Peske has a point. The nationwide average teacher salary fell by over 6 percent between 2002 and 2022, going from $75,152 to $70,548 in 2023 dollars, according to new Reason Foundation research. In total, inflation-adjusted teacher salaries fell in 40 of 50 states, as shown in Table 1.

It’s also a fact that teacher salaries are tied to educational attainment and years of experience, meaning that high-performing teachers—and those in shortage areas like math, science, and special education—aren’t paid more for their results or expertise.

To put the right incentives in place, bold teacher pay reforms are needed. But to maximize the long-term impact of these policies, it’s important to address the root causes of stagnant salaries. Examining data both before and after the COVID-19 pandemic reveals structural problems in K–12 finance that keep dollars out of teacher paychecks.

Table 1: Inflation-adjusted average teacher salary growth (2002 to 2022)

Teacher salaries before COVID-19

Nationwide, inflation-adjusted teacher pay was flat in the nearly two decades leading up to the pandemic, with the average salary falling by 0.6 percent between 2002 and 2020. While a handful of states saw big swings—salaries rose by 22 percent in Washington while falling 19 percent in Indiana—most states saw moderate changes, ranging from -5 percent to +5 percent over that period.

Remarkably, teachers’ salaries weren’t increasing at a time of unprecedented growth in public school funding, which rose by 25 percent per student as all but one state boosted K–12 spending from 2002 to 2020. Figure 1 shows the growth in K–12 revenue and teacher salaries during this period.

With education funding at record levels, why wasn’t more money going to teacher paychecks?

Figure 1: U.S. revenue per student growth vs. average teacher salary growth (2002-2020, inflation-adjusted)

A surge in non-teaching staff

One reason teacher pay didn’t grow with K–12 spending is that public schools spent heavily on hiring non-teaching staff. From 2002 to 2020, as student enrollment grew by 6.6 percent, non-teaching staff expanded by 20 percent. For every five new students, public schools added about one non-teacher. In comparison, the number of classroom teachers rose by 6.6 percent—mirroring enrollment growth, but well below growth in all other staff.

Figure 2 shows the growth of public-school staff by position type. The largest growth category was in student support, which includes social workers, psychologists, speech-language pathologists, and other positions. A nearly identical number of instructional aides—paraprofessionals who assist teachers and often work with students with disabilities—were also added to public school payrolls. Taken together, the data suggest that special education and a greater emphasis on wraparound services played large roles in the growth of non-teaching staff.

Figure 2: Public school staffing growth by position type (2002–2020)

Rising teacher pension debt

Another expense that diverted funding from teacher salaries was employee benefits, a Census Bureau category that includes pensions, Social Security, health insurance, and other costs. Between 2002 and 2020, benefit spending per student rose by 79 percent in inflation-adjusted dollars. While salary and wage spending increased by $573 per student, benefit spending increased by $1,745 per student. Research indicates that rising teacher pension costs were the primary factor behind this trend. States have failed to set aside enough money to pay for the pension benefits promised to teachers, resulting in unfunded liabilities that accumulate over time.

Pension debt can add up to big bucks: In 2024, the Teacher Retirement System of Texas had an estimated $62.6 billion in unfunded liabilities, while the California State Teachers’ Retirement System had $85.5 billion in debt. These costs are usually paid for by increasing school districts’ and teachers’ contribution rates to the pension plans. As a result, K–12 funding that might go to salaries has increasingly been directed toward pension costs, even as many states have reduced teachers’ retirement benefits.

Before the pandemic, the story was relatively straightforward: Teacher salaries stagnated despite significant increases in public school funding, primarily because funds increasingly went to hire non-teachers and cover unfunded pension liabilities. After the pandemic began, however, a different story emerged.

Teacher salaries after COVID-19

Teacher pay now plunged, falling 5.6 percent in fiscal year 2023 dollars, from $74,698 in 2020 to $70,548 in 2022. But this wasn’t because more dollars were going to new hires or benefit spending—the number of non-teachers dropped by 2 percent (before again rising sharply in 2023), and real expenditures on employee benefits inched up by $39 per student. While teacher turnover during the pandemic might have played a part, inflation during those years took a big bite out of teacher paychecks.  

After the onset of COVID-19, price growth reached levels not seen since the 1980s. “We currently face macroeconomic challenges, including unacceptable levels of inflation,” said Janet Yellen, who was Treasury secretary at the time.

The price level during the 2022 school year was nearly 10 percent higher than just two years earlier. Large pay bumps were needed to keep pace with inflation, far more than the usual 3 percent or 4 percent that districts typically dole out. Yet this didn’t happen.   

While school districts weren’t exactly strapped for cash—education funding rose by 7.4 percent between 2020 and 2022, reaching a new record of $20,097 per student in 2022—most of this $1,386 per-student increase came from federal Covid-19 relief funds. And because these dollars were temporary, many districts were hesitant to allocate them to long-term commitments such as teacher salary increases. Instead, they opted to spend the federal funding on things like building renovations, tutoring, and one-time bonuses.

Groups such as the American Federation of Teachers and the National Education Association lobbied hard for the stimulus funding that ultimately squeezed teachers’ purchasing power. The consensus among economists is that Covid-19 fiscal stimulus—including the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act signed by President Donald Trump and President Joe Biden’s $1.9 trillion American Rescue Plan, which sent $122 billion to public schools—helped lift inflation to historic levels. Public school lobbyists won the battle for pandemic relief funding, but that money didn’t increase teachers’ take-home pay even as inflation cut their purchasing power. 

Conclusion

Public school staffing decisions and rising pension debt led to teacher salary stagnation in the years leading up to COVID-19. While teacher take-home pay failed to keep up with inflation during the pandemic, the rise in price levels was atypical—and due in part to the stimulus spending that teachers’ unions lobbied for.

For policymakers looking to boost teachers’ salaries today, states like Texas and Arkansas offer bold ideas for targeting dollars on effective teachers and those teaching in shortage areas. But to maximize the long-term impact of such reforms, they’ll also need to pay down pension debt, examine special-education costs, and encourage school districts to prioritize teacher pay over other expenses. That teachers’ wages had stagnated over two decades of unprecedented growth in public school funding highlights deep structural problems in K–12 finance that shouldn’t be ignored.

A version of this column first appeared at The Thomas B. Fordham Institute.

The post Why teacher salaries are stagnant appeared first on Reason Foundation.

For state policymakers, it is crucial to have an accurate understanding of modern homeschoolers when considering new laws or regulations. While misconceptions about homeschooling remain prevalent, a growing body of research and data is helping to set the record straight.

The following analysis compiles key information to address two fundamental questions: Who homeschools, and why do they choose to do so? It begins by examining trends in homeschool participation, then looks at the sector’s demographics and the reasons families choose home education, and ends with a brief discussion of policy considerations.

Homeschool participation and growth

Homeschooling has increased over the past few decades, but it saw an especially steep spike at the onset of the COVID-19 pandemic. Participation estimates vary by data source, but it is clear that growth has been anything but linear.

Using figures from the U.S. Census Bureau’s Household Pulse Survey, Alanna Bjorklund-Young and Angela R. Watson estimate that nearly 6 percent of students were homeschooled during the 2022–23 academic year. In comparison, the most recent estimate published by the National Center for Education Statistics’ National Household Education Survey (NHES) puts this figure at 3.4 percent in the same year.

This discrepancy is due to differences in how data are collected. The Pulse survey uses a broader definition of homeschooling than the NHES, whose estimates “can be viewed as a more restrictive definition of homeschooling, providing a more conservative estimate of this population,” write Bjorklund-Young and Watson.

However, the NHES also reports that a total of 5.2 percent of students are schooled at home—comprising homeschoolers and students enrolled full-time in virtual courses—a figure that is more in line with the Pulse survey.

Bjorklund-Young and Watson suggest looking at these data sources as a range of estimates. But to evaluate growth over time, the NHES figures should be used to ensure consistent comparisons. According to the NHES data, the proportion of homeschooling students increased from 1.7 percent of all students in 1999 to 3.4 percent in 2011–12, but dipped to 2.8 percent by 2018–19. Homeschooling then surged during the Covid-19 pandemic, with the latest NHES data showing the aforementioned 3.4 percent homeschooled in the 2022–23 school year. While the total number of homeschoolers in 2022–23—1.76 million—is up from 1.45 million in 2018–19, it is nearly identical to the 2012 figure of 1.77 million students.

Research also indicates that the homeschool population is dynamic, with many students switching school sectors at least once during their K–12 education. A survey conducted by Albert Cheng and Angela Watson found that only 17 percent of adults who were ever homeschooled did so for the entirety of their K–12 education, with 56 percent of respondents doing so for six years or fewer.

Homeschool demographics

The National Center for Education Statistics’ NHES program and the Census Bureau’s Pulse survey also provide insight into homeschooling demographics. According to the NHES, a greater share of white students (5.1 percent) were homeschooled in 2022–23 than Black students (1.7 percent) and Hispanic students (1.8 percent), as shown in Figure 1. However, compared to pre-pandemic levels, the proportion of Black homeschoolers increased by half a percentage point—rising from 1.2 percent to 1.7 percent. White participation rose even more, while Hispanic participation fell slightly.

Bjorklund-Young and Watson’s research provides additional context for these figures. Using the NHES data, they estimate that in 2022–23, about 29 percent of homeschoolers were students of color: 6 percent black, 14 percent Hispanic, 7 percent two or more races, and less than 2 percent Asian (see Figure 2). Their estimate rises to 40 percent using Pulse data, indicating that students of color are underrepresented among homeschoolers, regardless of the data source. (About 51 percent of all school-aged students fall into this category.) While students of color have seen only modest growth as a share of all homeschoolers over time—about four percentage points between 1998–99 and 2022–23—Bjorklund-Young and Watson nonetheless conclude that “the stereotypical narratives around homeschooling as a predominantly white population must be updated to represent the modern group of homeschoolers.”

Additionally, a nationally representative survey by Angela Watson and Matthew Lee included comparisons of homeschooling parents with their non-homeschooling peers on characteristics such as political affiliation, religiosity, and schooling sectors. It found that, while Republicans are overrepresented among homeschoolers—44 percent of homeschool parents identified as Republican compared to 36 percent of the general population—the majority of homeschool parents are either Democrats or independents (see Figure 3). The study also found that fewer than half of homeschoolers attend religious services weekly (including 31 percent who never attend services), and about 35 percent of homeschool households have at least one child enrolled in a public school.

The NHES data also provide valuable insight into other key demographic variables, as shown in Figure 4. (Although the National Center for Education Statistics has not yet published a complete 2022–23 dataset, I use its 2018–19 data to supplement the latest figures.)

Not surprisingly, a greater proportion of students living in areas classified as rural or towns are homeschooled than those living in areas classified as cities or suburbs. But while city and suburban students are homeschooled at lower rates, the NHES’s 2019 data indicate they still comprise about 64 percent of all homeschoolers.

Students living in lower-income households homeschool at lower rates than those living in higher-income households. According to the NHES’s 2019 data, nearly half of homeschoolers—about 49 percent—live in households earning more than $75,000.

Finally, in terms of education level, parents who have attended at least some college choose to homeschool at higher rates than parents with only a high school education. The NHES’s 2019 data show that a slight majority of homeschooler parents (52 percent) hold a bachelor’s, graduate, or professional degree, with less than one-quarter having only completed high school or less.

Reasons for homeschooling

The National Center for Education Statistics’ 2023 NHES report provides insight into why parents choose to homeschool. The survey allowed respondents to select multiple factors that were important in their decision, along with one “most important” factor. These findings, which largely mirror the final NHES survey before the Covid-19 pandemic, are summarized in Figure 5.

Notably, parents’ concerns about school environment stood out above the rest, with 83 percent of respondents identifying it as an important reason to homeschool and 28 percent ranking it as the most important one. Another factor receiving high scores in both categories was dissatisfaction with academic instruction at other schools, which was selected as an important reason by 72 percent of respondents and the most important reason by 17 percent. Taken together, nearly half of the respondents cited school environment or academics as the most important reason to homeschool their kids, underscoring the weight parents put on these factors.

Also notable is that moral instruction was selected by 75 percent of respondents as an important reason to homeschool, while the desire to provide religious instruction was chosen by 53 percent.

Takeaways and policy implications  

Available research and data on homeschooling provide several key takeaways for policymakers.

First, homeschoolers are a sizeable and growing share of U.S. students. Estimates vary, but we can confidently say that homeschoolers comprise between about 3.4 and 6 percent of all U.S. students, with a conservative estimate of 1.76 million total students as of 2022–23. “The U.S. homeschool population is of similar magnitude to the private and charter sectors,” conclude Watson and Lee.

As its popularity grows, homeschooling will face increasing scrutiny and regulatory pressure. It’s important for state policymakers to have an accurate view of who homeschoolers are, how they homeschool, why they choose this model, and what the research says about abuse, neglect, outcomes, and other vital issues. They should also carefully consider whether proposed homeschool regulations—ranging from notification requirements to curricular reviews—will achieve their intended purposes, and what the negative unintended consequences of additional oversight might be.

