Public schools throughout the United States are bracing for a significant financial challenge in 2025 as the federal pandemic relief funds come to an end and student enrollment continues to dwindle, as revealed by data from the Georgetown Edunomics Lab.
The imminent funding shortfall is primarily attributed to the conclusion of the Elementary and Secondary School Emergency Relief funds, which infused billions of dollars into school districts during the pandemic. By September 2024, these funds will have been exhausted, placing around 250,000 educational jobs, amounting to $24 billion in labor costs, at risk.
Marguerite Roza, director of the Edunomics Lab at Georgetown University, cautioned school districts about their financial planning, stating, “We actually warned school districts in advance, be careful about this money. Because if you take on recurring commitments, financial commitments, you’re going to really find that in 2025, we will be calling it the bloodletting.”
Compounding the issue is a national decline in public school enrollment that has persisted since 2020. California has experienced a particularly sharp decrease, driven by factors such as reduced birth rates and increased out-migration from the state, according to recent studies.
This enrollment decline not only leads to reduced funding from the state, which typically allocates resources based on student numbers, but also results in many districts facing an excessive workforce. An influx of staff during the pandemic, intended to mitigate learning loss and bolster social-emotional support, has ultimately left numerous districts overstaffed.
Roza likened the situation to a family winning the lottery, saying, “It’s like if a family wins the lottery and says, ‘Wow, I have $1 million this year. I should buy a new house that has a $1 million mortgage.’ There’s no way you’re going to be able to pay that next year. You’re just using that money for this year.”
Education specialists have noted that while some districts managed to reduce their temporary staff through attrition or early retirement incentives, others did not implement effective exit strategies. This oversight has led to a stark financial crisis that could have lasting repercussions on public education.
Mike Fine, CEO of the Fiscal Crisis and Management Assistance Team—a California state agency assisting school districts with financial and operational challenges—expressed the sentiment of many in the education sector. “Let me say this on behalf of all educators and all education administration folks: None of us got into this work to lay off teachers and counselors and librarians and nurses and aides and bus drivers,” he said. However, he acknowledged the reality of the situation: “The dollars are limited, and we have to live within the bounds of the financial support that we have.”
Watch the video above to learn more about the implications of declining enrollment for school funding and student services.
