Education Policy Research - Reason Foundation Free Minds and Free Markets Thu, 09 Mar 2023 06:20:22 +0000 en-US hourly 1 Education Policy Research - Reason Foundation 32 32 Analyzing Nebraska’s proposed legislation impacting school finance and property taxes Thu, 09 Mar 2023 06:20:21 +0000 Two bills are being considered that aim to increase the state’s role in financing K-12 education and decrease local property tax burdens for school district residents.

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During their first legislative session under Gov. Jim Pillen, Nebraska policymakers are considering legislation that aims to increase the state’s role in financing K-12 education and decrease local property tax burdens for school district residents. Specifically, two state bills address the fact that Nebraska is one of the most property tax-dependent education systems in the country, and many of its rural school districts get no state equalization aid under the state’s K-12 funding formula. However, while the legislation would help alleviate property tax burdens, there’s a substantial exception baked in that would prevent taxpayers from getting dollar-for-dollar property tax relief from the increase in state funds.

Backed by Gov. Pillen, Legislative Bill (LB) 583 would increase state reimbursements for special education expenditures as well as ensure that every school district—including the many rural Nebraska school districts that currently get no state formula aid—receives a minimum of $1,500 per student amount in state aid, also called Foundation Aid.

The bill would also set aside $2 billion in revenues to be collected from state taxpayers in a series of years in an Education Future Fund to sustain further increases in state education funding. All told, this would result in about $270 million in new revenues for K-12 education in the immediate year following the bill’s enactment.

Another bill, LB 589, aims to make the new influx of state funds from LB 583 result in a reduction in property tax burdens. This bill would cap the annual allowable growth in state and local school district revenues, both property tax and non-property tax, at three percent. Note that reimbursement funds for special education and donations are excluded from these revenues, which means that the increase in special education reimbursements wouldn’t count toward a school district’s revenue growth cap. Additionally, an amendment introduced would exclude payments on the principal and interest of bonds from the revenue growth limit. There are also exceptions allowing for higher revenue growth caps for districts that have substantial growth in total student enrollment or enrollment of low-income or English learner students. 

Laying aside these exceptions, however, the many Nebraska school districts that rely primarily on property taxes should see a necessary reduction in property taxes from the new per-student Foundation Aid and the three percent annual budget growth cap.

Take the example of Centura Public Schools, a school district with 442 students in the 2022-2023 school year that is heavily reliant on local property taxes. LB 589 specifies that all local and state revenues, excluding only special education funds and private grants and donations, should be used to calculate a district’s three percent revenue growth limit. According to the district’s most recent annual financial report (AFR) from the 2021-2022 school year, Centura receives $6.61 million from those funding sources. Now, if Centura were to receive $1,500 per student under LB 583, that would represent an estimated $663,855 increase in funding—a 10% increase on the funding sources considered under the cap based according to the district’s latest AFR.

Assuming Centura doesn’t qualify for any of the enrollment growth exceptions granted in LB 589, the new aid from the state would require a reduction in property taxes for the district to meet the three percent revenue growth limit. Based on the district’s AFR figures, Centura would only be able to grow its budget by an estimated $198,237. Therefore, the new state aid should result in an estimated total property tax reduction of about $465,618, spread across all property taxpayers in the district. These calculations are all summarized in Table 1.

Table 1
Revenue SourceAmount
TOTAL REVENUE FROM LOCAL SOURCES (exc. Private grants, donations)$6,240,608
TOTAL REVENUE FROM STATE SOURCES (exc. SPED aid, SPED transportation)$340,054
LB 583 Estimates 
Foundation Aid Estimate$663,855
Estimated % increase from Foundation Aid10.05%
3% of State & Local Revenues with Exclusions$198,237
Property Tax Reduction Estimate$465,618
*All calculations are estimates based on the author’s interpretation of the bill text and are for illustrative purposes only. 

This dynamic would apply to many of Nebraska’s other small, property tax-dependent school districts—the influx in state aid would necessitate a reduction in their property taxes to meet the three percent revenue growth limit.

But problematically, LB 589 provides a pathway whereby Centura–and similarly situated school districts– could minimize the property tax relief by allowing districts to override the revenue growth limit with the approval of 60 percent of the district’s voters in a special election. It also allows district school boards to override the revenue growth limit without petitioning voters at all if they receive an affirmative vote from at least 75 percent of school board members.

According to the bill, voter or school board approval would allow districts with “no more than four hundred seventy-one students”—which would include Centura—to have a revenue growth cap of seven percent instead of three percent. This cap would cut Centura’s required property tax reduction down to about only $200,000, a very small reduction in property taxes considering that Centura levied $5.55 million in local property taxes in the 2021-22 school year.

The advantages of LB 589 and LB 583 are that they aim to gradually decrease Nebraska’s heavy property tax burdens by increasing the state’s role in financing K-12 education. Future state investments would be subject to the same budget growth limits and should result in further property tax relief. But for the many Nebraska districts in similar situations as Centura, the current provisions in LB 589 that allow for school boards or voters to override the proposed three percent revenue growth limit risk creating a dynamic where $2 or $3 in new state funds are required to achieve only $1 in property tax relief.

To achieve cheaper and more immediate property tax relief, state legislators could consider removing provisions in LB 589 that allow school districts to increase their revenue growth cap with school board or voter approval.