Next, data show that homeschoolers are a diverse population, putting to rest the stereotype that home education is exclusively the domain of white Christian conservatives. While white families homeschool at higher rates than Black and Hispanic families, between 29 and 40 percent of homeschoolers are students of color.

Furthermore, less than half of homeschool parents say they are Republicans, which should alert policymakers to the fact that homeschooling draws support across the political spectrum. Regardless of partisan affiliation, parents want what is best for their children, and for many, this means a home-based education.

Additionally, and perhaps surprisingly, many homeschooling families are connected to the public education system in some form. It’s rare for children to be homeschooled for their entire K–12 education, and more than one-third of homeschool households have at least one child enrolled in a public school. This underscores that, even within the same family, children have vastly different needs that can only be satisfied by a diverse supply of education providers. If maximizing each child’s unique potential is a primary goal for K–12 education, then it only makes sense to give families robust options through policy mechanisms such as education savings accounts, charter schools, and public school open enrollment. Policymakers should be sector-agnostic when it comes to cultivating K–12 education systems.

Finally, these findings offer valuable insights into where public schools are falling short and provide guidance on how they can improve. The fact that 45 percent of homeschool parents cite either concerns about school environments or dissatisfaction with academic instruction at other schools as the most important reason for homeschooling should raise flags for policymakers, especially at a time when lax discipline, chronic absenteeism, declining enrollment, low academic standards, and curricular controversies are making headlines from public school systems across the country.

The latest data and research clearly demonstrate that homeschoolers are diverse in many ways and that past conceptions about them should be discarded. They also provide lawmakers with an accurate understanding of modern homeschooling, its role in the education system, and insights into what public schools can learn from the reasons parents choose to homeschool. This is a critical time in K–12 education. With public schools falling short for families in a variety of measures, homeschooling is increasingly becoming an attractive alternative. Overregulating the sector in response to that preference won’t solve any of those problems, but it may add to them.

A version of this column first appeared at Education Next.

The post What state policymakers should know about homeschoolers appeared first on Reason Foundation.

“It’s no surprise that public schools are underfunded throughout the state,” claimed Anaheim Union High School District trustee Jessica Guerrero.

In reality, new Reason Foundation research shows that taxpayers are getting a poor return on their investment in California’s public schools, and the last thing those schools need is more money. Between 2002 and 2023, the state’s public school funding increased by nearly 79%, rising from $14,526 per student to $25,941 per student after adjusting for inflation.

The most recent data shows Los Angeles Unified spends $27,073 per average daily attendance, or per student, for shorthand. Santa Ana Unified spends $25,099 per student, San Bernardino Unified spends $24,881, Long Beach Unified spends $22,379, and Corona-Norco Unified spends $18,321.

California led the nation in K-12 spending growth over the past two decades, and you would expect commensurate gains in student outcomes. But results on the National Assessment of Educational Progress (NAEP) from 2003 to 2024 were disappointing, with declines in 8th-grade math and only modest gains in 4th-grade math and 8th-grade reading. The lone bright spot was 4th-grade reading, where the share of students scoring below basic on NAEP improved from 50.4% to 43.7%. That means that just over half of 4th graders are meeting the lowest reading threshold.

Despite record education funding, student outcomes have barely budged. While there is plenty of blame to go around, Reason Foundation’s data reveal structural problems with how K-12 dollars are spent. For starters, California’s public schools are a textbook case of mission creep. From 2002 to 2023, enrollment fell by 317,253 students while the number of non-teachers—including counselors, psychologists, social workers, administrators, and instructional aides—increased by 74,428.

There are fewer kids and more staff because public schools are increasingly focused on things like “whole child” development and content about everything from climate change to ethnic studies, which takes time away from core classes like math, English language arts, and science.

For example, California is spending $4 billion on community schools that provide both students and their families with healthcare, mental health support, legal clinics, and other services. These things aren’t bad, but it doesn’t make sense to turn public schools into social service hubs when nearly 46% of 8th-graders can’t do basic math and districts like Los Angeles Unified can’t cover their bills.

Teacher pension debt is also diverting resources from classrooms. In 2023, California’s public schools spent $4,900 per student on pension benefits, which include pension costs, health insurance, workers’ compensation, and other expenses. These costs have increased by a massive 134.9% since 2002, when schools spent $2,086 per student in real terms.

While benefit spending is up, teachers’ benefits aren’t any better. That’s because the main cause of this increase is unfunded pension liabilities. For years, lawmakers failed to set aside enough cash to cover pension promises made to teachers, and the bill has come due.

In 2024, the California State Teachers’ Retirement System reported $85 billion in debt, which is more than the state spends on K-12 education each year. Allowing this debt to accumulate means even fewer dollars will be spent on instruction in the years ahead, as money is shifted to pay for benefits promised to retirees and workers.

Finally, empty school buildings are eating up resources. Between 2020 and 2023, public enrollment dropped by 5.1%. Yet only seven of the state’s public schools closed in 2023-24—well below pre-COVID-19 school closure levels and fewer than rural states like South Dakota and Utah.

Public school closures are challenging for communities, but the alternative is worse. Underutilized schools are inefficient and costly, siphoning away dollars that could be used to boost student achievement with reading programs, tutoring, and increasing pay for high-performing teachers.

There are no easy fixes to California’s student achievement woes, and even more money won’t help. Policymakers must address structural issues with how education funding is spent, with a focus on academics, reducing pension debt, and closing underutilized schools.

A version of this column first appeared at The Orange County Register.

The post Southern California school districts spend big, but student outcomes have barely budged appeared first on Reason Foundation.

Today, Reason Foundation published our 2025 K-12 Education Spending Spotlight, which brings together over two decades of school finance data for all 50 states. With nationwide funding approaching $1 trillion and outcomes declining—nearly 40% of 4^th graders aren’t reading at a basic level on the National Assessment of Educational Progress— it’s critical to examine how dollars are spent and why they aren’t producing better results.    

Reason Foundation’s interactive tool, which includes data on expenditures, staffing, teacher salaries, debt, and student outcomes, can help answer those questions and is available here.

There are five key trends to know, but here’s the big takeaway: despite record funding, K-12 finance faces structural problems that undermine student achievement.

Between 2002 and 2023, public school funding rose by 35.8% from $14,969 per student to $20,322 per student after adjusting for inflation. New York now spends $36,976 per student followed by New Jersey at $30,267 per student, and funding now exceeds $25,000 per student in eight states, including: Vermont ($29,169 per student), Connecticut ($28,975), Pennsylvania ($26,242), California ($25,941), Rhode Island ($25,709), and Hawaii ($25,485).

Since the start of the COVID-19 pandemic, the largest increase in per-student spending has occurred in California, rising 31.5% from $19,724 in 2020 to $25,941 in 2023.

Michigan, Kentucky and Missouri were the next biggest percentage increasers, all spending 17% more per student in 2023 compared to 2020. Per student spending also rose by over 15% during that period in Hawaii, New Mexico, Arizona, Mississippi and Alabama.

Figure 1: Inflation-Adjusted Public School Revenue (2002-2023)

All 50 states increased K-12 funding from 2002 to 2023, but inflation-adjusted average teacher salaries fell by 6.1% between 2002 and 2022, decreasing from $75,152 to $70,548 per year. 

From 2020 to 2022, due in part to high inflation during and after the pandemic, the average teacher’s salary decreased by more than five percent in 38 states. They declined the most in North Carolina (−9.6%), New Mexico (−8.8%), South Carolina (−8.7%), West Virginia (−8.6%), and Mississippi (−8.2%).

Research shows that effective teachers are critical to student learning, so why aren’t more education dollars showing up in teacher paychecks?

One reason is that public schools are spending more money on non-teaching staff, such as instructional aides, counselors, social workers, psychologists, and instructional coordinators. Nationwide, non-teaching staff increased by 22.8% between 2002 and 2023, while public school enrollment only ticked up by 4.1%. 

This raises important questions, such as whether public schools have drifted too far from their academic mission and whether special education costs have gotten out of control.

Another reason teacher salaries aren’t increasing is that benefit spending has risen sharply, going from $2,221 per student in 2002 to $4,022 per student in 2023—an 81.1% increase. 

In 2023, employee benefit costs in New Jersey were the highest in the nation at $8,333 per student. In New York, the cost was $7,949 per student.

Research indicates that these costs are largely driven by teacher pension debt. States have failed to set aside enough funding to cover their pension promises, and now the bills are coming due. Benefit spending increased by 194.1% per student in Hawaii, 171.3% in Vermont, 169.9% in Illinois, 167.1% in New Jersey, and 166.4% in Pennsylvania.

Figure 2: Inflation-Adjusted Spending Per Student on Employee Benefits and Salaries (2002-2023)

But these aren’t the only structural issues. With enrollment falling by nearly 1.2 million students since the start of the COVID-19 pandemic, public schools will need to become more efficient by closing schools and reducing staff counts. Available data suggest that school districts have been slow to close under-enrolled schools, and the number of non-teaching staff in public schools has increased since 2020. This is unsustainable, especially since the National Center for Education Statistics projects that enrollment losses will persist for years to come.

There are no quick fixes, but one thing is certain—policymakers can’t expect a good return on investment from public schools unless structural problems are addressed. Focusing on academics, paying down pension debt, and right-sizing schools are difficult but necessary reforms that can pay dividends in the long run. 

From the states

The New Jersey Senate Education Committee advanced a proposal that could significantly limit charter schools. It would ban virtual and prohibit charter school boards from contracting with for-profit entities to manage or operate the school, and “impose residency requirements for some charter school trustees,” the New Jersey Monitor reported. Harry Lee, the president of the New Jersey Charter School Association, argued that this legislation could be “read as a moratorium on charters.”

What to watch

Also in New Jersey, on the campaign trail, Gov.-elect Mikie Sherrill supported expanding the state’s Interdistrict Public School Choice Program–a form of open enrollment. This policy is in much need of reform and hopefully she will keep this campaign promise. As of the 2023-24 school year, more than 5,000 students used it to attend public schools other than their assigned ones. Despite being operational for more than 25 years, participation is one of the lowest in the nation due to an artificial cap imposed by then-Gov. Chris Christie’s administration in 2012. 

The New Hampshire Supreme Court issued a decision clarifying the state’s cross-district open enrollment law, which allows students to transfer to schools in other districts. The court stated that every school district must have an open enrollment policy and that a transfer student’s home district is responsible for 80% of tuition costs, even if the home district’s policy is not to have an open enrollment policy. New Hampshire’s law ranks 21st among the 50 states nationwide, according to Reason Foundation’s open enrollment best practices, but the state scored just 45 out of 100 points, receiving an F grade for its transfer policies.

Tennessee Speaker of the House Cameron Sexton (R-Crossville), expressed interest in expanding the state’s private school scholarship program. Launched last year, the program provided $7,300 scholarships to 20,000 students to pay for private school tuition. While the program is scheduled to increase the total number of scholarships available to 25,000 during the 2026 school year, Sexton argued that the expansion should be greater, as 42,000 students applied for scholarships.

The latest from Reason Foundation

–Public schools without boundaries 2025: Ranking every state’s open enrollment laws

–Policymakers are increasingly supportive of public school choice

–Open enrollment is an important part of school choice in California

–Los Angeles Unified School District celebrates mediocre test scores

Recommended reading 

Ohio school districts shouldn’t be allowed to declare students “impractical” to transport

Aaron Churchill at the Fordham Institute

“Ohio districts have used this loophole to deny transportation to thousands of public charter and private school students—and this was the way Columbus ducked their transportation responsibilities last year…Statewide, almost 23,000 charter and private school students were declared impractical last year (roughly 8 percent), while only 592 out of more than 1.4 million district students—a miniscule fraction—were deemed as such. In other words, non-district students were nearly 200 times more likely to be denied transportation than students attending district schools.”

Contested questions in public schools

Ilana Redstone at National Affairs

“Despite the post-pandemic increase in the popularity of private schools and homeschooling, the vast majority of American children have continued, and likely will continue, to receive a public education. However, doing so in an institution that hasn’t acknowledged its failures ensures that both the educational crisis and its associated erosion of democratic norms will persist. This means that rebuilding trust in this institution matters — although doing so will require us to first understand how public schools lost their way.”

Rulemaking must resolve ambiguities in federal school choice law—and fast

Jim Blew at Education Next

“Governors should be prevented from adding requirements not found in the federal law, such as prohibiting SGOs from focusing on specific student groups or educational approaches. Similarly, new governors should not be allowed to remove an organization from a state’s list unless that organization falls out of legal compliance; this stipulation would preempt the sudden disruption of a student’s education due to politics.”

___________________________________________________________________________

Are you a state or local policymaker interested in education reform? Reason Foundation’s education policy team can help you make sense of complex school finance data and discuss innovative reform options that expand students’ educational opportunities. Please reach out to me directly at jude.schwalbach@reason.org for more information.

