School Finance Systems Need to Fairly Accommodate Enrollment Trends, Not Ignore Them

The 2020-21 school year began with unprecedented uncertainty. A new survey from Civis Analytics revealed that nearly 40 percent of families say they have disenrolled from their current K-12 school in response to their COVID-19 reopening plans. School district leaders are keenly aware that losing children means losing funding, and as they could not have possibly planned for an enrollment shock of this magnitude, administrators have valid reasons to ask policymakers for additional support so they can stabilize their budgets, deliver virtual instruction and protect the health of staff and students.

However, it is key that policymakers disentangle the effects of the coronavirus pandemic on enrollment decline from larger trends that state education systems were seeing prior to the pandemic.

Consider North Carolina, which recently introduced a hold-harmless provision for the coming school year that would at least fund school districts at the levels they received last year, regardless of changes in their student populations. The provision was welcome news to many district and school administrators who are expecting to lose students due to the pandemic.

However, prior to coronavirus pandemic-related school shutdowns, the North Carolina Department of Public Instruction had already projected enrollment declines for 74 of 115 school districts for the next school year. Additionally, 19 of these school districts were projected to have enrollment losses of 2 percent or more in a single year. While the pandemic has undoubtedly increased these rates for some North Carolina school districts, a larger trend is at play here.

And this is happening nationwide. A 2018 report from the National Center for Education Statistics projected that 19 states will have enrollment declines by 2026, 10 of which should expect declines of 5 percent or more. Most of these states are in the Northeast and Midwest. Although some of these regional losses could be explained by growth in homeschooling or school choice, the more powerful factors at play include family migration patterns, fertility rates, and regional economic opportunity. Even in states where overall public K-12 populations are growing, not all school districts are seeing new students.

Enrollment patterns play a big role in determining both school district operations and statewide education policy. School districts often struggle to trim their budgets as they lose students, and states with larger enrollment challenges are facing stronger political demands for policies like hold-harmless provisions and subsidies for small or shrinking school districts.

But as Marguerite Roza and Hannah Jarmolowski recently highlighted in Education Next, these solutions aren’t “harmless,” despite what the name suggests. The more that school funding is divorced from individual student needs and instead is tailored to accommodate special district circumstances or to maintain historic spending levels, the more school funding inequities emerge.

School finance systems need to fairly accommodate new enrollment trends, not ignore them.

The recession and current uncertainty around where kids will end up after the COVID-19 pandemic — compounded by shrinking student populations and increased school choice in many states — warrant prudent responses from policymakers that put kids first. Any policies introduced to help school districts weather the current recession and pandemic need to be temporary and address only immediate problems attributable to the pandemic. Hold-harmless provisions, for example, are difficult to roll back once they’re implemented. State legislators should also carefully consider whether any temporary measures implemented could exacerbate funding inequities or shortchange disadvantaged communities that are already most hurt by education budget cuts.

The COVID-19 pandemic has certainly had far-reaching effects for which school districts need immediate support. But if shortsighted policymaking isn’t kept under control, there’s a risk that the COVID-19 crisis will become a scapegoat for years to come and will prolong inequitable school funding policies.