When students leave, the funding stays

With 10 states enacting universal or near-universal school choice programs since the pandemic, it’s no surprise many are wondering how public schools will be impacted in the future.

A chief concern perpetually levied against these programs, which allow families to receive a portion of their child’s per-pupil funding for K-12 education to access schools and other educational services outside the public system, is that they “drain” resources from public schools when students leave.

But a look at the data show this criticism defies fiscal sense. In fact, public schools are actually better off when choice policies enter the picture.

Choice programs lead to smaller class sizes, better fits between teachers and students, and better matches between students and their learning environment. This translates into more manageable classrooms for teachers and better learning environments for students.

Academic research also shows public schools, and outcomes for students who remain in them, improve after choice enters the picture. Research indicates that when choice enters the pictures and expands, students’ overall experience learning improves, absenteeism declines, and suspension rates fall.

School funding is also incredibly favorable for public schools because of the funding protections they enjoy.

Most states (34) provide protections for districts against funding reductions from declining enrollment. These policies are designed specifically to mitigate funding declines for public schools. The strength of these protections vary considerably, but they ensure one thing: that districts will receive funds for students they don’t serve.

To be sure, there are certain advantages to these policies that benefit public schools. These policies offer districts a greater measure of revenue stability and budget predictability, as well as extra time to make budgetary changes when enrollment changes.

But these policies also have tradeoffs. They increase costs for taxpayers because the state pays districts for students they no longer enroll. Funding guarantees or “hold harmless” funding, which provide a perpetual source of funding, may unnecessarily direct state funds to districts when their financial circumstances are improving or to districts that have high amounts of local wealth. This arrangement undermines efforts to increase fiscal equity among districts, a supposed goal among many choice opponents.

Illinois, which threw more than 9,000 low-income children under the bus by allowing the Invest in Kids Act to sunset and thereby taking their privately funded scholarships away, has a funding protection in place which bases a district’s funding on its current year enrollment or average enrollment from the most recent three years, whichever is greater.

Iowa, which enacted education savings accounts, a program that will expand to all K-12 students by 2025-26, includes a funding guarantee to help districts cope with enrollment loss. That is, districts that lose students may receive 101% of funding from the previous year and have one year to adjust.

Arguments about choice weakening public schools financially becomes even more tenuous in light of these policies. As policymakers enter a new legislative season and weigh the merits of expanding educational options for their families, they can be even more confident that affected public schools will come through unharmed, and even stronger than before.