The post Funding Education Opportunity: Study examines K-12 education spending, teachers’ salaries and benefit costs appeared first on Reason Foundation.

Policymakers must have the best data possible to inform their public education decisions. The following analysis from Reason Foundation’s K-12 Education Spending Spotlight brings together the latest figures from the U.S. Census Bureau and National Center for Education Statistics and highlights five key insights from our tool and their implications for state policymakers and other stakeholders.

These critical insights include examining and ranking every state’s total K-12 and per student public school funding, the public school enrollment levels in every state and how states continue to hire more non-teaching staff even as they lose students, how and why teachers’ salaries are failing to keep up with inflation in nearly every state, how much public school funding is increasingly being shifted to cover pension debt, and the disappointing student scores on key standardized tests since the pandemic.

Total U.S. public school funding is approaching $1 trillion and now exceeds $25,000 per student in eight states.

Nationwide, public school funding increased by 35.8% between 2002 and 2023, rising from $14,969 per student to $20,322 per student after adjusting for inflation, Reason Foundation’s K-12 Education Spending Spotlight finds.

In total, U.S. public schools received $946.5 billion in funding in 2023, with New York topping all states at $36,976 per student, followed by New Jersey at $30,267 per student.

Notably, eight states exceeded $25,000 per student in 2023: New York, New Jersey, Vermont ($29,169 per student), Connecticut ($28,975), Pennsylvania ($26,242), California ($25,941), Rhode Island ($25,709), and Hawaii ($25,485).

The lowest-spending state, Idaho, was the only state spending less than $12,000 per student. Utah, Oklahoma and North Carolina spent less than $14,000 per student.

Since the start of the COVID-19 pandemic, the largest increase in per-student spending has occurred in California, rising 31.5% from $19,724 in 2020 to $25,941 in 2023.

Michigan, Kentucky and Missouri were the next biggest percentage increasers, all spending 17% more per student in 2023 compared to 2020.

Per student spending also rose by over 15% from 2020 to 2023 in Hawaii, New Mexico, Arizona, Mississippi and Alabama.

Nationally, compared to pre-pandemic levels, K-12 funding is up by 8.6%, rising by $1,610 per student in real terms between 2020 and 2023. However, the bulk of these new education dollars, since 2020—approximately $1,181 per student—are from the $190 billion in federal COVID-19 relief funding that public schools received during the pandemic. While non-federal dollars increased by $429 per student during this time, this is a departure from pre-pandemic trends, when state and local funding rose by $1,089 per student between 2017 and 2020.

Policy implications of K-12 funding levels

For policymakers, K-12 funding has increased dramatically in the past couple of decades, with public schools in all 50 states seeing substantial increases. However, with federal pandemic relief funding now expired, combined with rising economic uncertainty, declining public school enrollment, and increased competition from school choice and homeschooling, the era of unrelenting public school funding growth may be coming to an end. Public school funding is at record levels, and state and local policymakers should shift the focus to maximizing the impact of existing K-12 dollars in ways that can improve student outcomes.

Public school funding is increasingly spent on employee benefits, including teacher pensions.

Inflation-adjusted K-12 education spending on employee benefits—which includes teacher pensions, health insurance, and other expenses—increased by 81.1% between 2002 and 2023, rising from $2,221 per student to $4,022 per student, Reason Foundation’s analysis shows.

In comparison, real spending on employee salaries grew modestly, rising from $8,449 per student to $9,098 per student, a 7.7% increase. As a result, for every new $1 that public schools spent on employee salaries between 2002 and 2023, benefit expenditures rose by $3.27. In 12 states, growth of employee benefits exceeded 100%, including Hawaii (194.1%), Vermont (171.3%), Illinois (169.9%), New Jersey (167.1%), and Pennsylvania (166.4%), as shown in Table 2.

In 2023, employee benefit costs in New Jersey were $8,333 per student. In New York, the cost was $7,949 per student. Vermont and Connecticut also spent more than $7,000 on employee benefits per student they serve.

Employee benefit costs also exceeded $5,000 per student in Pennsylvania, Illinois, Michigan, Massachusetts, Delaware, New Hampshire, Rhode Island, Wyoming, and Alaska.

Policy implications of rising benefits costs on K-12 spending

Research shows that teacher pension debt is the primary driver of rising benefit spending. For years, states have failed to set aside enough money to cover the pension benefits promised to teachers, resulting in hundreds of billions of dollars in unfunded liabilities (i.e., the difference between the total pension benefits owed to teachers and the dollars available in pension funds). Today, this means that more K-12 education funding must be used to cover pension costs, even while many states have reduced benefits for teachers, rather than in classrooms.

Policymakers should take steps to reverse this trend by paying down pension debt as fast as possible to avoid high-interest costs and modernizing antiquated assumptions and benefit designs. Otherwise, pension costs will continue to eat up a greater share of teachers’ paychecks and school districts’ budgets.

Despite plummeting enrollment, the surge in public school staffing has persisted.

Between 2002 and 2023, the number of public school staff increased by 15.1%, while student enrollment grew by only 4.1%. The bulk of new K-12 hires were non-teachers, which increased by 22.8%, such as counselors, social workers, speech pathologists, and instructional aides.

In comparison, the number of teachers rose by 7.6% during this time. Nationwide, non-teaching staff now account for over half, 52.5%, of all public school employees, up from 49.2% in 2002. Table 3 shows the growth in non-teaching staff, while Table 4 displays enrollment growth.

Since the start of the COVID-19 pandemic, the public school staffing surge has persisted. Despite public school enrollment falling by 1.18 million students between 2020 and 2023, public schools added over 81,000 non-teaching staff to their payrolls during that period.

For example, California has lost 318,532 students since 2020, but has added 3,400 non-teaching staff members, while New York has lost 159,701 students but has added 6,996 non-teaching staff members.

Public school enrollment fell in 39 states from 2020 to 2023.

The 2% increases in public school enrollment in Idaho and North Dakota were the largest gains in the country. The only other states where public school enrollment grew from 2020 to 2023 were South Dakota, Delaware, Louisiana, Utah, Alabama, Montana, Texas, Florida and South Carolina.

With a 6% decrease in public school enrollment, Hawaii has experienced the largest decline in public school students since the pandemic. Enrollment also decreased by more than five percent in New York, Mississippi, Oregon, and California, and by at least four percent in New Mexico, New Hampshire, Illinois, West Virginia, Colorado, Kentucky, Washington, Rhode Island, and Michigan, according to Reason Foundation’s analysis.

Policy implications of decreased public school enrollment and current staff sizes

With the National Center for Education Statistics projecting a 5.3% decline in public school enrollment between 2024 and 2032, current staffing levels are unsustainable. School closures are on the horizon in places like Boston, Houston, Seattle, and Oakland, but it will also be important to reduce staffing to levels that match enrollment.

To minimize the need for layoffs, school districts can leverage staff resignations and retirements, while also giving greater scrutiny to costly across-the-board pay increases. Critically, public schools should also consider the return on investment from decades of adding non-teaching personnel to their payrolls and whether this aligns with their core educational mission.

The average teacher salary has declined significantly since the onset of the COVID-19 pandemic.

Nationwide, the average inflation-adjusted teacher salary fell from $75,152 in 2002 to $70,548 in 2022, the most recent year with complete data available, a 6.1% decline, Reason Foundation finds.

However, most of this drop in teachers’ salaries occurred in the aftermath of the COVID-19 pandemic. Between 2002 and 2020, the average teacher salary remained virtually flat, decreasing by 0.6% to $74,698—but then from 2020 to 2022, it dropped by $4,151, or 5.6%.

From 2020 to 2022, the average teacher’s salary decreased by more than five percent in 38 states. They declined the most in North Carolina (−9.6%), New Mexico (−8.8%), South Carolina (−8.7%), West Virginia (−8.6%), and Mississippi (−8.2%).

Only one state, Minnesota, increased teachers’ salaries after the pandemic.

As a result of the decreases following the pandemic, only 10 states experienced positive gains in average teacher salary between 2002 and 2022, with Washington (18.6%), New York (12%), and Massachusetts (11.7%) leading the list, as shown in Table 5.

In comparison, three states saw teacher salaries decline by more than 20% from 2002 to 2022: North Carolina, Michigan, and Indiana.

Policy implications of teachers’ salaries declining

For over two decades, large and regular increases in public school funding haven’t boosted teacher salaries, and this is unlikely to change without structural reforms.

First, it’s important to understand why teacher salaries stagnated between 2002 and 2020. Public school revenue grew by $3,742 per student (25%) during this period, but funding increasingly went to cover the costs of support services spending, which rose by $1,135 per student (25.4%), and employee benefits, which increased by $1,745 per student (78.6%).

Because teacher pay is tied to years of experience and educational attainment—and teacher salaries vary substantially by state—it’s also possible that demographic shifts in the teacher population contributed to the observed trends. However, available federal data make it difficult to draw firm conclusions. While the share of teachers with over 20 years of experience has declined, educational attainment has increased, with the proportion of teachers holding only a bachelor’s degree falling over time.

What drove the decline in teacher salaries between 2020 and 2022?

Teacher turnover and other factors played a role, but historic inflation levels were likely the most significant factor. In the 2022 school year, the average monthly price level was 9.6% higher than it had been just two years earlier, negating funding increases from state legislatures and eating into teacher paychecks. Large and widespread increases in nominal pay would’ve been required just for teacher salaries to keep pace with inflation, let alone increase, during these years.

For policymakers, the key takeaway is that public school spending decisions, combined with rising pension costs, are eating into teachers’ paychecks. Even if teacher demographics have shifted over time, school officials are increasingly prioritizing spending education funding on non-teaching personnel, while unfunded pension liabilities also consume a larger share of K-12 dollars.

Student outcomes were falling even before the COVID-19 pandemic, despite record funding levels.

The National Assessment of Educational Progress (NAEP) is the gold standard for measuring national and state K-12 outcomes in math, reading, and other subjects. While the National Center for Education Statistics (NCES) publishes average scale scores that are precise, they also publish more intuitive proficiency levels: Basic, Proficient, and Advanced.

Importantly, the proficient benchmark is an aggressive target that doesn’t equate with grade-level proficiency or meeting state standards. According to NCES, “Students performing at or above the NAEP Proficient level on NAEP assessments demonstrate solid academic performance and competency over challenging subject matter.” For this reason, our analysis focuses on the share of students who perform below the basic performance threshold.

Across all four subjects examined—4th and 8th-grade math and reading—the trend is clear: the share of students scoring below NAEP basic fell between 2003 and 2013, increased by 2019, and then grew sharply in the wake of the COVID-19 pandemic in 2022. Except for 4th-grade math, scores regressed again from 2022 to 2024, and outcomes in all four subjects were worse in 2024 than in 2003. These figures are presented in Table 6 below.

For low-income students, a similar trend is observed, as shown in Table 7. Student performance improved from 2003 to 2013, worsened before the pandemic in 2019, and then dropped dramatically in 2022.

By 2024, low-income 8th graders fared worse than they did in 2003, while 4th-grade students still performed slightly better. Notably, performance in three of the four subjects was worse in 2024 than in 2022.

Policy implications of NAEP scores

For policymakers, a pressing concern is the widespread failure of public schools to get students back up to speed in the wake of the COVID-19 pandemic, despite receiving $190 billion in federal Elementary and Secondary School Emergency (ESSER) relief funding during the pandemic.

Research shows that public schools were given more than enough money to reopen safely; yet, many used the windfall to prioritize things other than academics, even as students fell behind. For instance, researchers at Georgetown University’s Edunomics Lab estimate that approximately 20% of the federal pandemic relief dollars were allocated to school facilities, including building repairs and HVAC upgrades. While this was permitted under the law—and some public schools used their federal relief funds wisely—ESSER was a policy failure, especially when viewed through the lens of student achievement.

It’s also notable that, even before the pandemic, student outcomes were trending downward despite record education funding levels across states. For example, 34% of 4th graders and 27% of 8th graders scored below basic on NAEP reading in 2019. While gains were made between 2003 and 2013, a large share of students still scored below the lowest performance threshold in this peak year.

Conclusion

In the years ahead, policymakers will need to address a complex set of K-12 challenges, including declining public school enrollment, bloated staffing for current and projected enrollment levels, mounting pension costs and debt, stagnant teacher salaries, and underwhelming academic outcomes. These problems arose during a period when public schools saw historic funding increases, and money alone won’t solve them.

Instead, lawmakers will need policy solutions that address their root causes and maximize the use of existing K-12 funding. Reason Foundation’s K-12 Education Spending Spotlight aims to help them get started.

Related: K-12 Education Spending Spotlight Archives

The post K-12 Education Spending Spotlight 2025: Annual public school spending nears $1 trillion appeared first on Reason Foundation.

Research by Stanford University’s Thomas Dee shows declining birth rates, domestic migration, and more families choosing private schools and homeschooling during and after the COVID-19 pandemic school closures are all factors in declining public school enrollment. 