More fundamentally, Nebraska lawmakers should also examine every aspect of how the state Tax Equity and Educational Opportunities Support Act (TEEOSA) formula works and how it’s funded. There are many problems in Nebraska’s education funding system that should be addressed, such as how the state formula sorts districts into complex, non-transparent comparison groups to determine base funding and how most Nebraska school districts raise more than their formula share from local property taxes alone. State policymakers shouldn’t pass up this opportunity to decrease the formula’s overreliance on property taxes and to make the formula more transparent and student-centered.

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Clearing up definitions of backpack funding Wed, 01 Mar 2023 06:02:00 +0000 Portable education funding that follows students to their schools is often called “backpack funding."

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For school choice programs to succeed, state leaders need to account for whether their K-12 funding system has portable education funding, i.e., dollars that follow students to the school of their choice. Portable education funding is also often called “backpack funding,” but this term can refer to several things. 

In a new Reason Foundation policy brief, Public Education Without Boundaries, our team analyzes how school finance systems can get in the way of dollars following students across school district boundaries. Advocates of backpack funding should also pay attention to how dollars follow students between individual public schools, between public and private education environments, and how the whole education funding system ultimately ties together. In each case, backpack funding hits new roadblocks and requires different policy solutions.

1.       District-to-District Backpack Funding

An important subset of backpack funding concerns how education dollars follow students when they attend public schools outside of their residentially-assigned school district boundaries. Without strong funding portability mechanisms, school districts have weak financial incentives to welcome transfer students via cross-district school choice. The recent policy brief, Public Education Without Boundaries, tackles this problem and identifies three primary culprits preventing funding portability between public school districts.

First, most states have a group of school districts that are “off-formula,” meaning the districts can raise more than all the funding they are entitled to under their state’s main funding formula from local tax sources alone. Put simply, off-formula school districts create funding portability problems because they often don’t lose or gain funding when students transfer out or transfer in.

A second problem for funding portability between school districts is local education funding, which often comes from local property taxes. These taxpayer funds are often raised to support public school operations and finance construction projects, but because these local taxpayer funds aren’t raised based on student enrollment in schools or the district, they again don’t follow students when they transfer out of a school district.

The third funding source that doesn’t follow students easily is any state funding stream that’s not based on current enrollment figures or is not based on enrollment at all. To illustrate, in 2018, Missouri’s K-12 funding system funded 194 school districts based on past revenue amounts rather than current their student counts. Again, this means that a student transferring into any of those Missouri school districts doesn’t generate new funds for the district and that a student transferring out doesn’t take any funding away from the district if they leave.

Achieving backpack funding between school districts means finding ways to make these kinds of education funding sources—which don’t typically follow students—portable. 

One model for how to do this is in Wisconsin, which sets a single, statewide per-student funding amount that follows each student to their new school when they transfer to a new district. That calculated amount accounts for state and local funds–including some dollars that are not portable–which are then deducted from a sending school district’s state revenues. While this amount doesn’t include all funding devoted to a student in their home district, it exemplifies a way that other states can factor in education revenues from different sources and ensure that they come out of a sending district’s budget and follow transfer students out and to their new schools. 

2.     School-to-School Backpack Funding

Importantly, even if policymakers follow examples like Wisconsin to ensure education dollars are portable across school district boundaries, ensuring that funding follows students within school district boundaries when students transfer to a new school within the same district is a separate challenge. While all states have funding formulas ensuring that at least some education dollars follow students across district boundaries, none have statewide policies requiring that districts implement backpack funding at the school level. Therefore, implementing school-to-school backpack funding is a district-level decision that only a small subset of school districts across the country have implemented to some degree.

The standard method most school districts use to allocate dollars within their boundaries is to allot staffing and program-specific funding to each school. Under this common model, school resources aren’t usually thought of in terms of dollars. Budgets are largely administered at the district level, so school principals aren’t directly dealing with the financial effects of students transferring in or out of their schools.

This widespread practice of districts allocating staffing and programs to individual schools has several negative effects on within-district school choice as well as overall funding fairness. When dollars don’t automatically follow children between schools, districts might not be willing to allow for within-district choice because it can complicate budgeting for each individual school. 

Additionally, it’s long been noted that this budgeting practice based on staff positions leads to large per-student funding disparities between schools within the same school district due to differences in staff salaries between campuses. And as new state reports on federally mandated school-level spending data show, this practice often shortchanges schools serving high-need students. 

Achieving backpack funding within districts requires a different toolkit than what’s required to get backpack funding between districts. At the local level, school district leaders need to commit to a weighted student funding mechanism to fund individual schools and implement it with fidelity so that schools are funded solely based on the individual needs of the students they serve. 

Similarly, state policymakers could also advance legislation that requires districts to fund their schools on a weighted funding model and that gives students the option to choose schools within their boundaries. While these efforts would require substantial cultural shifts whereby districts place more budgeting responsibility on individual schools, they would lead to school-to-school backpack funding that fosters both public school choice and funding fairness.

3.       Public-to-Private Backpack Funding

Another definition of backpack funding expands the previous definitions to include non-public education environments. An example of public-to-private backpack funding would be universal education savings accounts (ESAs)—like the accounts recently implemented in states like West Virginia, Iowa, and Arizona. Universal education savings account programs are for all students in a state, regardless of their income or whether they are currently enrolled in public schools, private schools, or homeschooling.

In most cases thus far, students only qualify for an education savings account once they have withdrawn from the public school system. Also, ESAs and private school vouchers are often tied to the per-student amounts under the state’s education funding formula. When a student withdraws from a public school district to utilize an ESA or voucher, that state per-student amount generally leaves the district and follows the student. 

