School choice and families relocating aren’t the chief drivers of falling enrollment, but they exacerbate the most pressing issue.
Declining birth rates remain the top reason districts are shrinking, says Dr. Marguerite Roza, director of Georgetown University’s .
Historically, urban areas tend to lose students as suburban areas grow. Declines are now the norm across the board as districts compete with private schools and vouchers.
“Because of this birth rate piece, any additional choice will exacerbate what’s already a very difficult trend for school districts,” Roza says. “Even one incremental student leaving is accelerating our decline.”
The harsh reality of budgeting in 2026
Leaders are transitioning from a period of federal funding surplusesto a systemic contraction that Roza calls the “.”
National K12 spending surpassed $1 trillion in FY2024, according to from the Institute of Education Sciences. Now, the elimination of pandemic-era funding and declining birth rates are forcing leaders to make difficult financial decisions.
Recent media reports revealed a growing trend in the number of districts considering school closures.
Seattle Public Schools recently reported a $87 million budget shortfall, according to . Parents gathered outside the district’s headquarters last Wednesday to speak out against closing schools.
However, in some buildings, there are classrooms with only one or two students, Superintendent Ben Shuldiner said during a .
“I was at a school that had one child in a classroom. Two adults,” he said. “That can’t possibly be OK.”
Other leaders are cutting staff or relying on natural attrition, even though the latter practice, according to Roza, is a “dangerous” strategy that can inadvertently create a salary drift.
For example, turnover is most frequent among teachers in their first five years in the profession. Leaving these positions unfilledtilts the scale toward/tips the balance towardveteran staff, who are paid much more.
“If you lose a lot of teachers in their first five years, you’ve lopped off the employees that balance out your salaries,” Roza explains. “Your average salary is drifting up. Now, you have a relatively expensive workforce, which is a different kind of financial problem.”
Relying on natural attrition to influence your budget also signals to parents that leadership is more focused on staff than student outcomes.
As funding shifts accelerate, knowing which agencies now control your grants, and what that means for compliance and budgets, is essential. 91心頭+ members can use the Funding Transition Predictive Resource to stay ahead of it..
Chasing ‘new money’
Treating K12 federal funding like an ATM is “wishful thinking,” Roza says. However, there are a few avenues worth exploring, including the .
The new IRS provision (not an Education Department program) allows for tax-deductible donations to scholarship-granting organizations, and donors will receive a dollar-for-dollar federal tax credit.
The program is perhaps one of the bigger conundrums for Democratic governors, according to Roza.
“The way the tax credit scholarship works, not only could it result in more money for public schools, but it could also result in students leaving public schools,” she says.
Some leaders are wary of opting into the program if it expands school choice, she adds. In the coming years, states will be able to use the money to support tutoring, transportation and AP test fees.
“I would be surprised if we saw a penny of it before the end of 2027,” Roza says. “Even then, that’s kind of early because people are going to donate closer to when they could get their tax refund, which won’t come until the spring of 2028.”
Some districts are tapping into specific revenuestreams to use empty classrooms to expand preK or early childcare programs that could funnel students into their schools.
Career tech programs have also gained traction. However, they’re not necessarily a massive “new source of cash,” according to Roza.
Ultimately, she recommends that district leaders stop searching for “a pot at the end of some rainbow” and acknowledge limited resources by focusing on more strategic, student-centeredspending.
“I’m not surprised that leaders don’t want to make a hard tradeoff and ask, ‘Where do I find new money?'” she says. “I also think they’re signaling to the public or their boards that they can always find new money to get out of the situation. They’re misreading the environment we’re now in.”
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