However, enrollment trends vary across states. Some major school districts and states saw student numbers drop even before the pandemic. To put the public school enrollment figures into perspective, it is useful to examine state-level and longitudinal data reported by the National Center for Education Statistics (NCES). 

Here are five key takeaways from the data and interactive tools to explore other key trends. 

1. Public school enrollment has fallen by 1.28 million students since the start of COVID-19. 

In the U.S., the COVID-19 pandemic is viewed as starting in February or March 2020. Between the 2020 and 2024 fiscal years (FY), public school enrollment fell by 1.28 million students or 2.5%. 

States such as New York, California, Mississippi, and West Virginia all lost more than 5% of their students during that period.

Only nine states saw growth in public school enrollment during that time. In fact, North Dakota is the only state with public school enrollment gains over 2% from the pre-pandemic year. 

In comparison, in the four years leading up to the COVID-19 pandemic, public school enrollment increased in 31 states, with sharp increases in North Dakota (6.9% enrollment growth), Idaho (6.4%), Nevada (6.3%), Utah (5.7%), and Washington (5.1%). Chart 1 shows public school enrollment trends between the 2012 and 2024 fiscal years, according to NCES data.

Chart 1: Public school enrollment trends (FY 2012 to FY 2024)

2. The short-term public school enrollment recovery after the pandemic in 2022 and 2023 appears to be over. 

In the 2022 and 2023 fiscal years, the nation’s public schools recouped some of their pandemic enrollment losses with slight increases each year over FY 2021 levels, when enrollment was at its post-pandemic low point.

However, the latest National Center for Education Statistics data signals that any hope of further year-over-year enrollment gains might be over. In the 2024 fiscal year, nationwide, public schools lost over 102,000 students compared to the number of students in 2023, with 39 states experiencing a decrease in enrollment, according to NCES data. 

The states with the largest public school enrollment declines from 2023 to 2024 included West Virginia (-1.7% enrollment decline), Arkansas (-1.7%), and Wyoming (-1.5%).

Among the 11 states that increased public school enrollment in FY 2024, the states with the largest gains included New Jersey (0.6% enrollment growth), South Carolina (0.6%), and North Dakota (0.4%). 

3. Public school enrollment was inching upward before COVID-19.  

Before the COVID-19 pandemic, public school enrollment increased by 1.3 million students, or 2.6%, from 2012 to 2020. During this time, the majority of states experienced an increase in public school enrollment, with North Dakota (19%), Utah (14.3%), and Nevada (13%) seeing the most significant increases. 

U.S. public school enrollment started to flatten somewhat in the years immediately preceding the COVID-19 pandemic, but 32 states still had an increase in public school students between 2019 and 2020. 

4. COVID-19 aggravated existing enrollment loss trends in some states while reversing growth trends in others. 

For some states, the pandemic aggravated existing declines in public school enrollment. From the 2012 to 2020 fiscal years, states like New Hampshire (-7.6% drop in enrollment), West Virginia (-6.9%), and Illinois (-6.7%) lost considerable percentages of their public school student populations.

Other states saw the pandemic stop and reverse their enrollment trends. For example, Oregon saw a 7.5% increase in public school enrollment between FY 2012 and FY 2020 but a 6.2% enrollment loss between FY 2020 and FY 2024. 

Washington experienced a similar trend, with 9.2% enrollment growth from 2012 to 2020 and a 4.2% enrollment loss during and after the pandemic. Other states like New York (-0.4%), California (-0.6%), and Massachusetts (0.6%) had relatively flat enrollment changes pre-pandemic that turned sharply downward after FY 2020. Chart 2 compares pre-pandemic and post-pandemic trends in public school enrollment, based on NCES data

Chart 2: Changes in each state’s public school enrollment from 2012 to 2024

5. Public school enrollment declines are expected to continue for years. 

The National Center for Education Statistics projects that public school enrollment will decline to 46.9 million students by the 2032 fiscal year, representing a 5.3% decrease from 2024.  

States such as Hawaii, California, Mississippi, New Mexico, and New York are forecasted to lose over 12% of their public school students during this time, with only 13 states projected to increase the number of students.  

Conclusion 

Nationwide, public school enrollment has decreased by over one million students since the start of the COVID-19 pandemic. This significant drop reversed the modest growth observed in the years leading up to the pandemic. Local context is essential. Not all states experienced declines after the pandemic, while some states faced enrollment decreases that had started well before the pandemic. 

As public schools become increasingly underutilized and school districts face mounting cost pressures, state and local policymakers must adjust to current enrollment and the forecasts of fewer students in the decade ahead. Public school enrollment trends will impact state and local budgets, bond elections, and teacher pension liabilities that policymakers must grapple with.

The post Examining the latest K-12 public school enrollment data and trends appeared first on Reason Foundation.

But despite what United Teachers Los Angeles and others might claim, LAUSD’s budget woes aren’t due to a lack of funding. According to the latest federal data, LAUSD received nearly $26,900 per student in fiscal year 2023. Taxpayers sending over $537,000 for each LAUSD classroom of 20 students is enough to provide a good education for kids.  

Instead, LAUSD’s problem is its lavish spending. Between 2012-13 and 2024-25, the district’s enrollment plummeted by 164,000 students, yet it added over 17,000 non-teachers such as instructional aides, school counselors, and social workers. The district also doled out a 21% pay raise to teachers in 2023, knowing that billions in federal COVID-19 pandemic relief dollars were set to expire the following year.   

California ranks fourth in the nation in public school spending growth since 2002, which has masked LAUSD’s financial mess. However, after two years of budget deficits and the current economic uncertainty, the state budget is projected to tighten in the coming years, and the district’s mishandling of COVID-19 reopening has accelerated its enrollment declines. 

LAUSD can do a few things to get its fiscal house in order, or it risks the same fate as school districts like Oakland and San Francisco, which are on the brink of insolvency.   

For starters, LAUSD needs to cut spending to sustainable levels. On average nationally, labor accounts for roughly 80-90% of typical public school budgets, so personnel reductions are unavoidable for LAUSD. This is never easy, but can be done in ways that minimize disruptions to classroom learning, such as trimming back on administration and non-instructional school staff. Regular attrition, such as retirements and resignations, can also be leveraged to minimize the need for pink slips.

LAUSD can also save money by reducing its facilities footprint. Research published by Available to All indicates that nearly half of the district’s elementary schools have experienced enrollment declines of 50% or worse in the past two decades, leaving an estimated 160,000 empty seats. 

Underutilized schools are costly to maintain and spread the school district’s financial resources thin, which can result in fewer elective classes and enrichment opportunities for kids. School closures are politically challenging but necessary if LAUSD is going to get on a sustainable path.  

Next, LAUSD can mitigate enrollment losses by giving families more options. States and school districts across the country are moving away from residential assignment, where students are zoned to schools and have limited or no options. Public school open enrollment gives students access to seats in schools regardless of where they live, putting parents in the driver’s seat and creating a competitive environment where public schools are incentivized to innovate, improve and attract students.

A study on LAUSD’s Zones of Choice program—a limited form of open enrollment—suggests that embracing an expansive policy would pay dividends for the school district. In their working paper on the impact of the Zones of Choice program, the University of Chicago’s Christopher Campos and the University of California-Berkeley’s Caitlin Kearns found significant gains in student achievement and college enrollment, which they attribute to increased competition. 

“The evidence demonstrates that public school choice programs have the potential to improve school quality and reduce neighborhood-based disparities in educational opportunity,” the researchers conclude.

Next, LAUSD can mitigate enrollment losses by giving families more options. States and school districts across the country are moving away from residential assignment, where students are zoned to schools and have limited or no options. Public school open enrollment gives students access to seats in schools regardless of where they live, putting parents in the driver’s seat and creating a competitive environment where public schools are incentivized to innovate, improve, and attract students.

A study on LAUSD’s Zones of Choice program—a limited form of open enrollment—suggests that embracing an expansive policy would pay dividends for the school district. In their working paper on the impact of the Zones of Choice program, the University of Chicago’s Christopher Campos and the University of California-Berkeley’s Caitlin Kearns found significant gains in student achievement and college enrollment, which they attribute to increased competition. 

“The evidence demonstrates that public school choice programs have the potential to improve school quality and reduce neighborhood-based disparities in educational opportunity,” the researchers conclude.

The solutions to LAUSD’s fiscal woes are straightforward—spend less, give parents choices, and focus on academics. The challenge will be overcoming objections from United Teachers of Los Angeles and other groups that oppose anything that disrupts the failing status quo. However, adopting these reforms would be a win-win for the district and students and would be worth the political fight.

A version of this column first appeared at the Los Angeles Daily News.

The post How LAUSD can deal with budget deficit, declining enrollment appeared first on Reason Foundation.

Portable education funds are dollars sensitive to student enrollment, meaning school districts gain or lose funding with changes in student counts. Public schools generally lose funding when enrollment falls, but K-12 funding systems vary substantially across states.

Reason Foundation’s funding portability metric measures the strength of this relationship, looking exclusively at state and local education funding. The main benefits of having a higher portability score are:

• Compatibility with Private School Choice: When education funds are sensitive to enrollment, dollars can follow the child to public school alternatives.
• Compatibility with Public School Choice: Public schools have greater financial incentives to accept transfer students when greater shares of education funds accompany them across district lines.
• Better Incentives: Public schools have a stronger incentive to be responsive to parents’ needs when funding tracks closely with enrollment.
• Efficiency: Tying public school funding to enrollment gains or losses ensures that resources aren’t held up in declining-enrollment school districts.

This analysis examines the K-12 finance systems in five states through a portability lens. With public education changing rapidly, policymakers must assess whether their approach to school finance can support a dynamic ecosystem characterized by parent choice, competition, and tightening state budgets. We start with a brief overview of our methodology, summarize each state’s portability score, and then compare these scores to school choice funding levels in each state. 

The takeaway from our findings is clear: K-12 finance formulas can substantially impact how school choice programs are funded, which in turn can affect the options available to students and the costs to taxpayers.

Methodology

The criteria used to calculate funding portability scores are summarized in Table 1 below. For each state, we gathered data, reports, and other information directly from state education agencies and other public sources. We used school finance documents, state statutes, and direct contact with state education agency officials for each funding source or allocation stream to determine whether it is provided to school districts based on marginal changes in student enrollment. Importantly, local dollars that contribute to state formula funding were considered similarly to state formula dollars since they are essentially allocated from one pot of funding.

Table 1: Funding Portability Score Criteria

_{This approach was developed based on the work of researchers at Georgetown University’s Edunomics Lab, to whom we owe a debt of gratitude. Our work does not replicate their methodology and has a distinct objective. However, the results of our research might be similar in some instances. For more information, see https://edunomicslab.org/category/student-based-allocation/.}

State Scores

The following section summarizes the results of our portability analysis in each of the five states examined: Arizona, Arkansas, Georgia, New Hampshire, and Oklahoma.

1.      Arizona

In the 2023 fiscal year (FY), Arizona’s non-federal K-12 budget was $13 billion, or $11,503 per student. Of that amount, $10.5 billion, or $9,295 per student, is portable. As a result, Arizona’s portability score is 80.8%, the highest score of the five states examined.

Arizona’s public school funding is highly sensitive to student enrollment because a large share of K-12 funding is allocated through the state’s funding formula, which uses weighted-student funding to tie dollars to students. However, the state still has room for improvement.

The largest pot of dollars that aren’t portable are school district secondary property tax levies, which total nearly $1.8 billion. These are voter-approved levies for capital bonds, dollars to supplement district operations, and other purposes. Because these property tax funds are district-specific, they are not sensitive to student enrollment. Similarly, there is $186.4 million in other special property taxes that are district-specific and not tied to enrollment. From state funding sources, Arizona has $616 million in programs that aren’t allocated based on enrollment, as well as $370 million in state grants outside of its formula that are for specified school programs.

2.      Arkansas

In FY 2023, Arkansas’ non-federal K-12 budget was $5.6 billion, or $12,451 per student. Of that amount, $3.9 billion, or $8,730 per student, is portable. As a result, Arkansas’ portability score is 70.1%, ranking only behind Arizona in the states examined.

Arkansas scores high because a large share of K-12 funding is allocated through the state’s funding formula, the Matrix, which is sensitive to student enrollment. Additionally, many of the state’s largest grants outside of the formula—such as funds for low-income students, those in alternative learning environments, and English learners—are also allocated on a per-student basis and thus are portable.

Arkansas’ K-12 funding system still has a portion of dollars that aren’t portable, with the largest pot being non-formula property tax levies that total $771.0 million. These are voter-approved levies for capital bonds, dollars to supplement district operations, and other purposes. From state funding sources, Arkansas has $265.9 million in small, restricted grants for career education, special education, and other programs that also aren’t allocated based on enrollment.