However, the problems that occur with district-to-district backpack funding also apply to public-to-private backpack funding. Local funds outside of the formula and state grants outside of the formula don’t typically follow ESA students, and off-formula school districts won’t typically see a reduction in funding when a student leaves to use an ESA. 

4.       Universal Backpack Funding

Finally, having a universal ESA is not all that’s required to have universal backpack funding. To achieve true universal backpack funding, policymakers need a single mechanism that allows for district-to-district, school-to-school, and public-to-private education choices. Education savings account amounts would need to be calculated similarly to how the per-student funding amount is calculated in the Wisconsin example above so that non-portable education funds become portable. 

Coming up with a single mechanism that accommodates all forms of backpack funding requires policymakers to make the public K-12 funding system more compatible with ESAs. When public school funding mechanisms have a mixture of portable and non-portable dollars, it’s difficult to have ESA amounts that are similar to the per-student funding levels in the public schools without costing the state extra money to make up the difference between the education dollars that follow students out of a school district and the dollars that are left behind in the district losing the student. 

As more universal education savings account bills make their way through legislatures and to governor’s desks across the country, policymakers should also consider how universal backpack funding can help streamline their education funding mechanisms so that all students are funded the same way, regardless of the schools they attend or the environments they are educated in.

Universal backpack funding would help break down the divide that exists between students being educated in public and private environments and ensure that all education funding follows students wherever they go to learn.

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Funding Education Opportunity: Examining public school enrollment losses and sectors with gains, state education legislation, and more Fri, 24 Feb 2023 16:01:00 +0000 Plus: South Carolina mulls expanding open enrollment, Texas governor calls for school choice reforms, and more.

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Where exactly did the 1.2 million students who left the public school system go during the COVID-19 pandemic? Until now, data on this topic has been hazy at best, but a new Urban Institute essay by Stanford University’s Thomas S. Dee featuring data from the Associated Press and data journalists at Stanford University’s Big Local News provides a snapshot of where approximately 58% of the 1.2 million students who left public schools went. Dee reviews K-12 enrollment changes by sector from 21 states, plus Washington, D.C., between the 2019-20 and 2021-22 school years.  

In the 21 states examined, public K-12 enrollment declined in every state except for three states and the District of Columbia. The AP and Stanford found that public K-12 enrollment dropped by approximately 711,000 students in those locations. California and New York experienced massive enrollment declines, with nearly 271,000 and 133,000 students leaving public schools. 

By contrast, K-12 enrollments increased in other schooling sectors. Homeschool enrollment grew by about 184,000 during the pandemic, as likely would’ve been expected, with the homeschooling sectors in Florida and New York growing the most. 

Private school enrollments also grew, but more modestly, increasing by nearly 103,000. Florida, again, and Tennessee experienced the most significant growth in their private schools. 

Yet, the private and homeschool sector growth only accounted for about 40% of public school enrollment losses. Dee estimated that population changes, such as students moving to other states and declining birth rates, accounted for more than a quarter of public school enrollment losses. 

At the same time, the report estimated that 240,133 students remain unaccounted for. These unexplained losses featured most prominently in California and New York, where nearly 152,000 and 60,000 students remain missing, respectively. 

Some absences are likely due to unregistered homeschooling and families not enrolling their children in kindergarten, which is optional in nine of the 21 reviewed states. In these cases, Dee estimated that skipping kindergarten accounted for almost 40% of unexplained absences.

Nonetheless, some students have not attended school for multiple years now. Researchers have previously estimated that the lifetime earnings of students who experienced just one year of learning loss could be reduced by more than 9%, so there will be long-term concerns about many of these students and their futures. 

These public school enrollment declines have also hastened financial crises for many school districts that were unprepared for them, especially urban ones. For instance, Minneapolis Public Schools announced an impending fiscal crisis due to declining enrollment last fall.

With fewer students in public schools and an increasing number of families more comfortable with switching schools, public school districts will need to up their game as they navigate a more competitive education marketplace. Research shows that school districts can positively respond to competitive pressures by implementing measures like open enrollment. 

Policymakers should weaken school district monopolies, so students have options outside of their residentially-assigned schools. Oftentimes students drop out of school because of bullying by other students, not feeling like they fit in with classmates, not getting the academic attention they need, or conflicts with teaching staff. Policies, such as education savings accounts and open enrollment, provide students with flexible schooling options to transfer to schools that fit their needs. Education savings accounts, in particular, allow for significant educational customization, paying for tuition, books, physical therapy, transportation, and much more.

From the states

State policymakers continue to advance school choice proposals nationwide.

The Utah State Senate failed to pass a proposal (S.B. 166) to make microschools legal in the state.

In Idaho, the Senate Education Committee passed a proposal (S.B. 1038) that would establish approximately 6,600 education savings accounts. These accounts could be used to pay for various approved education expenses, such as private school tuition or textbooks. There are no income restrictions on the accounts. 

The Arkansas Senate passed Gov. Sarah Huckabee Sanders’ LEARNS Act (S.B. 294), which would initially establish education savings accounts for students who are homeless, in foster care, have disabilities, or are assigned to failing public schools. However, student eligibility would expand by 2026 to all K-12 students. At the same time, the proposal would also remove any caps on charter schools and student transfers through open enrollment. Currently, the bill has 25 cosponsors in the Senate and 55 cosponsors in the House, providing a supermajority and majority, respectively.

