Shuttered schools, shrinking student bodies, and pink slips for teachers: public schools across America might have to take drastic actions to cope with the financial fallout of declining enrollments, at the same time as federal Covid relief funds are set to expire next fall.

The deadline for school districts to use the third and largest round of the Department of Education’s related funding, under the Elementary and Secondary School Emergency Relief grants totaling $189.5 billion, is September 30. They can, though, request an extension for employing or liquidating funds to March 2026. 

That short-term problem of expiring funds comes amid another crisis that is set to plague public schools in the coming years: Fewer babies are being born, so fewer children will go to school. 

In New York public schools this year, enrollment dipped to 2.38 million, the lowest level since the early 1950s, according to the state education department. Nationwide, the decline in the school-age population is half a percent each year. Much of that decline is concentrated among kindergarteners and first-graders, which corresponds to slowing birth rates. 

America’s total fertility rate fell in 2023 to 1.62 births per woman, a 2 percent decline from a year earlier, according to data released last month by the Centers for Disease Control and Prevention’s National Center for Health Statistics. The Congressional Budget Office projects that population growth will drop, like an L-shaped curve, in the next decade. 

“We need to be in touch with reality,” the director of national research at an organization that advocates for school choice policies, EdChoice, Michael McShane, tells the Sun. “We need to look at demographic trends, fiscal trends, and have honest conversations about what’s going on.”

What was far from reality, according to Mr. McShane, is that the temporary infusion of federal money during the pandemic prompted some schools to double down on administrating. In California’s largest K-12 public school system, the Los Angeles Unified School District, the “Central Administration” budget has almost doubled — to $638 million in 2023-24 from $358.2 million in 2022-23, even though there are almost 100,000 fewer students than a year or so ago, according to its reported data.

“The total 2023-24 budget, all funds, is about $19 billion,” the Public Information Officer at Lausd, Britt Vaughan, tells the Sun. Asked by the Sun why that budget has increased while student enrollment is down 40 percent since 2007, Mr. Vaughan pointed to the district’s committee meeting, during which was discussed the idea of dipping into state reserves for the first time to “mitigate any potential reduction to school funding” as the state’s budget deficit is projected to reach nearly $55 billion by 2025.

California is not unique. The gap between staffing enrollments is growing nationwide, with 6,414,038 employees at public schools for only 46,486573 students in the 2022-23 school year, a research center on education finance at Georgetown University, Edunomics Lab, has found.

Declining enrollments reflect a multitude of cultural and economic factors. The Covid pandemic prompted many families to pull their children out of city schools and move to the suburbs, where housing costs were lower and quality of life seemed better, Ms. Roza says. Meanwhile, waves of families are migrating southward, so cities in the north and midwest can expect to see the greatest enrollment issues. 

Classes are also getting smaller because of chronic absenteeism, dubbed “the missing children’s problem,” where students who were going to school during the pandemic are no longer enrolled. Educational alternatives, like homeschooling, are growing in popularity.

“We will have fewer kids in the future,” Mr. McShane says. “We either may need fewer schools or we may need to organize schools differently.”

School districts are allocated revenues based on the number of children they enroll. When that figure declines, some schools may have to shut down so that resources are not spread too thin. Rather than closing 20 schools at once, Mr. McShane says, districts might be able to find gentler responses like merging schools or closing down one and redistributing those students to another. 

Rounds of staffing layoffs could come too, if hopes for more attrition to reduce expenses go unfulfilled. In school districts like Los Angeles, where union contracts have a “last in, first out” policy, the newest teachers are let go — not necessarily the lowest-quality ones. 

Those junior teachers tend to have lower salaries, so closing a budget gap would require laying off, say, twice as many teachers, the director of Edunomics Lab, Marguerite Roza, tells the Sun. The current protocol for layoffs “disproportionately hurts our higher-needs student population,” Ms. Rosa says. “It’s not about protecting what’s best for kids, it’s about protecting what’s best for senior teachers who tend to vote in union elections.”

The policy can also lead to “a really unbalanced workforce,” Ms. Roza says. “You have too many … music teachers and not enough math and special ed teachers, where turnover rates are a lot higher.”

Minneapolis is already wrestling with these questions. The city’s public school district has seen an enrollment drop of nearly 20,000 students, or 43 percent, since the start of the century. It’s now facing an estimated budget deficit of $110 million. Given that its funding is based on a per-pupil formula, school boards are grappling with how to cut costs fast enough.

Minneapolis’s robust teachers union, meanwhile, is advocating for pay raises to keep up with inflation — a demand that could prompt fresh layoffs. “They have probably too many staff, the staff want to see pay raises over time, and they don’t quite have the student population to support at all anymore.” Ms. Roza says. “I think it’s all going to fall apart, especially as the federal relief money disappears.”

Yet she asserts that “the school systems can contract.” That’s what happened to school districts in the Rust Belt beginning in the 1950s, when hundreds of thousands of Americans flocked to the Sun Belt. “The bigger problem with the declining birth rate is the imbalance in society. If there are fewer and fewer people working, then the math doesn’t work and something has to give,” Ms. Roza says.

Both the youngest and the oldest cohorts of America’s population could be affected. A lower birth rate means lower collective productivity, wealth, and taxpayer money, which goes to support retirees and buoy government programs like Social Security and Medicare. 

The Social Security Trustees’ annual report, released May 6, asserts that the program’s financing is improving, yet that sunny outlook does not account for a long-term decline in birth rates. “When the trend toward lower fertility is incorporated accurately in future Reports,” according to an assessment by the American Enterprise Institute, “the picture of the program’s finances will look much worse and therefore the realistic cost of needed reforms will rise.”

As Covid cash dries up, public schools should ward against budget issues by doing a better job of forecasting enrollment, Ms. Roza recommends. They can start checking in with students as young as three and four on whether they will stay in the district. District leaders can assess expenses and student outcomes across their schools, and give priority to those that afford less, but perform well.

They can ask themselves, Ms. Roza says, “Do we need all these schools? Which ones are worth protecting?”