3.      Georgia

In FY 2023, Georgia’s non-federal K-12 budget was $23.8 billion, or $13,652 per student. Of that amount, $10.3 billion, or $5,914 per student, is portable. As a result, Georgia’s portability score is 43.3%, a relatively low score compared to other states. This is mainly because a small share of K-12 funding is allocated through the state’s funding formula—the Quality Basic Education (QBE) formula—which is the only source of funding that is portable. Georgia also provides $545.8 million in funding to partially equalize local levies for school districts with low property wealth in per-student terms, dollars that are also sensitive to enrollment.

Most other funding sources outside the QBE, however, aren’t portable. The largest pot of non-portable dollars are school district property tax levies, which total nearly $8.4 billion when excluding property tax funds that contribute to the QBE. These are levies for capital bonds, dollars to supplement district operations, and other purposes. There is also $2.2 billion in various kinds of local sales taxes that are district-specific and not sensitive to enrollment. From state funding sources, there is $615.7 million in state grants for capital funding, pre-kindergarten, and other special programs that aren’t portable. Finally, the state also provides $387.1 million in categorical grants for transportation, nursing, sparse school districts, and other purposes that aren’t allocated based on enrollment.

4.      New Hampshire

In the 2022 fiscal year, New Hampshire’s non-federal K-12 budget was $3.3 billion, or $19,827 per student. Of that amount, $854.4 million, or $5,067 per student, is portable. As a result, New Hampshire’s portability score is 25.6%, the lowest score of all five states examined. Most of the Granite State’s portable dollars are allocated through its Equitable Education Aid (EEA) formula, which has several allocations tied to student enrollment.

The primary reason for New Hampshire’s low score is its reliance on local tax dollars that don’t contribute to the state’s EEA formula. In total, non-formula local revenue accounted for $2.3 billion or 70.2% of all K-12 dollars. Another key driver of non-portable funding is the state’s Stabilization grant, a hold harmless provision that provided $157.5 million to districts that experienced funding losses in 2012 when New Hampshire adopted changes to its funding formula. About 33% of school districts still receive Stabilization funding, the same share as when it originated in 2012.

5.       Oklahoma

In FY 2022, Oklahoma’s non-federal budget was $6.9 billion, or $9,888 per student. Of that amount, $6,402, or $4.5 billion, was portable. As a result, Oklahoma’s portability score is 64.8%, ranking third of the five states examined. The Sooner State’s relatively strong score reflects the fact that most of its K-12 dollars are allocated through funding allotments and weights in its Foundation Aid and Salary Incentive Aid formulas, which tie dollars to enrollment.

The lion’s share of non-portable dollars in Oklahoma’s funding system—about $2.4 billion—are local dollars that don’t contribute to either of the state’s funding formulas. Additionally, the state has about $211 million in intermediate revenues that also aren’t allocated based on student enrollment.

How does portability affect school choice funding?

Across these five states, there are a few drivers of non-portable dollars, including hold harmless provisions and state categorical grants. However, the primary factor harming portability is non-formula local dollars. It’s worth emphasizing that, in many states, many local K-12 dollars are portable since they contribute to the state’s funding formula. For instance, in Arizona, local funding accounts for 37.4% of state and local education funds, but less than half of this funding is non-formula. But in other states, such as New Hampshire, the bulk of local dollars are non-formula.

School choice policy designs vary, but each state’s portability score can be compared to the financial support provided to their programs. To do this, we first obtained school choice funding data for each state from EdChoice and public school funding from each respective state education agency. We then calculated the share of per-student dollars that school choice participants receive on average compared to the average per-student funding public schools receive. The results in Table 2 paint a clear picture: states with more portable K-12 funding systems tend to have a greater share of dollars following school choice participants.

The most striking comparison is between Arizona and New Hampshire. Both states tether school choice funding to their respective funding formulas: 83.2% of dollars follow the school choice participants in Arizona compared to only 25.7% in New Hampshire. This is due to the fact that Arizona’s funding system allocates most of its K-12 dollars through the state’s funding formula, while New Hampshire’s funding system relies heavily on non-formula local dollars that stay with school districts regardless of enrollment changes.

Interestingly, even in states where school choice funding isn’t tied directly to per-pupil formula amounts—Arkansas, Georgia, and Oklahoma —their portability scores still predict the share of funding that follows school choice participants. For instance, Oklahoma’s portability score of 64.8% is nearly identical to its school choice funding share of 65.7%. This is likely because school choice programs are designed to reflect the revenue lost when students leave public schools rather than trying to achieve funding parity for school choice participants. 

The takeaway is clear: when it comes to school choice, K-12 finance systems are important determinants of how much funding follows the child.  

Table 2: Comparing K-12 Funding Portability with School Choice Funding

_{Note: The ESA amount and public school funding comparisons were made using the most recent available data at the time of writing. As a result, some of the years might not match. However, this shouldn’t substantively affect the observed trends. 
*Includes ESA participants with disabilities, who receive higher scholarship amounts. The median award amount, excluding these students, is $7,409. Using this amount instead would yield a school choice share of 64.4%.
**Oklahoma funds participants based on family income. $6,500 is the median scholarship amount of the five tiers.}

Conclusion

Generally, states with weighted-student formulas that limit non-formula dollars will score highest on Reason Foundation’s funding portability metric. Low-scoring states can still implement private school choice programs, but incompatible K-12 finance systems could result in lower funding amounts for school choice participants. A large gap between per-student public school funding and choice scholarship amounts can have negative downstream effects. Choice programs with comparatively low scholarship amounts can limit students’ options since states that spend more on public education also tend to have higher tuition costs at private schools. Similarly, if policymakers in low funding-portability states want to achieve better funding parity between choice programs and public schools, they can only do so at an additional cost to taxpayers. 

At a time when school choice is fueling demand for new K-12 options, school finance reform is one way for states to incentivize a robust supply of providers. School finance reform can also help lessen the burden on taxpayers as public education enters a new era that features more choice and competition.  

The post Which K-12 finance systems foster school choice? appeared first on Reason Foundation.

Under the proposal, individuals and businesses would receive tax credits for donating to scholarship-granting organizations —nonprofits that would award funds to students for things like private school tuition, homeschooling curricula, and other educational purposes. The program would initially be capped at $5 billion annually, or enough to fund about one million students at $5,000 each.

Proponents say the federal program would bring school choice to all 50 states, making about 90% of all U.S. students eligible to participate overnight. While we share this goal, there are practical reasons to respect federalism with school choice. 

For starters, a federal school choice program would establish a one-stop shop for Congress to impose nationwide mandates on participating private schools. In its current form, the bill’s language already includes a deal-breaker: participating private schools would be forced to accept all students with disabilities and follow the Individualized Education Plans (IEP) created for them by public schools. IEPs are notoriously bureaucratic documents that specify things like required services and accommodations, paying little attention to student outcomes.

While many private schools specialize in special education—at least 137,000 special needs students participate in school choice—some aren’t set up to provide these services. And for students with disabilities, making private schools more like public schools defeats the whole point of school choice: providing alternatives to public schools’ byzantine special education system.

But this would only be the start of federal intrusion into private schools. The next time Democrats control Congress, they can rewrite the law to teachers’ unions benefit such as subjecting private schools to curricular standards, testing mandates, on-site inspections, admissions requirements, and more. 

While attacks on school choice are nothing new, a federal program that would be the biggest in the nation raises the stakes too high for everyone. Regulations like these would standardize private schools, resulting in fewer meaningful alternatives for families. It’s hard to see how this wouldn’t happen–just look at how Congress has weakened the federal D.C. private school voucher program over time, or the regulatory bureaucracy that has evolved around other federal tax credits.

A federal school choice program would also kill state-level momentum at a crucial time. School choice advocates are on a roll, passing 16 programs with universal student eligibility since the start of COVID-19. But even in red states, lawmakers phasing in these programs, including West Virginia, Louisiana, and Arkansas, face fierce opposition over the cost to state budgets, putting planned school choice program expansions at risk. 

“We have this line item [education savings accounts] that continues to just expand that may have been good in concept when we chose to do this, but the application now we see is causing some problems,” says West Virginia Republican delegate Dana Farrell, who, notably, is supportive of school choice. 

Even though state-level concerns about escalating choice program costs are overblown, a federal program might lead state leaders to decide that the budget battles aren’t worth it, while giving opponents an easy talking point. Similarly, states considering new policies, such as Mississippi and Montana, would have weaker incentives to invest state dollars if federal tax credits are covering the tab. 

Every family should be able to choose the education that aligns with their unique needs and values. For states without school choice programs, the best path forward is to convince state lawmakers and voters that private alternatives are good for kids and can strengthen public schools. But achieving this aim through Congress is shortsighted and threatens the core pillar of school choice: reducing the government’s role in K-12 education. Federal school choice would be a step in the wrong direction.

The post Don’t trust the federal government with the nation’s largest school choice program appeared first on Reason Foundation.

Montana employs a hybrid education funding formula that has features of multiple formula types—student-centered, resource-based, and program-based formulas. As a result, substantial shares of education dollars are ineffectively delivered to school districts based on inputs, not individual student counts. Notably, only seven states use resource-based funding as their primary funding formula to allocate education dollars to school districts because they’re generally opaque and restrictive. Furthermore, no states employ program-based funding as their primary formula. This puts Montana in the minority of states.  

What are the drawbacks of Montana’s approach to K-12 funding?

Rather than putting the focus on students’ needs, Montana’s education funding formula is built around the needs of school districts. When legislators make critical decisions, the conversation should be squarely on kids and outcomes, not school districts and inputs, like staff counts. Importantly, Montana’s funding formula is also opaque, with only a handful of experts who understand how money is distributed.

What are the most pressing problems with Montana’s funding formula?

Montana’s basic entitlement lacks a coherent purpose. Rather than targeting additional dollars to rural or sparse districts with low enrollment, it instead provides a foundational grant, or a funding floor, to all districts.  

Additionally, Montana’s base funding amount (i.e., per-Actual Number Belonging) isn’t uniform. Most states have a standard per-student amount that is sometimes adjusted by grade level. But Montana uses so-called “decrement” funding that reduces transparency and further subsidizes districts with low enrollment.

Finally, Montana’s Quality Educator Payments focuses on inputs rather than students. Under the program, each school district in the state receives a set amount ($3,566 in the 2024 fiscal year) to fund each licensed educator and other licensed professionals, such as social workers, counselors, psychologists, and others. These payments incentivize hiring additional non-teaching staff because each employee generates an additional state subsidy. Additionally, research shows that teaching credentials have a weak relationship with student achievement and Montana students would be better served by allowing school districts to spend these dollars flexibly instead.

What about how local property tax dollars are equalized under the state’s funding system? 

The way Montana equalizes local property tax dollars is also a problem. Reason Foundation research shows that Montana’s higher-wealth school districts generally receive more funding per student, that greater local tax effort (i.e. districts with higher tax rates) is associated with lower per-student funding, and that higher school district poverty rates are also associated with lower per-student funding. Montana’s equalization mechanism is complex but fails to accomplish its primary goal: to streamline K-12 education dollars in a way that’s fair for students and taxpayers.

What education funding reforms should state policymakers pursue to help students and schools? 

Montana should fully adopt a student-centered funding formula as its primary way to allocate education dollars. Student-centered funding is an approach to K-12 education finance that ties education funding to individual students. It can take many forms, but typically sets a base funding amount for regular-program students, with additional weights added for classifications such as special education. Policymakers should also streamline how local dollars are equalized among school districts to reduce funding disparities, increase transparency, and result in greater tax fairness. 

Which states have student-centered funding?

The majority of states—30 states—use student-centered funding as the primary formula to allocate education dollars to school districts. This includes states with rural student populations similar to Montana, including Oklahoma, Nebraska, and New Hampshire.   

What are the benefits of student-centered funding?

Unlike other school finance approaches, student-centered funding puts student needs as the focus of education funding decisions. It also gives policymakers a clear policy lever for allocating dollars based on their goals and priorities for public education, such as improving special education services or career and technical education. Finally, student-centered funding is a transparent approach to school finance that encourages local flexibility over spending decisions.

How are weights used in a student-centered funding formula?

States use weights to deliver extra funding to support certain student populations. The most frequently used weights are for special education students, English language learners, and low-income students. Sometimes weights target additional dollars to gifted and talented students or students enrolled in career and technical education. Ultimately, policymakers can choose weights based on their K-12 priorities.

Is student-centered funding the same thing as school choice?

No, student-centered funding is not a school choice program. Both red and blue states use student-centered funding to allocate dollars to public school districts. For example, states such as Texas, Tennessee, Utah, Kansas, California, and Oregon all employ some form of student-centered funding.

What is an example of a state that has adopted student-centered funding similar to what Montana should do?

Most recently, Mississippi adopted student-centered funding in 2024, and Tennessee adopted it in 2022. But California’s transition to student-centered funding—just over a decade ago—provides valuable research and insight.

In 2013, California’s Local Control Funding Formula (LCFF) streamlined more than 30 categorical grants into a single weighted-student formula. A study by Education Trust-West found that this change helped drive substantial improvements in funding fairness.