What to watch

South Carolina policymakers are thinking about expanding open enrollment. Proposals in the South Carolina House and Senate would expand public school choice, allowing students to transfer to public schools other than their assigned ones. Currently, some public school districts in the Palmetto State permit students to participate in within-district open enrollment, but the new proposal would require all school districts to participate in cross- and within-district open enrollment. During his testimony, Reason Foundation Senior Policy Analyst Christian Barnard recommended adding transparency provisions to strengthen the proposal.

Texas governor’s State of the State address calls for school choice reforms. Texas Gov. Greg Abbott called K-12 education an “emergency item” this legislative session. Noting that Texas successfully implemented education savings accounts (ESAs) for students with special needs during the pandemic, Gov. Abbott stated that Texas now needs to establish universal state-funded ESAs for all Texas families. 

Recommended reading 

A Poor Poverty Measure
Ishtiaque Fazlul, Cory Koedel, and Eric Parsons at Education Next

“While it has been understood for some time that school lunch enrollment as a poverty indicator is blunt and prone to error, the magnitude of the problem has not yet been fully appreciated. In exploring the rules, features, and processes of the National School Lunch Program, we find that the program’s design, incentives, and lack of income-verification enforcement likely contribute to the oversubscription.”

Stockton, Calif., School Officials Could Face Criminal Charges after Audit Finds ‘Sufficient Evidence’ of Relief Fund Fraud
Linda Jacobson at The74

“The audit by an independent California agency largely focused on a questionable $7.3 million contract paid for with pandemic relief funds. In 2021, former officials appeared to ram through the purchase of 2,200 ultraviolet air filters designed to kill COVID despite multiple warnings that they weren’t following laws and procedures, the report said.”

The Stakes Are Only Getting Higher For Pandemic School Aid Spending
Marguerite Roza at Forbes

“Districts need to plan now so students don’t face chaos at the start of the 2024 school year with classrooms and teachers shuffled, programs abruptly dropped, demoralized staff, and leaders focusing on nothing but budget woes. Past experience tells us that deep cuts are often inequitable and impact our neediest students the hardest.”


Are you a state or local policymaker interested in education reform? Reason Foundation’s Education Policy team can help you make sense of complex school finance data and discuss innovative reform options that expand students’ educational opportunities. Please reach out to me directly at for more information.  

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Arkansas could be the 12th state to enact a robust open enrollment law Thu, 23 Feb 2023 16:00:35 +0000 The LEARNS Act would provide universal school choice for all Arkansas families by 2026.

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For too long, Arkansas students’ public school options have been limited by residential assignment. This outdated and unfair method of school assignment sorts students into schools based on the geographic location of their homes.

This means that access to better public education options can depend on a family’s ability to essentially “buy” seats to better public schools through their mortgage inside the right school district boundaries.

However, a new Arkansas proposal aims to level the playing field, letting families pick their schools— public or private —regardless of their income. Introduced by State Sen. Breanne Davis, the LEARNS Act (Senate Bill 294), has already garnered the support of a supermajority in the Senate. The proposal also has 55 cosponsors in the state House and is strongly supported by Gov. Sarah Huckabee-Sanders.

This proposal would provide universal school choice for all Arkansas families by 2026. Children with disabilities, in foster care, homeless, and those assigned to failing schools would first gain access to an Education Freedom Account (EFA). But all children in the state would be eligible for an account within three years. Families could use their EFA to pay for approved education expenses, such as private school tuition, fees, school uniforms, and supplies. 

In addition to private school choice, the proposal would vastly expand the Arkansas Opportunity Public School Choice Act–the state’s cross-district open enrollment program. Cross-district open enrollment lets students transfer to public schools in school districts outside their assigned one. 

While all public school districts are required to participate in cross-district open enrollment, the policy is crippled because program participation is capped at 3% per school district. This means very few students can transfer through cross-district open enrollment.

Caps on participation help school districts retain their monopoly over the students that are geographically assigned to them. This means that school districts have little incentive to compete for new students or address the concerns of the students and parents assigned to their schools.

The LEARNS Act, however, would eliminate these arbitrary participation requirements. This reform would make Arkansas the 10th state to adopt a robust mandatory cross-district open enrollment law and the 12th state to have a law that requires mandatory open enrollment.

Any student could transfer to a public school outside their assigned school district. Moreover, students could transfer to their new public school for free, as they should be able to, since Arkansas is one of the 24 states that explicitly prohibits public schools from charging tuition to non-resident students.

Cross-district open enrollment is an essential form of school choice since it often lets students access better schooling options. For example, research from Texas and California found that students often transfer to schools with better test scores or more highly ranked than their assigned schools.

Moreover, in 2016 and 2021, California’s nonpartisan Legislative Analyst’s Office found that students used the state’s cross-district option to transfer to schools that offered Advanced Placement or International Baccalaureate courses, specific instructional models, or emphasized career preparation in particular fields.

Similarly, research on Ohio’s open enrollment program showed achievement benefits. It increased on-time graduation rates for transfer students who consistently used open enrollment, particularly those in high-poverty urban areas.

Open enrollment is a popular choice among families. For instance, participation in Wisconsin’s mandatory cross-district open enrollment program increased from 2,500 students during the 1997-98 school year to 70,000 students 23 years later. 

If signed into law, Arkansas’ refurbished open enrollment program would be a noteworthy example of a good education policy that lets students attend schools that are the right fit for them. The LEARNS Act could also weaken public schools’ unfair monopoly over students and encourage competition between schools. Significantly, families’ school choices would no longer depend on where they can afford to live, and instead, parents and students could choose the best schools for them.

