As public school enrollment decreases across the country, schools must allocate federal COVID-19 relief funds to offset future budget losses, a new Georgetown University study found. 

State governments distribute funding to public schools based on enrollment rates, so enrollment decreases will lead to significant budgetary cuts, according to the report. Georgetown University’s Edunomics Lab, a research center focused on education finance, released the report Oct. 28, analyzing over 6,000 districts’ projected financial losses from decreased enrollment. 

While public school enrollment nationwide decreased 3% during the 2020-2021 school year, 82% of the analyzed districts received enough COVID-19 federal relief aid to offset budgetary decreases resulting from lower enrollment. Since the federal aid was distributed based on community need, the remaining 18% of districts whose federal funding did not offset enrollment losses were almost exclusively concentrated in wealthier areas with low poverty rates, according to the study. 

However, although federal aid mostly offset budgetary declines in high-poverty districts, the federal aid is not sustainable and these districts will face severe financial loss in the future, according to Edunomics Director Marguerite Roza, Ph.D., who co-authored the study. 

“That kind of aid can only cushion schools’ budgets for about two years,” Roza said in a phone interview with The Hoya. “We think there’s gonna be a massive fiscal cliff in a lot of places, when you wake up one day and you don’t have enough money to pay your bills.”

The pandemic was a driving factor in the decrease in public school enrollment, with many parents and students abandoning public schools for private and charter schools, homeschool programs, group tutoring pods and fully remote learning.

While it is unclear whether these enrollment decreases are permanent, the rise in alternative education options is a worrying trend for public schools, according to Roza. 

“The pandemic forced kids home for over a year to learn remotely, so a lot of people found some sort of education program that worked better for them,” Roza said. “So that was a tectonic shift in education.”

Since March 2020, the federal government has provided $190 billion in aid to schools in efforts to help them reopen and combat the impact of the pandemic. 

Edunomics aims to advise districts on how to best use this aid and how to make decisions that will positively impact their students, according to Chad Aldeman, the report’s co-author. 

“We focus on educating school and district leaders, people at the state level, advocates and even members of the media to help understand the pressing issues in school finance,” Aldeman said in a phone interview with The Hoya. “We help district leaders think through enrollment changes and staffing and labor costs and all the different factors that go into that in terms of how to pay, how to structure compensation, how to think about turnover and how to think about different incentives.”

While federal aid has helped schools stay afloat as they transition back to in-person learning, schools must avoid overspending on extracurricular programs and hiring more teachers and instead save money for when the funds inevitably run out, according to Roza.

“Historically, school districts have not known how to shrink, and they tend to enact policies that make shrinking harder,” Roza said. “We rely on district leaders to decide how to spend tens or hundreds of millions of dollars. Very few, if any, of them have been taught about education finance.”

To adjust to enrollment trends, districts will have to make changes that will be uncomfortable, such as laying off teachers. However, waiting will only exaggerate the effect on students, according to Roza. 

“They don’t like to say we’re going to let go of these people, and so they’ve kept them on longer and longer and longer,” Roza said. “So when they ultimately find that they do not have enough money to pay the bills for the rest of the year, they have to do it all at once. It’s very disruptive to make cuts all at once. It causes kids to lose teachers mid-year, and it strips the programs that students rely on.”

In order to stay ahead of future financial loss, individual districts must think critically about how many students will enroll, and act proactively to best serve them, according to Aldeman.

“A lot of this is in flux and districts at the end of day will have to balance their budgets based on the students they serve,” Aldeman said. “And so we think it would be a good idea now for districts to calculate how many students they can expect to enroll in the coming years and then tailor their budgets accordingly.”