The Local Control Funding Formula remains a popular reform. In a survey of California’s school district superintendents, 82 percent agreed that the funding formula leads to greater alignment among goals for serving students, strategies, and resource allocation decisions, and 74 percent of superintendents indicated that the financial flexibility enabled their school districts to better match education spending with their schools’ local needs. A separate survey found that, of those familiar with the California law, 72 percent of likely voters and 84 percent of parents with school-aged children viewed it positively.

The post Frequently asked questions about Montana school finance reform appeared first on Reason Foundation.

“Thirty-eight states have regulations. Illinois is an outlier. This is not something we want to be an outlier on,” said Illinois State Rep. Terra Costa Howard, the bill’s sponsor.

The state’s House Education Policy Committee recently voted in favor of HB 2827, which now heads to the House floor.

The push for greater oversight stems partly from ProPublica and Capital News Illinois reporting, including a story detailing a horrifying account of a boy referred to as “L.J.”

In 2021, when L.J.’s public school informed his mother, Ashley White, and her boyfriend, Brian Anderson, that he’d have to repeat the third grade, they unenrolled the nine-year-old. The couple claimed they were homeschooling but were doing nothing of the sort—they physically and emotionally abused L.J., who received little or no education at all for over a year.

The story is gut-wrenching, and the reporters suggest that the state’s lax homeschooling laws are to blame. “No oversight also means children schooled at home lose the protections schools provide, including teachers, counselors, coaches, and bus drivers — school personnel legally bound to report suspected child abuse and neglect,” wrote Molly Parker and Beth Hundsdorfer, who brought the story to light.

However, the regulations proposed by HB 2827 likely would not have made a difference for L.J. and could make successful homeschooling more difficult for thousands of other kids. Soon after he was pulled from school, White and Anderson were reported to the state’s Department of Child and Family Services (DCFS), which conducted multiple investigations before finally removing him in December 2022. DCFS had the couple on their radar, and it was their responsibility to address the alleged abuse regardless of whether homeschool regulations were in place. This was a DCFS failure, not a homeschooling failure.

The unfortunate fact is that regulating homeschools won’t protect children from abuse. Research indicates that homeschoolers are no more likely to be abused at home than public school students, with at least one study finding no relationship between the amount of homeschool regulations and the frequency of homeschool abuse.

And while school officials are mandated to report suspected incidences of abuse, less than one-quarter of referrals to child welfare agencies in 2023 came from education personnel, according to a report published by the U.S. Department of Health and Human Services (HHS).

Additionally, many of these referrals aren’t reliable. A study published by the journal Child Abuse and Neglect found that education personnel had the lowest substantiation rates of professional reporters at only 12.7%, ranking well below rates for law enforcement (39.4%), medical personnel (34.9%), social services staff (28.7%), and others.

Still, educational neglect is often cited as a reason for greater state oversight of homeschoolers, with some fearing that they won’t keep up with their public school peers or learn the right content. But Illinois House Bill 2827 would give public school officials broad authority to demand things like curricula, work samples, and other learning materials from parents. Not only is this ripe for abuse—all homeschoolers would be subject to investigation at any time—but it also infringes on families’ diverse approaches to homeschooling that have been shown to work.

For instance, some homeschool families take an unconventional approach called unschooling, also known as self-directed learning. The general idea is that students learn best when pursuing their interests, free from the rigid curricula and other constraints typically found in public school classrooms. Unschooling “is the act of fusing living and learning, of seeing them as one and the same,” writes homeschooling expert Kerry McDonald.

While unschooling isn’t for everyone, McDonald’s research details numerous homeschooled families (including her own) who have successfully adopted this approach. Under HB 2827, parents like McDonald and others could face truancy charges or worse if a hostile school official doesn’t like how they educate their kids.

The regulations proposed by Illinois lawmakers will not help the kids they are intended to help. Instead, this bill would interfere with the thousands of homeschool parents deeply invested in seeing their children succeed.

At a time when 41% of the state’s 4th graders aren’t reading at a basic level, policymakers in Illinois and around the country should turn their attention to improving public schools.

A version of this column first appeared at RealClearEducation.

The post The push for greater oversight of homeschoolers appeared first on Reason Foundation.

The National Center for Education Statistics (NCES) expects these downward trends in public school enrollment to continue. It projects statewide enrollment losses of 15.7 percent by the 2031-2032 school year.

With decreased enrollment and federal pandemic relief funding expiring, Southern California school districts face severe budget crunches. State and local budgets for the next fiscal year are still being developed, but LAUSD’s projected deficit is $94.5 million, Long Beach Unified’s expected deficit is $54 million, and Santa Ana Unified’s is facing a whopping $180 million budget deficit.

School districts facing these massive deficits should be looking to right size. However, new data from Reason Foundation shows that California’s public schools have been slow to respond to the red ink and loss of students. In fact, California has actually closed fewer public schools in recent years. In total, California closed 31 public schools in 2019-2020 but only closed seven public schools statewide in 2023-2024, which is even fewer public school closures than in smaller, rural states like South Dakota and Utah.

Today, California has thousands of underutilized schools. Statewide research published by The 74 shows that 1,400 public schools lost at least 20% of their enrollment during the pandemic, 125 of which were in LAUSD. Underutilized schools are expensive to operate and spread resources thin, which isn’t good for students.

Generally, public school funding is tied to student enrollment, and fewer students mean fewer dollars. But during the pandemic, California’s public schools got a windfall of federal relief cash, and non-federal funding rose faster than in any other state—by $1,691 per student after adjusting for inflation.

California also has a generous hold harmless provision in its funding formula, allowing public schools to collect funding for students they had in previous years but who are no longer at the schools—known as “ghost students.” A Reason Foundation study estimated that California funded 401,000 ghost students in 2022-2023, costing taxpayers $4 billion.

Together, these policies insulated public schools from making difficult budget decisions like closing underutilized schools, even allowing them to give in to teacher union demands for salary increases and bonuses. For example, LAUSD—which got billions in federal COVID relief funds—gave teachers a 21% hike pay hike in 2023 and doled out pay bumps to counselors, psychologists, nurses, and others.

With federal relief dollars expiring and a bleak state budget outlook, school districts are beginning to face fiscal reality. California’s Legislative Analyst’s Office estimates that the state’s budget deficit could grow to $30 billion by 2028-2029, which would put future K-12 funding increases in jeopardy. Statewide, inflation-adjusted public school funding grew by 59% per student between 2002 and 2022, but declining enrollment puts schools in unchartered waters.

School closures are difficult and politically fraught, and they will not alone balance school district budgets. However, they are critical to properly serving the students still in public schools, right-sizing spending, and reaching fiscal sustainability.

State policymakers should shine a light on the problem by requiring the state to collect and report on vacant and underutilized school buildings annually. That way, taxpayers and other stakeholders can hold public schools accountable for being good stewards of public resources. For their part, local policymakers must tackle enrollment declines and school closures head-on and resist attempts to delay or block plans to reduce their facilities footprint.

Ultimately, California’s public schools must prioritize the students still in them, which will require closing schools and making other difficult decisions such as staff and programmatic reductions.

A version of this column appeared in the Orange County Register.

The post Southern California school districts are serving fewer students and facing massive budget deficits appeared first on Reason Foundation.

With falling birthrates—and parents looking to K-12 alternatives such as private schools and homeschooling—state and local policymakers will need to right-size public education. In school districts with significantly fewer students—and presumably fewer dollars— public school closures will be necessary since under-enrolled schools spread resources thin, are costly to maintain, and are often lower-performing.

The most recent federal data from 2021-22 shows that school closures were down by nearly one-third compared to pre-pandemic levels. That’s because many school districts could plug budget holes with the $190 billion in federal COVID-19 relief funding they got during the pandemic. Now that these federal dollars are expiring, public schools are feeling the fiscal impact of losing students.

As states and districts begin grappling with having fewer students and their fiscal realities, new data published by Reason Foundation indicates that public school closures were on the upswing across states in 2024. Reason obtained school closure data from 15 states, including California, Colorado, Florida, and New York, finding that total school closures returned to pre-pandemic levels in 2023-2024. Across the 15 states with data available, there were 98 public school closures in 2023-2024—nearly the same number closed, 99, in 2019-2020.

Despite losing over 5% of their public school students, California’s public school closures declined each year since the start of the COVID-19 pandemic. In 2023-24, only seven public schools in California closed—down from 31 closures in 2019-2020. This was fewer closures than in rural states like Utah, South Dakota, and Iowa.

One reason is that California’s public schools have been flush with state and federal cash, giving them little incentive to right-size. California’s public schools got $23.4 billion in federal COVID-19 relief funds during the pandemic, while non-federal funding increased by $1,691 per student in real terms between 2020 and 2022—the highest growth rate in the country.

In the coming years, school closures will be a heated issue on school board agendas in California and other states. Already, battles are taking place in big cities experiencing significant enrollment declines, such as Oakland, San Francisco, Boston, Seattle, and others.

Reason Foundation offers five recommendations for how state policymakers can address declining public school enrollment, including shoring up teacher pension systems that can drain money away from classrooms, eliminating hold harmless funding protections that give schools money for students no longer there, and modernizing facilities funding and management by right-sizing operations, selling unused land and buildings. 

Lawmakers should also pay close attention to Indiana, which offers a model for shining a light on empty school buildings and strengthening rights for charter schools. In 2023, Indiana lawmakers established reporting requirements for school districts whose enrollment declined by 10% or more in the preceding five years. These districts must conduct an annual review to identify buildings eligible for closure under the policy and report their findings to the state. Importantly, under-enrolled school buildings are now included in the state’s right of first refusal policy, which gives charters access to vacant or under-utilized facilities for just $1. Policymakers in other states could also consider extending these protections to non-profit education providers.

Public schools must adapt to their new enrollment reality. This won’t be easy, but in the long-run it’s best for students, taxpayers, and communities. 

From the States

In other important education and school choice developments across the country, South Carolina policymakers are seeking to bypass constitutional challenges to private school choice, and Tennessee and Wyoming policymakers introduced proposals to significantly expand existing private school choice programs.

In a proclamation, Tennessee Gov. Bill Lee called for a special legislative session, beginning Jan. 27, to pass expansive private school choice reforms. Nearly identical proposals in the state House and Senate would make about $7,100 private school scholarships available to 20,000 students annually. The first 10,000 scholarships would be reserved for students whose families’ incomes are below 300% of the federal poverty limit. Currently, private school scholarships are only available to students from low-income families in Davidson, Shelby, and Hamilton counties.

South Carolina’s State Supreme Court struck down the state’s private school choice program in 2024 as unconstitutional, stating that the state cannot directly fund private schools. However, South Carolina policymakers aim to circumvent this ruling with funding tweaks. Instead of funding the program via the general fund, the new proposal would use funds from lottery revenues. If passed, 15,000 eligible students could receive scholarships valued at $8,500 to pay for private school tuition in 2027.

In Wyoming, House Bill 199 aims to expand the state’s limited education savings account into a universal program, providing $7,000 scholarships per family to pay for non-public education costs. Last year, state policymakers passed an expansive private school scholarship program, but Gov. Mark Gordon line-item vetoed the proposal to limit student eligibility to those whose families’ income was less than 150% of the federal poverty limit.

Texas Gov. Greg Abbott announced he has the necessary votes to pass school choice proposals this year. Moreover, Sen. Brandon Creighton, the Chair of the Senate Education Committee, introduced Senate Bill 2 which would provide private school scholarships to 100,000 K-12 students valued at $10,000. Scholarship recipients could use these funds to pay for tuition at accredited private schools, textbooks, and other eligible education expenses. Moreover, the bill would provide recipients with disabilities scholarships valued at $11,500. Additionally, homeschooled participants could each receive scholarships valued at $2,500.

What to Watch

Indiana Gov. Mike Braun called for universal private school choice.

In his first state budget, Indiana Gov. Mike Braun announced plans to increase K-12 funding by 2% each year and make the state’s near-universal private school scholarship universal. Currently, students whose families’ incomes are less than 400% of the federal poverty limit can receive $6,200 scholarships, which can pay for private school tuition.

The U.S. Supreme Court announced that it will hear oral arguments regarding religious charter schools which were ruled unconstitutional by Oklahoma’s State Supreme Court last summer. The virtual charter schools would have been operated by the Catholic Archdiocese of Oklahoma City and the Diocese of Tulsa. All concerned parties must submit their briefs to the U.S. Supreme Court by April 21, 2025.

The Latest from Reason Foundation

–More than 20 percent of publicly funded students in Delaware use open enrollment to choose schools About 26,000 students, more than 20%, used K-12 open enrollment in Delaware during the 2020-21 school year. This policy can help students escape bullying, access specialized courses, smaller class sizes, and shorten commutes.

–Public school closures were on the upswing in 2024 Permanent school closures seemingly paused during the pandemic as districts were temporarily buoyed by federal pandemic relief funds. But as those funds expired and districts felt the effects of lower enrollments, school closures increased in regularity. 