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California’s schools need to adapt to the state budget woes Tue, 14 Feb 2023 05:00:00 +0000 Gov. Gavin Newsom’s recently-released budget projects a $22.5 billion deficit, which means school districts will likely need to rightsize operations.

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California’s public school students recently showed historic declines in standardized test scores due in part to school closures and other COVID-19 pandemic-related learning disruptions. Amidst a growing state budget device, state legislators and local school leaders need to help students get back on track with smart policymaking.

California Gov. Gavin Newsom’s recently-released budget projects a $22.5 billion deficit, which means school districts, especially those experiencing dramatic student enrollment declines like the Los Angeles Unified School District, will likely need to rightsize operations. School districts should be finding cost savings in areas such as reductions to the currently very generous post-employment health care and dental benefits for retirees, which are controlled at the district level.

California policymakers should also allocate any remaining federal funding for pandemic relief to tutoring services and programs that allow local school leaders the most discretion over how to use the money to help students. As of Sept. 30, 2022, California schools had spent just over 43 percent of the $21.5 billion federal stimulus funds allocated to the state’s school districts and charter schools during the pandemic. School districts need to ensure they don’t create new costs that outlast federal funding set to dry up. Schools must be shrewd about whether or not to add new staff. Many school districts aren’t in a financial position to make new hires due to their declining student populations.

Los Angeles Unified and Oakland Unified School District have heavily invested in tutoring, universal summer school, and small-group literacy programs since the spring of 2020. These programs may help explain why each school district gained ground in some reading metrics and experienced less significant overall National Assessment of Educational Progress (NAEP) score declines than many other urban school districts across the country. And because different student populations have vastly different learning needs, the more discretion local leaders have on how to use these resources, the better.

At the state level, policymakers should resist the urge to funnel education dollars through specific grants and earmarks. These programs make it difficult for school leaders to prioritize the programs they see helping their students when budget cuts are necessary.

Finally, California must consider ways to provide families with more education choices. Improving the state’s public school open enrollment programs is one way to do so. Ensuring that all public schools are participating in within-district and cross-district open enrollment would allow students to enroll at public schools that better fit their academic and social needs.

A 2021 study conducted by the nonpartisan Legislative Analyst’s Office gave the state’s biggest open enrollment option, the District of Choice program, good marks. Students using the program often enrolled in higher-performing school districts, and districts that lost students to the program showed increased community engagement in an effort to win families back. By consolidating and expanding California’s open enrollment offerings, policymakers would empower more families to find education options that better fit their children’s needs. Unfortunately, a recent Reason Foundation study of K-12 open enrollment policies found California’s open enrollment programs fall short in every key benchmark, so much work is needed.

With the state facing a significant budget deficit, federal COVID funding to schools set to dry up in 2024, and the need to help students make up for learning losses suffered during the pandemic, California’s schools and policymakers have their work cut out for them in 2023. But practical solutions like improving open enrollment policies and rightsizing schools can start to put the state on the right path to providing a higher-quality education to California’s students.

A version of the column previously first appeared in the Orange County Register.

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How states can learn from Wisconsin’s cross-district open enrollment system Mon, 13 Feb 2023 06:01:00 +0000 The term school choice often brings to mind vouchers, education savings accounts, or charter schools. But another form of school choice is critical to giving families options that might better fit their needs: cross-district open enrollment. While many states allow … Continued

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The term school choice often brings to mind vouchers, education savings accounts, or charter schools. But another form of school choice is critical to giving families options that might better fit their needs: cross-district open enrollment.

While many states allow students to transfer to schools across district lines, only nine states implement robust policies that ensure students have access to schools with available seats. A new Reason Foundation policy brief shows promising results and highlights how Wisconsin’s cross-district open enrollment system can serve as a model for policymakers in other states.

For starters, Wisconsin’s open enrollment program has shown tremendous growth. The number of participants has grown from 2,500 students in the 1998-99 school year to more than 70,000 students in the 2021-22 school year.

The figure below compares enrollment in Wisconsin’s public schools and choice programs over time. While public school enrollment in Wisconsin has fallen precipitously, cross-district open enrollment has continued to grow, even outpacing the growth of private school choice in recent years. 

Importantly, the study suggests that cross-district open enrollment helps students access better schools, finding that districts that see net gains through the open enrollment process tend to have significantly higher ratings on the state’s report card than districts that lost students. This finding supports the idea that parents are in the best position to make decisions for their kids and that open enrollment is a viable vehicle for putting them in the driver’s seat.

While multiple factors have contributed to the success of Wisconsin’s cross-district open enrollment policy, a significant factor is that a substantial portion of students’ per-pupil funding follows them to their new school districts. For regular program students, Wisconsin transfers $8,125 to the receiving school district from the residentially assigned district. This represents about 59% of the average combined state and local spending per student in the state and exceeds the average per-student state contribution by a little more than $1,000.

Wisconsin’s approach creates a win-win by leaving behind some funds to cover fixed costs for the sending district and providing a strong financial incentive to accept transfers for the receiving school district.

For transfer students with special needs, this amount goes up to $12,977. The importance of this increased value should not be lost. Historically, Wisconsin school districts would reject transfers due to claims that they were unable to meet student needs. By offering a higher transfer funding amount, districts are incentivized to take on more challenging students who are often most in need of new opportunities.

