seen," Schuster says.

Education has been losing out in the federal budget as well. The Urban Institute reported last week that federal education spending in real terms for fiscal year 2007 was down 2.1 percent from 2006.

The road is particularly hard in areas with declining enrollments. Much of education funding is distributed per pupil, but costs don't necessarily go down in the same proportion as the population drops.

The Mesa, Ariz., schools, for example, educate 72,000 children, down 1,500 from a year ago. They recently hammered out about $13 million in cuts, or three percent of their operating budget. In addition, they anticipate increased costs such as $4 million for bus fuel, up from $3.1 million this school year.

A registered nurse will now oversee paraprofessionals in the schools, instead of each school having a nurse. Libraries will no longer be staffed with certified teachers. Offices and custodian crews will slim down. The good news is the district will maintain its student-teacher ratio and its art, music, and physical education programs.

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