Fiscal Analysis: How Arkansas’ Education Freedom Account program is impacting taxpayers and students “The Arkansas EFA program’s true cost (i.e., net cost) is substantially lower than its total cost. That’s because switchers generate substantial offsetting state fiscal savings that can account for as much as half of the total costs” writes Reason’s Christian Barnard.

–Public school enrollment is plummeting. Here are five things policymakers can do about it Instead of delaying the inevitable, policymakers should proactively consider how they can shore up districts’ finances, especially as K-12 enrollments drop and enrollment projections look grim. Solutions include shining a light on vacant facilities, strengthening rights for charters and other K-12 providers, eliminating funding protections, and shoring up teacher retirement systems.

Universal School Choice Programs Probably Cost States Money. They’re Worth It. At Education Next, Reason’s Christian Barnard analyzes how universal school choice policies impact state budgets by using Arizona’s universal education savings account program as a case study. He argues that while it’s likely that universal school choice costs states money in the short run, the costs aren’t nearly as high as opponents claim and are still a small portion of state budgets. Additionally, he argues that the benefits of expanding educational options on a large scale are worth the cost tradeoff.

Recommended reading 

Public Schools Added 121,000 Employees Last Year, Even as They Served 110,000 Fewer Students
Chad Aldeman at The74

“Despite all the continued attention to supposed teacher shortages, the truth is that schools employ more educators than ever. At the same time that student enrollments fell by 1.3 million (a decline of 2.5%) over the last five years, schools added the equivalent of 55,000 teachers.”

Shrinking Indianapolis Schools Could Be Dissolved, Turned Into Charters
Patrick O’Donnell at The74

“The bill targets districts where so many students have left for charter and private schools that fewer than half remain in district schools. It would shut all five districts, including the Gary Community School Corporation near Chicago, by 2028. Schools would then be turned over to charter schools that would be overseen by new panels appointed by the governor, Indiana charter school boards and local officials.”

Don’t want to close underenrolled schools? Here’s how to make the math work.
Marguerite Roza at the Thomas B. Fordham Institute

“What isn’t financially viable? A school with the full complement of typical school staff but fewer kids. These aren’t purposely designed small schools, rather they’re underenrolled large schools (sometimes called “zombie schools”). Los Angeles Unified School District, for instance, has a slew of tiny schools spending over $30,000 per pupil. Such schools vary in performance, but all sustain their higher per-pupil price tag by drawing down funds meant for students in the rest of the district. In the end, no one wins.”

The post Funding Education Opportunity: Public schools closing as enrollments decline appeared first on Reason Foundation.

With falling birthrates and parents increasingly looking to K-12 alternatives—such as private schools and homeschooling—state and local policymakers will need to adapt to the new enrollment reality. Here are five ways they can address the challenges posed by declining enrollment.

1. Shine a light on empty school buildings

Transparency is a foundational tool for addressing K-12 enrollment declines. While states typically publish enrollment data, this isn’t enough.

Underutilized schools often signal financial problems and can mean that families are dissatisfied with the school’s educational quality. Indiana provides a framework for identifying public school facilities that are vacant or underutilized across the state, a critical step for policymakers. 

Passed in 2023, Indiana Senate Bill 391 established reporting requirements for school districts whose enrollment declined by 10% or more in the preceding five years. School districts subject to the law must conduct an annual review to identify buildings eligible for closure under the policy. These findings must be reported to the Indiana Department of Education, including an accounting of designed occupancy rates and usage information (e.g., classroom instruction, office space, storage, or special-use classrooms).

While some states make similar information available—typically requiring school districts to publish lists of vacant facilities— they generally fall short. For example, Arizona’s vacant space report fails to capture reliable data about underutilized facilities, with most districts reporting none. In comparison, Indiana’s approach ensures that policymakers, taxpayers, and other stakeholders can fully assess whether school districts are operating efficiently using data collected by the state.

2. Strengthen rights for charters and other K-12 providers 

School districts are often reluctant to let go of unused space, even when there are motivated buyers or tenants. One reason is that they don’t want to do business with their competition, which is why about 18 states have adopted right of first refusal laws, giving charter schools priority to purchase surplus facilities. For example, school districts in South Carolina must allow charter schools to purchase or lease surplus buildings at or below the market rate before offering them to the public. But school districts can easily get around these laws by not designating buildings as vacant, a limitation that Indiana lawmakers also recently addressed.  

For years, Indiana has required school districts to sell or lease surplus facilities to charter schools for just $1—an ambitious policy with little practical effect. However, Indiana’s policy now broadens eligibility to include underutilized buildings, defined as those operating below 50% capacity in the current and prior two school years. While the law makes some exceptions for school districts (e.g., if the building is used for special student populations at 30% capacity or more), it also allows charters to petition the Indiana Department of Education for a final ruling on closure if they can’t reach an agreement for an eligible building within 45 days.

Indiana strengthened its right of first refusal policy by looking beyond vacant facilities and establishing a clear appeals process that the state’s attorney general can enforce. Policymakers in other states could consider extending these rights to non-profit K-12 providers as well.

3. Eliminate funding protections

Many states have hold-harmless provisions that protect school districts against revenue losses. These policies untether the relationship between funding and student needs, especially during periods of declining enrollment.

Hold harmless policies generally take two forms: 16 states have declining enrollment protections that allow school districts to use prior years’ student counts for funding purposes, while 22 states have funding guarantees that ensure school districts get a minimum level of state aid.

While hold-harmless policies have benefits—such as making budgets more predictable or serving as a bargaining chip to get needed reforms across the finish line—they also have substantial drawbacks. For instance, hold harmless polices weaken the incentive for school districts to right-size or innovate in response to enrollment losses and can also strain state budgets. Reason Foundation estimates that in 2021-22, Missouri’s declining enrollment provision cost the state $197 million—nearly 5% of the state’s total formula aid—while two of its funding protections cost the state another $134 million.

State policymakers should assess the cost of hold-harmless policies and whether these education funding dollars could be used better, which is critical when public school enrollment is falling and states can’t afford to spread dollars thin.  

4. Shore up teacher retirement systems

Teacher pension plans are underfunded by hundreds of billions of dollars today, a problem that public school enrollment declines will likely exacerbate. States have failed to set aside enough money to cover the pension benefits promised to teachers, resulting in unfunded liabilities (i.e., the difference between the total pension benefits owed to teachers and the dollars available in pension funds). For instance, Texas’ teacher pension plan had an estimated $70.4 billion in unfunded liabilities in 2023, California’s had $85.6 billion, and Ohio’s had $20.2 billion.

As enrollment falls—and the number of public school teachers likely drops—pension contribution rates for teachers and school districts will continue to rise to service pension debt. As a result, pension costs would consume a larger share of teacher paychecks and school district budgets, leaving fewer dollars for things like pay raises, tutoring, or classroom technology.

Policymakers should take steps to reverse this pension “crowd out” by paying down teacher pension debt as fast as possible to avoid high-interest costs and modernizing antiquated assumptions and benefit designs. For example, states should make more realistic assumptions about their plans’ investment returns and future demographic patterns, which is vital in ensuring solvency. Committing to long-term fiscal discipline in pension funding and modernizing retirement design can prevent the problem from worsening and help mitigate unforeseen increases in contributions.

5. Modernize facilities funding and management

School districts should right-size their facilities footprint in the short term to minimize underutilized or vacant buildings. While some might resist selling assets that might be used in the future—and various legal and regulatory barriers exist that may complicate any divestiture—districts shouldn’t hold onto buildings that aren’t operating in a way that advances their educational mission. 

But long-term changes are also needed to how districts manage their portfolios of real property assets.

As public school enrollment declines over time, it could become increasingly difficult for districts to pass general obligation bonds that finance facility construction and improvements. This challenge could become greater in states with robust school choice programs such as open enrollment, education savings accounts, and charter schools. As more students attend schools other than their residentially assigned ones, voters might be reluctant to support local funding measures that they don’t directly benefit from.

They might also object to paying for facilities that benefit students who don’t reside within district boundaries (and whose parents don’t pay local taxes to the district). For instance, Arizona’s Queen Queek Unified—where most of its students are out-of-district transfers—has had difficulty getting voters to approve bonds in recent years, which some blame on the state’s open enrollment program.

To overcome these and other challenges, K-12 policymakers should look to public-private partnerships (P3s). The basic idea is that private companies can partner with public agencies to help build or improve facilities through a combination of support, including finance, design, construction, operations, and/or maintenance. A similar approach has been adopted for other public infrastructure assets such as airports, water/wastewater systems, and various social infrastructure facilities like courthouse facilities, hospitals, and university campus development. 

P3s offer several advantages, including cost savings, improved project outcomes, timeliness, and risk-sharing between public and private entities. For instance, in 2021, Prince George’s County Public Schools (PGCPS) entered a P3 arrangement to finance, design, build, and maintain six new schools over 30 years. This deal will save the district an estimated $180 million and expedite construction.

Conclusion

With fewer students in public school classrooms, state and local policymakers should pursue policies that right-size public education. While these solutions aren’t always easy, they can build a foundation for a more sustainable education system in the long run, which is better for students, educators, and taxpayers.

The post Public school enrollment is plummeting. Here are five things policymakers can do about it.   appeared first on Reason Foundation.

Public schools have lost nearly 1.2 million students since the start of the COVID-19 pandemic, and many school districts need to make the difficult and politically fraught decision to close neighborhood schools.

With declining birth rates, increased homeschooling, and more parents embracing private and charter schools, the National Center for Education Statistics (NCES) projects public schools will lose another 2.7 million students by 2031-32. Enrollment is expected to fall 15% from 2022-23 levels in California and New Mexico, with New York not far behind at nearly 14%, according to NCES. 

With fewer students—and less funding—widespread public school closures, while challenging, are necessary and inevitable. However, the most recent federal data from 2021-22 shows that they were down by nearly one-third compared to pre-pandemic levels. There were fewer closures because districts plugged budget holes with the $190 billion in federal COVID-19 relief funding they got during the pandemic. But these federal dollars are expiring, and schools now feel the fiscal impact of losing students. 

Without more recent school closure data, policymakers and other stakeholders are in the dark on a critical policy issue. 

To shine a light on declining public school enrollment and school closures, Reason Foundation attempted to collect data from all 50 states via public information requests and other public sources. We obtained data from 15 states and excluded charter schools, alternative schools, and programmatic closures from the analysis to get the clearest picture possible of public schools. While our dataset has limitations—including rural states like Idaho and Vermont with relatively few schools to close— it provides much-needed insight into how things are playing out across states, including California, Colorado, Florida, Iowa, New York, Utah, and Virginia. 

Our findings indicate that public school closures in these 15 states are on the upswing, with trends varying by state. In the three years before the COVID-19 pandemic (from 2017-18 to 2019-20), total combined school closures in the 15 states examined ranged from 84 to 99 a year. However, in 2020-21, they fell to 69 across the 15 states, and then again to only 65 in 2021-22, a 34% drop-off from 2019-20.

Importantly, total school closures started returning to pre-pandemic levels in 2022-23, with 82 total school closures across the 15 states and continued rising in 2023-24 with 98 closures—almost the same number as 2019-2020. 

Chart 1: Public School Closures by School Year (15 States) 

At the state level, there were notable increases in school closures in the last two school years. For instance, Colorado jumped from 11 closures in 2022-23 to 26 closures in 2023-24, and South Dakota went from no school closures in 2022-23 to 11 closures in 2023-24, with both states exceeding their pre-pandemic school closure levels by large margins in 2023-24.

Meanwhile, states like New York, Nebraska, and Iowa each returned to pre-pandemic closure levels by 2023-24 after sharp declines during the pandemic. 

But California bucked these trends. Before the COVID-19 pandemic, the Golden State had 31 school closures in 2019-20, with closures then falling each year until 2023-24, when it had only seven closures—even fewer than Utah, which had eight.  

Chart 2: School Closures by State 

All told, total public school closures across the 15 states returned to pre-pandemic levels before federal relief funds expired in September 2025. However, given the magnitude of enrollment drops, many districts seem to be delaying the inevitable, just as experts feared.

This appears to be the case in California, where only a handful of public schools were closed in 2023-24 despite statewide enrollment plummeting by 5.1% between 2019-20 and 2022-23 (the latest federal enrollment data available). An analysis published by The 74 identified more than 1,400 schools in California where enrollment fell by at least 20% during the pandemic, including 125 schools in the Los Angeles Unified School District alone—that’s one in five of the district’s schools.  

For many school districts, the recent years with significant federal relief funding was a missed opportunity that could’ve been spent to help smooth the transition for affected students. Now they’ll have to right-size without this budget cushion. But there’s also evidence that districts in some states—such as Colorado—took advantage of the additional dollars, with closures rising in each of the last three school years. This head start should be welcome news, though the trend is likely to continue: between 2019-20 and 2022-23, Colorado’s public schools lost over 42,000 students—about 4.6% of total enrollment.