A final key component to Wisconsin’s success is that school districts can only reject transfer students’ applications for limited reasons, such as grade level capacity and the applicant’s discipline or truancy records. Otherwise, school districts must accept all transfer applicants so long as open seats are available. In fact, school districts must implement a lottery if the number of transfer applicants exceeds the number of available seats. This limits the arbitrary rejection of students and encourages families who need a change to apply in a relatively transparent process.

Open enrollment is just one tool in the education reformers’ toolbox, but its important potential should not be underestimated. Since open enrollment only involves public schools, there is the potential to bring along new allies who may be reluctant to support other forms of school choice. Wisconsin’s open enrollment program is not perfect, but the state’s ambitious program can serve as a starting point for other states looking to open up public school choice.

For more information, please see the policy brief, “K-12 open enrollment in Wisconsin: Key lessons for other states.

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K-12 open enrollment in Wisconsin: Key lessons for other states Thu, 09 Feb 2023 15:21:19 +0000 Wisconsin's public school open enrollment program serves over 70,000 students and can be a model for other states.

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Executive Summary

In recent years, providing families with more educational options has become an important policy for state legislatures around the nation. But while learning pods, charter schools and education savings accounts dominate the discussion, cross-district open enrollment as a form of school choice shouldn’t be overlooked. Wisconsin provides a best practices model for states looking to improve their student transfer policies.

This policy brief provides evidence that many of the measures incorporated in Wisconsin’s open enrollment system have been effective and have helped to make it the largest single school choice program in the state.

Among the key findings of this report:

#1 Increasing the window for program entry increases participation. Open enrollment jumped nearly 20% in one year when Wisconsin opened an alternative application procedure outside of the normal time frame.

#2 Students move to school districts with better academics. Districts with better outcomes on state tests tend to gain more students in open enrollment, while districts that perform poorly tend to lose more students.

#3 “Donor” districts initially improve. Wisconsin school districts that lost students to open enrollment initially improved on state tests, although these effects dissipated over time.

#4 Increases in the transfer funding amount are correlated with greater district participation. As the amount of funding transferred to the receiving district has increased over time, districts have taken in more students through the program.

Policymakers in other states have much they can learn from Wisconsin’s open enrollment program. Specifically, its statewide funding amount, differentiated funding for students with disabilities, and robust transparency requirements have encouraged school district participation and increased educational opportunities for families, with more than 70,000 students now participating.

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Open enrollment could make Missouri a school choice leader Mon, 06 Feb 2023 06:00:00 +0000 Proposed legislation in Missouri would would establish a an open enrollment program to allow students the opportunity to attend the public school of their choice.

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Missouri’s public K-12 education system needs an update. The quality of a student’s education has been determined by the ZIP code where their family can afford to live for far too long. Because of Missouri’s strict residential assignment system that determines where students can enroll in school, many students don’t have access to nearby public schools that may be a better fit for their learning needs. The K-12 Open Enrollment Act of 2023, introduced earlier this month in the Missouri House of Representatives, aims to change that by providing students with more educational choices.

This bill would establish a public school open enrollment program to provide all students the opportunity to attend the public school of their choice so long as seats are open in their grade level beginning in the 2024-25 school year.

Open enrollment programs can offer an array of benefits to students whose assigned school is not a good fit. Students may choose to switch public schools to access AP classes not offered at their assigned school, escape bullying, have a shortened commute, and much more. Open enrollment also encourages school districts to improve performance to attract and retain students. A recent study showed how California school districts that initially lost students because of open enrollment later improved their educational offerings and improved student retention as a result.

Under the proposed law, Missouri school districts could prioritize admission for certain students, such as siblings of current transfer students, those relocated due to foster care placement or students who are children of active-duty military personnel who have relocated due to orders.

But outside these special circumstances, school districts would not be able to discriminate against transfer applicants for reasons such as race, gender, disabling condition or academic record.

Finally, the bill would also make sure students can enroll in a non-assigned public school free of charge. Currently Missouri is one of 26 states that allow public schools to charge families tuition. These tuition costs can be a serious barrier for students seeking to transfer schools.

Currently, only 11 states, including Kansas and Oklahoma, have robust open enrollment laws. The K-12 Open Enrollment Act would not only allow Missouri to join their ranks, but it would also be the best open enrollment law in the nation.

As we observe the 12th annual National School Choice Week at the end of the month, remember that open enrollment can be the rising tide that lifts all boats for Missouri students.

A version of this column previously appeared in the Springfield News-Leader.

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How K-12 education is funded Fri, 03 Feb 2023 05:00:00 +0000 Funding for K-12 public education is a shared responsibility between federal, state, and local governments.

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Funding for K-12 public education is a shared responsibility between federal, state, and local governments. Figure 1 provides a snapshot of these revenue sources in the 2019– 2020 school year.

Flow chart of how K-12 education is funded

State policymakers have little say over how federal education dollars are allocated and used, so this policy brief focuses exclusively on state and local funding.

While school finance systems vary considerably across states, school districts generally rely on four distinct revenue streams that can be broadly categorized as follows:

State Funding Formula Aid is a state’s primary method of delivering education dollars to school districts. A combination of state and local dollars fund most state formulas through a foundation program. Arizona, for example, employs a funding formula where each student receives $4,775.27, using weights to augment that funding for students with greater needs. Additionally, each school district in the state is assumed to tax at a certain rate locally to contribute toward that per-student amount, with the state filling in the gaps when districts can’t cover the full amount locally.

