Public schools face funding ’death spiral’ as enrollment drops

SACRAMENTO — In Texas, the Austin public schools might lay off 200 people and still not fill the financial hole created by the coronavirus. Gov. Jay Inslee of Washington has proposed two new taxes to help pay for catching up students who fell behind during remote learning. And in Los Angeles, the costs of virus testing, laptops and free meals for families have mounted to more than $400 million.

Even with a promised lifeline of billions of federal dollars, public schools in many parts of the country are headed for a financial cliff, as the coronavirus drives up the costs of education while tax revenue and student enrollment continue to fall.

Schools can expect about $54 billion from the coronavirus stimulus plan approved by Congress late Monday, or nearly four times what K-12 education received in a March relief package. The deal also includes $7 billion to expand broadband access for students who have trouble logging on, and continued funding for school meal programs.

But school officials say that’s not nearly enough to make up for the crushing losses that state and local budgets have suffered during the pandemic, or the costs of both remote learning and attempts to bring students back to classrooms. Advocates for public education estimate that schools have lost close to $200 billion so far.

“We’re going to need way more investment both in the short term, to deal with COVID, and in the long term,” said Chip Slaven, a lobbyist for the National School Boards Association.

The pandemic has already forced schools across the country to fire nonunion employees, spending the money instead on remote learning technology, retrofitting buildings, testing and surveillance programs, and other coronavirus-related expenses. Education has been among the hardest-hit parts of the economy, according to an analysis by the Pew Charitable Trusts, with employment down 8.8% in October from the year before and lower than at any point in the past two decades — a loss of millions of jobs.

The fiscal crisis is looming at a time when families fed up with pandemic-era education have increasingly turned to private and charter schools or chosen to educate their children at home. That’s potentially a major drain on public school budgets, because most states base school funding at least in part on enrollment numbers.

The school boards association estimated that as many as 3 million students — about 6% of the public school population — are not in classes right now, and that number could grow.

At the same time, pandemic job losses, business closures and depressed property values have just begun to show up in state and local tax receipts and revenue pipelines, even as most states begin drafting their budget plans for passage by the end of the fiscal year in June.

Although the relief package passed Monday includes direct aid for education, it does not provide money to state and local governments to help make up for COVID-related budget losses, which could prevent them from further helping schools. Mitch McConnell, the Senate majority leader, insisted on excluding such aid, saying it would be a bailout for fiscally irresponsible states.

In the Vancouver Public Schools, a district of roughly 23,000 students in southwest Washington state, enrollment is down 4% so far this year, contributing to a potential shortfall of $21 million without state or federal relief. As the schools taught mostly virtual classes this fall, the district furloughed more than 600 people, including classroom aides, clerks, secretaries, bus drivers and security guards, to save money.

So far, states mostly have managed to hold school funding steady during the pandemic, but it’s not clear how long that can be sustained, said David Adkins, executive director and chief executive of the Council of State Governments, which tracks state policy nationally. It will be especially hard if enrollment doesn’t rebound.

“We’ll have to see how many of those folks come back home after normalcy can be achieved,” Adkins said.

But if the pandemic accelerates an exodus of affluent families from the public school system, he said he fears the loss of enrollment and political support could trigger a “death spiral,” further weakening public schools at a time when poor and disadvantaged students are already lagging.

For the most part, schools have been buffered financially from the pandemic. Property taxes, which are the main funding source for many districts, tend to hold steady until a recession is deep enough to diminish home sales and property tax collection. And many state governments had healthy reserves when the pandemic hit, having salted money away in anticipation of a potential economic downturn.

Some states enacted policies protecting schools financially from pandemic-related enrollment dips. In Sacramento, California lawmakers promised to use pre-pandemic student numbers to calculate school funding through the 2021-22 school year, to give districts the resources they needed to make schools safe and to prevent layoffs in communities where education is often a major employer.

But California entered the budget year with a projected surplus of nearly $6 billion. Grace periods were more limited in other states. Texas, for example, made its “hold harmless” policy contingent on schools having an option for in-person classes and limited it, at first, to some of the fall semester, before extending it through the end of the calendar year.

Now that the semester is nearly over, enrollment is down in nearly every district in Texas, largely because a significant number of parents held back students from kindergarten and pre-K. As a result, school funding is poised to suffer.

On Dec. 14, nearly two dozen Texas school superintendents and education advocates wrote to Gov. Greg Abbott, asking him to at least maintain current educational funding. Teachers and school staff “have put their lives on the line” this year, the letter said, and not laying them off is “the least we can do.”

Enrollment was down 4% in Dallas in October, meaning the district could lose $20 million if the governor doesn’t extend the hold-harmless policy. In Fort Worth, where enrollment has dropped more than 6%, the potential loss Jan. 1 could be as much as $50 million, the superintendent said. And Austin schools stand to lose as much as $25 million, which Stephanie Elizalde, the superintendent, fears would mean thinning the teacher ranks.

“We’re going to affect the quality of the instructional delivery for our students at a time, next year, when we know we’re going to have to be making up for so much loss,” she said.

The enrollment declines are similarly perilous across the country. A 5% drop in students might mean $15 million in cuts for schools in Tucson, Arizona, while Massachusetts recently released enrollment figures showing that tens of thousands of families had switched to private schools with in-person classes or held children back from kindergarten, subtracting funds from public schools.

In Los Angeles, not only is public school enrollment down by some 12,000 students — mostly the result of families leaving to find work or holding children back from kindergarten — but the district also has amassed some $400 million in pandemic costs, said Austin Beutner, superintendent, including for COVID-19 testing and free grab-and-go meals for students and adults alike.

He described the schools as facing a “wall of need.”

President-elect Joe Biden has vowed to reopen most of the nation’s schools within his first 100 days in office, a promise that is unlikely to be kept without more federal spending, although it is unclear whether he will be able to push more relief aid through Congress if the Senate remains in Republican control.

But some states have already taken matters into their own hands. Inslee has proposed taxing capital gains and health insurers in Washington to help generate revenue to compensate for the pandemic’s disastrous impact in that state, including $400 million to address learning loss and inequities in educational access. And the budget proposed by Gov. Ralph Northam of Virginia last week would protect funding for public schools despite an enrollment drop of more than 45,000 students.

In a recent op-ed published in The Washington Post, Beutner in Los Angeles and the heads of the nation’s two other largest public school systems, in New York and Chicago, called for a “Marshall Plan” that would direct $125 billion in federal funding to districts for COVID testing, mental health care and remedial summer instruction as schools emerge from the pandemic.

The cost, they note, “is less than 20% of the total earmarked for the Paycheck Protection Program and about twice the amount provided to airlines.”