Funding for public K-12 schools in the U.S. is based on enrollment. More students mean more money. In 31 states, public to determine the current year鈥檚 funding, which makes it easier to soften the financial blow when enrollment declines. In the rest of the states, school funding is based on the current year鈥檚 enrollment 鈥 meaning that any change in attendance is immediately felt in the budget.
鈥 also known as the 鈥渉old harmless policy鈥 or 鈥渇unding protection鈥 鈥 as giving schools money for 鈥済host students,鈥 calling it costly and unfair. Concerns like this may have models in 2017, giving public finance scholars like us a perfect opportunity to assess differences between how the two models can affect school budgets.
We from 2011 to 2020, a period that includes six years before and three years after Arizona鈥檚 policy change. In each of the first three years after the state ended the funding protection policy, school districts with declining enrollment immediately received less state funding.
Our analysis shows that school districts have more stability when state funding is based on head counts from the previous year. When enrollment fell, we found that high-income districts were more likely than their low-income counterparts to cut spending on instruction and administration and reduce the number of teachers 鈥 especially educators with less experience. This was a short-term effect. We don鈥檛 know what happens over the long term.
We didn鈥檛 explore the reason, but we believe it鈥檚 because wealthier districts had more 鈥渇at鈥 in their budgets in the first place that they could cut, while poorer ones were already pretty lean and trimmed where they could. It also seems that richer districts benefit more from a funding policy that relies on prior year鈥檚 enrollment figures.
Understanding the consequences of making this policy change is increasingly important as enrollment at America鈥檚 public schools is gradually declining. It鈥檚 .
In addition, with the federal spending for K-12 public schools, more of the burden will be placed on states. or less of school funding. Reducing federal funding may prompt more schools to switch to funding formulas based on current-year enrollment.
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