Outside-the-Formula State Aid are allotments that often come in the form of restricted-use grants for specific purposes such as reading intervention, textbooks, and staffing positions. These are funded exclusively by the state. Continuing with the example of Arizona, the state allocates various grants outside of its core formula for items like school safety and teacher salary increases.

Local Operating Levies are local education dollars raised by school districts to support operating expenses such as teacher salaries, classroom supplies, and routine maintenance. These often require voter approval, but school boards sometimes have the discretion to determine levy amounts within set limits. Georgia, for instance, allows school district boards to levy local property taxes above and beyond their formula contribution to support school operations.

Local Capital Levies are local education dollars raised by school districts to support capital expenses such as construction, equipment, and building improvements. These usually require voter approval and are often used to pay off bonded debt.

Importantly, every state education funding formula is heavily based on school district enrollment. While states vary on how enrollment-sensitive their funding systems are, overall, school districts in every state generally gain or lose funds when enrollment increases or decreases, all else being equal.

This column is an excerpt from Public Education Funding Without Boundaries: How to Get K-12 Dollars to Follow Open Enrollment Students

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National Microschooling Center founders illustrate how microschools are changing K-12 education Wed, 01 Feb 2023 15:48:39 +0000 Microschools provide an innovative alternative for families looking to leave the traditional K-12 education system.

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Many families reconsidered their relationships with K-12 education amid the COVID-19 pandemic. During this time, microschools came to the fore.

Instead of building large schools accommodating hundreds or thousands of students, microschool leaders plant schools in storefronts, libraries, and empty dance studios. These small schools can range in size, serving anywhere from 5 to 100 or more students in multiple grade levels. 

Don Soifer is the co-founder and Chief Executive Officer and Ashley Soifer is the Chief Innovation Officer and co-founder of the National Microschooling Center. Their organization provides information about microschools to parents, policymakers, and school leaders, and supports founders to launch their own. In this interview, we ask the Soifers why families are drawn to this alternative education model, what challenges microschool leaders face, how they are funded, and much more.

Jude: What is a microschool and how is it different from other education models?

Ashley: A microschool school is a small, intimate, flexible learning environment. There’s no cap on a microschool and school sizes can range anywhere from eight kids sitting around the living room to over 100 in an office building. But that group of 100 is likely broken up into smaller groups for learning. 

Jude: How are microschools different than a traditional classroom? 

Ashley: As a microschooling parent myself with three children in a microschool, it’s so exciting to have that connection with the educators that are with my children and to really tailor their individual education for each kiddo. If a child is working on a particular math program and the educator decides it’s just not working as well as it could be, they can adapt mid-year and shift to a different program. Some microschools follow state academic content standards while others may focus on social-emotional learning, use a science-based curriculum or utilize project-based learning.

Christian: What are the pitfalls of trying to set a standard definition for microschools?

Don: Since microschooling is so flexible, we’re reluctant to adopt definitions that might be too restrictive down the road. Once you define something, you put a bullseye on its back and that makes it very easy for regulators to find problems with it. At the end of the day, some amount of definition sounds helpful for parents, but let’s make sure that we don’t do it in a way that hamstrings the movement’s effectiveness or its potential to grow.

Jude: Why do families use microschools?

Don: Millions of families across the country have reevaluated their relationships with the institutions that they had historically relied upon to meet their educational needs. This looks very different in different places. In rural communities, we’re seeing a lot of interest in microschooling taking advantage of this golden age of digital content. Others, like Montessori microschools don’t rely on technology. 

At the same time, the hybrid aspects of microschooling haven’t really existed before. Families realized that they don’t need to have one exclusive provider for all of their educational needs. For example, some kids are in a microschool three days a week while the rest of the time is spent with a combination of tutors or classes. In terms of microschooling’s market share and the potential for students’ transformation – the sky’s the limit.

“Three-quarters of our microschool kids were more than two grade levels behind. But the microschool we ran for the city of North Las Vegas changed all that.”

Don Soifer

Jude: The public-private microschool you started in 2020 gained almost instant popularity. Why do you think microschools gained so much attention during the pandemic?

Don: When the pandemic began, it became obvious that the fifth largest school district in the country and all of the other educational options were not adequate during the pandemic for North Las Vegas residents. Ashley and I worked up two briefing books, dropped them on the city manager’s desk the next morning and ran microschools for the city of North Las Vegas in their rec centers and library. The city made it free for all of their residents so long as microschools were in person every day with safe procedures in place aligned wih government mandates. Participating residents would withdraw from the school district and follow homeschooling rules.

Three-quarters of our microschool kids were more than two grade levels behind when they arrived. But the microschool we ran for the city of North Las Vegas changed all that. Academic results and parental satisfaction were through the roof because we trusted them as partners in their children’s learning trajectories.

As we got more positive press for what we were doing, we realized we had 25 microschooling leaders coming to our office regularly who were building this exciting, vibrant, dynamic sector that had never existed before. This led us to launch the National Microschooling Center.

Jude: What advice would you give someone who wants to start a microschool? 

Ashley: The first thing is to talk to people in your community, gather interested families, and hear about their children. At the National Microschool Center, we take calls from folks that are interested in starting a microschool and provide support and resources. Don’t be afraid to jump in and microschool! 

Don: has a lot of resources from free training and learning tools about how to microschool. Many of our calls and emails are parents looking to join a microschool, but we often shift them into building mode. Researchers tell us that we’re at about a 2% market share nationally, which is about where Catholic schools are in this country. But I believe microschooling could get to a 10% market share. 

