School districts often struggle to balance the needs of all children under the financial constraints in which they operate annually. While this has long been the case, the severity of recent inflationary costs that all sectors have confronted across the country has been particularly impactful on public education. While an unprecedented infusion of federal funding for many school systems helped mitigate this impact, a series of fiscal challenges are confronting our nation’s schools heading into 2024.

School districts receive funding from three main sources: federal, state, and local revenues. Federal funds account for the least amount, about 10% of school budgets, but are the most restrictive. Local funds, on average, account for between 35-50% and are the most flexible. States contribute the remains portions based on funding formulas that vary across the country. 

After President Biden was elected, schools received an unprecedented amount of federal dollars to address the impacts of COVID-19. These ESSER funds were distributed in phases and followed the same federal funding formulas currently in place. This translated to an average of $3,700 per student, but there were restrictions on funding. For school districts dealing with the impact of the pandemic and rising inflationary pressures, these monies were a welcome stopgap. However, many school districts, feeling like they had no other choice, used these one-time funds for ongoing expenses such as positions and salaries. As these dollars are set to expire, superintendents and boards are seeing a huge fiscal cliff as they prepare budgets for the upcoming year.

This is occurring at the same time as many states have not continued to fund public education at the same levels as before the pandemic. Using ESSER dollars as a reason to prioritize other areas, the percentage of funding for public schools has declined in many states. This has been a phenomenon for some time.

During this same period, many urban school districts have experienced a decline in enrollment; the most significant factor in how most state and local funds are allocated. This is a lingering result of children not returning to schools after COVID-19 and the continuing expansion of choice options through charter schools and private school voucher programs. This siphoning of funds from traditional public schools, which are often not exempt from expensive regulatory statutes that choice options are allowed to avoid, continues to drain existing fund balances for school systems.

Why does this matter? Critics will say that “more funding” has often not translated into “better results.” While that can be debated, there are baseline standards of funding that school districts require that are matters of fact; and those baselines are in danger of being compromised. As we get ready to enter a very political environment with upcoming elections, it can only be hoped that local, state, and federal leaders will be asked how they intend to address this looming fiscal cliff and not be allowed to divert the conversation to non-existent issues in schools today.