Public school closures are difficult for communities, but declining enrollment means school boards must make tough decisions. While our 15-state dataset indicates that school closures have risen in the past two years, this is only the start of a difficult road ahead.

There’s much that state policymakers can do to help support this needed transition, but a good first step is requiring state education agencies to publish the most recent data on closed schools. Better yet, they could also publish annual data on under-enrolled public schools, so they know whether school boards are dealing with the problem or just kicking the can down the road. Transparency will be paramount in the coming years.

The post Public school closures were on the upswing in 2024   appeared first on Reason Foundation.

Today, between declining birth rates, fiscal chaos, and competition from charter and private schools, public education bears little resemblance to what it was before the pandemic. These challenges will deepen in the coming years, and widespread school closures and staff reductions are likely. But the most daunting task will be convincing parents to enroll their children in public schools.

The birth dearth

Nationwide, public school enrollment has declined by 1.2 million students—about 2.3 percent—since 2020. Research suggests that 40 percent of these students switched to private schools or homeschooling as parents grew weary of prolonged school closures, masking policies, and curricular battles. However, demographics also played a key role, with about one-quarter of the decrease attributable to a declining number of school-aged kids thanks to the birth dearth.

The number of births in the U.S. dropped by 17 percent between 2007 and 2023. This means that 720,000 fewer births occurred in 2023 than in 2007. This baby bust also extends to U.S. immigrants. In 2019, immigrant fertility rates dropped below replacement levels for the first time.

Additionally, some states have experienced significant student attrition because of domestic migration between states. For instance, California and New York lost nearly 342,000 and 244,000 students, respectively, between fiscal years 2021 and 2022 due to outmigration, according to Bellwether.

The bad news for public schools, which largely rely on per-pupil funding, is that the enrollment decline is far from over. With the lower number of school-aged kids as the driving factor, the National Center for Education Statistics (NCES) estimates that K-12 enrollment will drop by another 2.7 million students by the 2031-32 school year, with states such as California, New York, and New Mexico all projected to lose more than 10 percent of student enrollment. NCES projects that only nine states will see increases in public school populations, with Idaho, North Dakota, and Florida topping the list. 

All told, declining enrollment will be a major blow to public school budgets across the country. School districts such as Los Angeles Unified School District (LAUSD), the nation’s second-largest, are already shells of their former selves. While it still serves about 530,000 students, LAUSD lost more than 100,000 students between the 2015-16 and 2022-23 school years, staying afloat financially thanks to generous state and federal education funding policies. But, for LAUSD and countless other school districts, the fiscal reckoning has arrived.

The fiscal storm

In recent years, public school budgets have been shielded by the $190 billion in federal COVID relief funding received during the pandemic. But these funds are expiring and researchers from Edunomics Lab estimate this will result in an average single-year funding reduction of more than $1,000 per student in the 2024-25 school year. School districts that spent the one-time cash infusion on things like new hires, salary increases, or plugging budget holes will have to scramble to balance their books in the months and years ahead. The loss of federal pandemic-relief funding coupled with fewer students are why public school closures are on the horizon in places such as Seattle, San Francisco, and San Antonio. 

To make matters worse for public school budgets, inflation has wiped out many recent state and local education funding increases. Between 2020 and 2022, nominal nonfederal funding grew by $1,485 per student, but that’s an increase of only $55 per student after adjusting for inflation. Before the pandemic, most public schools had grown accustomed to frequent funding bumps, with inflation-adjusted education revenue increasing nationally by an average of $3,212 per student from 2002 to 2020. But with many state budgets tightening, public school lobbyists will have an uphill battle to secure more funding despite their soaring costs.  

There’s also another challenge lurking for public school budgets: universal school choice programs. Just four years ago, these programs seemed like a libertarian pipe dream. Now, in many states, they’re fundamentally changing public education and putting further strain on enrollment. 

A competitive K-12 marketplace

Before the COVID-19 pandemic, 65 school choice programs operated across 29 states, allowing students to access public dollars for private education. But virtually all of these policies were narrowly targeted, with eligibility limited to low-income students or students with disabilities. This changed in 2021 when West Virginia passed the first school choice law providing for near-universal participation. Since then, states like Arizona, Iowa, and Oklahoma have followed suit, bringing the number of states with universal or near-universal programs to 12.

According to EdChoice, 40 percent of all U.S. students are now eligible to participate in private school choice programs—that’s more than 22 million students and counting, with Texas and possibly other states likely to join the mix in 2025. 

When it comes to K-12 education, American families have more options than ever. The rise of homeschooling and private school choice—combined with charter schools, open enrollment, and other forms of choice—means that public schools will increasingly have to compete for students and their funding. 

Adapting to a new reality in K-12 public education

School districts must right-size in the coming years, ensuring that costs align with funding. For many districts, closing under-enrolled schools—a politically fraught process—will be an unavoidable part of the journey to fiscal sustainability. A study by the Brookings Institution found that between 2018-19 and 2021-22, 12 percent of elementary and 9 percent of middle schools saw enrollment declines exceeding 20 percent of their populations. As difficult as it is, school district officials should address this challenge head-on and dismiss vague or misguided calls for equity that delay the inevitable tough decisions and closures. 

Public schools must also embrace a competitive K-12 marketplace, which research suggests they can do with effective leadership. In a recent study by David Figlio, Cassandra Hart, and Krzysztof Karbownik of Florida’s tax credit scholarship program, which gives students scholarships to attend private schools, researchers found that competition among schools helped improve public school performance over a 15-year period, including improvements in test scores, student absenteeism, and other measures.

A separate study by California’s Legislative Analyst’s Office (LAO) found school districts that lost students to the state’s District of Choice program, which allows students to transfer to public schools outside of their assigned school districts, took steps to mitigate these declines by engaging their communities and revamping their programmatic offerings. For example, community meetings revealed that families wanted more college preparatory or math and science courses. Additionally, families wanted increased transfer opportunities to other schools inside the school districts. The LAO reported that “districts made the implementation of changes to address [their community’s] concerns a priority” and, in some cases, were able to significantly reduce the number of students transferring out afterwards. Between extended school closures and controversial policy decisions, many families felt betrayed by public schools in recent years.

In the post-COVID era, public schools must examine their shortcomings and find ways to serve families better, especially as there are fewer students and the education marketplace becomes more competitive. This will become increasingly important as states adopt education policies that give families more options.

A version of this column first appeared on TheDispatch.com.

The post What the birth dearth means for public schools appeared first on Reason Foundation.

Currently, school board elections in Florida are nonpartisan. Florida Amendment 1 would make them partisan beginning in November 2026. It allows for partisan primary elections in advance of the 2026 general election.  

Proponents’ Arguments 

Proponents argue that partisan elections would promote greater transparency, giving voters access to information to help them assess school board candidates. They claim that school board elections are already partisan in nature and that candidates should not be permitted to hide their political affiliations.  State Representative Spencer Roach (R-76) said:

“I simply think as policymakers, we have an obligation to provide voters with as much information as possible about candidates to include party affiliation, and let the voters make their decisions based on that information. So I don’t think you should ever be allowed to use the power of the law to hide your ideology or to hide your affiliations, whether it’s with a political party or otherwise. I think it’s really a legal fiction that these races are nonpartisan, the candidates are nonpartisan actors. And I think there are real differences in the party platform. So I think that every race, including judicial races, should be partisan.” 

Opponents’ Arguments 

Opponents argue that partisan elections would make school board elections more contentious, increasing political divisions in K-12 public education. They argue that the focus should be on what’s best for students rather than partisan politics. Opponents also say that independent voters could have less say over partisan elections because Florida is a closed primary state. Tina Certain, Alachua County School Board Chair said:

“It’s important to me that the race stays nonpartisan because everyone is impacted by school decisions. It doesn’t matter what your political affiliation is, and I think everyone should get to vote and have a voice on a candidate, not just based on your political registration during the time of the election.” 

Discussion 

Until 1998 Florida had partisan school board elections. But that year, the voters approved Florida Amendment 11, making school board elections nonpartisan. If passed, Florida would return to partisan school board elections and join Alabama, Connecticut, Louisiana, and Pennsylvania as the fifth state doing so. Five additional states—Georgia, North Carolina, Rhode Island, South Carolina, and Tennessee—allow school districts to hold partisan or non-partisan elections. Amendment 1 would put Florida in the minority of states on the issue, but partisan school board elections are already required or optional across 1,432 school districts in the U.S. 

Research indicates that voter engagement in local school board elections is low, with the National School Boards Association estimating that turnout ranges from just 5% to 10%. In comparison, the U.S. Census Bureau reports that turnout for the 2022 midterms was over 52%. One reason is that school board elections are often held off-cycle, meaning they don’t coincide with federal election dates and often coincide with when many residents are away from the state for the summer. But another reason is that they’re low-information races—voters tend to know little about the candidates on the ballot. Partisan elections could help improve voter engagement by signaling candidates’ priorities on budgeting, student discipline, curricula, school choice, and other matters. 

School boards have indeed become more contentious in recent years, with recall efforts on the rise and conflicts over things like masking policies, gender identity, and school closures. For instance, between 2021 and 2023, school board candidates took a stance on race in education/critical race theory in 87% of school board races, including in at least 37 elections in Florida. Divisions have risen across states with non-partisan elections and don’t appear to be any worse in states with partisan elections.   

The post Florida Amendment 1 would implement partisan elections for district school boards appeared first on Reason Foundation.

“This budget remarkably insulates K-14 funding from cuts, abides by constitutional requirements to restore funding in the future, and even provides a modest cost-of-living increase, all amid a record budget shortfall,” said Kevin Gordon, president of Capitol Advisors Group, a consultancy company.

However, California’s state budget crunch shows no signs of abating. And with public school enrollment projected to drop nearly 16% by 2031-32, the fiscal outlook for many public school districts is bleak, despite record funding boosted by COVID relief funding in recent years.

A new Reason Foundation study shows how state policymakers can adapt and better use K-12 dollars. The report examined two California hold-harmless funding policies that provide extra funding to schools based on outdated enrollment numbers and factors unrelated to students. 

First, it looked at how California calculates education funding for school districts. States like Texas, Indiana, Arizona, and others divvy up state education dollars based on the number of students currently in their schools. But California lets school districts choose the highest number of the current year’s enrollment, the prior year’s enrollment number, or the average number of students in its schools over the three most recent prior years. This results in taxpayers sending money to public schools for “ghost students”— kids who are no longer in classrooms but still generating funding for schools.

Hold harmless policies are supposed to make public school budgets more predictable, but they also have steep price tags. Statewide, Reason Foundation finds California taxpayers sent public schools $4 billion for 401,000 ghost students in 2022-23. Over 6% of the state’s total K-12 formula aid was allocated based on ghost students—a large share considering this is more than half of what’s spent on grants for disadvantaged kids, a supposed priority under the state’s Local Control Funding Formula (LCFF).

Most of California’s school districts received funding for ghost students, with over 300 districts getting at least $1,000 per student. Top recipients of taxpayer money for students no longer in their schools included San Diego Unified ($90.9 million), Long Beach Unified ($73.8 million), and Santa Ana Unified ($59.3 million), which each had thousands of ghost students. 

The biggest winner was the Los Angeles Unified School District (LAUSD), which collected $508 million for 50,400 ghost students in the 2022-23 school year, Reason Foundation finds.

For years, students have been fleeing LAUSD. Between 2015-16 and 2022-23, the district’s enrollment dropped by 15% for various reasons, including parents looking for better schooling options and moving to more affordable places. 

Ghost student funding reduces school districts’ incentives to improve or budget responsibly. It has allowed LAUSD and other districts to kick the financial can down the road, putting off difficult decisions like school consolidation or staff reductions. For example, while losing all those students, rather than make tough choices, LAUSD added 1,800 new staff during the COVID-19 pandemic and gave out pay raises last year because its funding didn’t reflect the student exodus. To balance its books, LAUSD’s $18.4 billion budget for 2024-25 is tapping into its reserves, which it could deplete in the next few years.

The study also evaluated California’s Minimum State Aid (MSA) policy, which requires school districts to receive as much state aid as they did in 2012-13, regardless of current enrollment or local wealth. In 2022-23, 148 districts got MSA funding totaling over $186 million. Most beneficiaries were Basic Aid school districts—property-wealthy districts that don’t qualify for state formula aid and are often higher-spending.

For example, Pacific Grove—which spent over $28,500 per student in 2022-23—got $1,624 per student in MSA funding. Santa Monica-Malibu got $1,043 per student in Minimum State Aid funding despite spending over $25,000 per student. It’s clear that MSA now only serves to top off the coffers of school districts that are already flush with cash.

For California lawmakers, the solution is straightforward. Education funding should be tied directly to students actually in schools, which is what LCFF is intended to do. California should allocate K-12 education funding based on current year enrollment and eliminate Minimum State Aid giveaways undermining the state’s funding formula. Doing so would be fiscally prudent and start to put the right incentives in place for public schools.

A version of this column first appeared in the Orange County Register.

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