After decades of steady growth, school enrollments have shifted drastically. K-12 school enrollment has declined by 2.3%, or 1.18 million students, in the U.S. over the past five years, and most schools aren’t showing signs of a rebound. National projections point to a further decline of 5.5% by 2031, equal to 2.7 million fewer students in school buildings across the country than we have today. The projected declines are not exclusive to a few pockets of the country. The National Center for Education Statistics projects 40 states will have fewer students in the coming decade compared to current enrollment.
Declining birth rates are the primary driver for enrollment declines. The number of births in the U.S. has fallen steadily in recent years with 690,000 fewer children born in 2024 compared to 2007. Another contributing factor is the share of students enrolled in private school and homeschool has been increasing in recent years. Families have more financial support to pursue these options with more states offering universal eligibility in private school choice programs.
Enrollment declines have significant financial implications for school districts because states largely allocate aid on a per student basis. Fewer state dollars can strain district finances, which forces districts to face tough choices of closing schools, reducing staff or cutting services. States have and can continue to soften the blow on district finances. In our analysis, we identified a few common strategies used by state leaders to assist local districts, like:
- Temporary hold harmless policies. A common response at the onset of the COVID-19 pandemic was to appropriate dollars based on prior years student counts to prevent service disruption. While these policies can provide an immediate cushion, they are not a long-term strategy for addressing the issue.
- Student counts averaged across multiple years. As detailed in our 50-State Comparison, states allocate dollars to districts based on an enrollment or attendance count. These counts are often based on a single school year. Some states have or are considering averaging the counts across multiple years to phase-in enrollment shifts, rather than making districts experience them right away. For example, California adopted a policy in 2022 to calculate attendance for the Local Control Funding Formula using the greater of current year, prior year, or the average of the three prior years. A recent review found that half of California school districts now use a three-year rolling average.
- Stabilization funds. Dollars are placed in a dedicated fund that does not revert to the state General Fund and can be allocated to support distressed districts. Florida created the Educational Enrollment Stabilization Program in 2023, which provides districts with supplemental state funds to address student enrollment changes throughout the school year and maintain financial stability. The state legislature considered legislation this session to provide a declining enrollment supplement to school districts with increased benefits for fiscally constrained districts.
States can be more than financial buffers for districts. They can support planning and community engagement related to enrollment shifts, such as helping districts minimize harm to students during school closures and consolidations. States can also collect crucial data on demographic changes to inform district leaders on which communities will be most impacted by these changes. States can support regional education services agencies and education cooperatives to pool resources and provide specialized services, such as special education, career and technical education, and information technology services to a wide range of students.
Fewer enrolled students may lead to financial challenges for school districts in the near term, but with effective state leadership, it can also be an opportunity for increased cooperation and new learning models.