“One of the biggest barriers that microschool leaders experience is zoning because even though microschooling has been around for quite some time, local regulators don’t always know where to put microschools.”

Ashley Soifer

Jude: What sort of financial or policy barriers are there for families interested in microschooling? 

Don: Policymakers should avoid making deals that could hamstring the effectiveness of microschools. For instance, overbearing accountability provisions can make it difficult for microschools to operate. Some microschools care more about the social and emotional growth of their learners than they do about their academic growth. Some never want to subject their learners to a norm-referenced assessment, let alone a criterion-referenced assessment. Others reject their state’s academic content standards as not being entirely pertinent to the future of their own learners.

Ashley: One of the biggest barriers that microschool leaders experience is zoning because even though microschooling has been around for quite some time, local regulators don’t always know where to put microschools. They start asking questions like: Do we need to do a traffic study? Are you a school? Do we need to figure out if pickup and drop off is going to cause backups on this major road? What does your parking lot look like? When those really aren’t things that usually matter because microschools are so small. So often the barriers we encounter come from local regulations, such as business licensing.

Jude: How are microschools funded exactly?

Ashely: It varies from state to state. In the city of North Las Vegas, the kiddos withdrew from the public school system and all the parents filed out their notice of intent. So they became homeschoolers but were coming to the microschool five days a week and learning The program was funded by city appropriation, completely outside of traditional education funding streams.  

In other states, some microschools are private schools or are inside traditional public schools. And there are some really innovative things happening in Arizona and Idaho with charter schools. Bottomline, it depends on your state’s frameworks and what tools let you serve the needs of your community best. 

Don: When we did a microschool for the City of North Las Vegas, we did it in rec centers and libraries that the city owns already. While Nevada is not historically a school choice-friendly state, Nevada’s TOTS (Transforming Opportunities for Toddlers and Students) Grants gives $5000 grants to families with special needs kids that can be used broadly for education purposes. Those funds supported microschools. Another example from Nevada is a microschool that operates out of a library in a rural area. The free library building covers a major facility cost, while other library-funded services can be used for microschooling purposes. States with social impact bond programs or pay-for-performance programs that could be accessed for microschooling are another possibility.  

Jude: What are the major costs associated with operating a microschool?

Ashley: Facilities are one of the major costs. If it’s a partnership microschool and there’s an employer providing the facility or house of worship providing the facility, that cuts down a ton on cost. Independent microschool leaders should connect with underutilized buildings. For instance, dance studios that are only open in the evenings could be happy to rent their space out at a much cheaper cost during the day.

Being creative with facilities is crucial because that cuts down some of those big-ticket items. Staffing is another big ticket item. Sometimes we purchase bulk licenses for different learning tools that will also provide free training so that microschool leaders can use them. That way, we can help them keep their bottom line low.

“We see the answer to scale as growing more microschool leaders. By creating more leaders you can have more microschool options popping up all over the country.”

Ashley Soifer

Jude: To what extent can microschools be scaled by operators? 

Ashley: Provider networks like Prenda play a crucial role in the microschool movement making resources for microschool leaders. The independent microschool leaders really don’t want to scale. They want to create a small intimate learning environment that families love, and they often aren’t looking to add multiple campuses or to grow their existing campus. We see the answer to scale as growing more microschool leaders. By creating more leaders you can have more microschool options popping up all over the country.

Jude: Are there any states where the microschool movement has grown significantly in the last few years? 

Don: In Southern Nevada, we have about 24 microschools. Other emerging hotspots include the Atlanta area, Southern Florida, Wichita, to some extent parts of New Jersey. It’s just a matter of time until Indiana, West Virginia, and Arizona with their school-choice vehicles join the microschooling community with a big-time presence.

Jude: How is microschooling different from homeschooling? 

Ashley: Oftentimes, it depends on your state. Some are taught by parents or other family members who say, “Hey, we need a better solution for our kiddos.” Others come from a variety of career fields. In the microschool venture with the city of North Las Vegas, our star middle school math teacher ran pyrotechnics at one of the shows on the Strip here in Las Vegas. What middle school kid doesn’t want to hear how he uses math every day to blow things up? 

Others are veteran teachers. One of our best microschool leaders in Nevada taught in an independent school and got tired of shutting her door to teach the way that she wanted. So she opened a microschool so that she can now teach the way that’s best for kids.

Jude: What advice do you have for policymakers interested in supporting microschools in their cities and states? 

Don: They should call us! What’s exciting to me is that this is truly a permissionless education and systems don’t always know what to make of microschools. We can help people navigate the existing frameworks and especially those in their state, municipal, or locality. It’s time to upgrade and update the frameworks in which microschools operate.

Jude: What final thoughts do you have for readers?

Don: This is about empowering families to build and not join, and to be active partners in learning in ways that fundamentally change the relationship people have historically had with education. Microschooling represents a new frontier with some great forward-thinking people, it has diversified in ways that we maybe haven’t seen in school choice experiments during the past 15 years. We have as many microschooling leaders who are as hard left as hard right, and it brings together a community that in some way raises the ceiling on what happens when school choice becomes a possibility and families project into it their own values and what they want for their own kids. 

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Funding Education Opportunity: School choice in rural America, 2023 education legislation, and more Mon, 30 Jan 2023 18:13:23 +0000 Plus: New research on how to fund public school transfer students, school closures and more.

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With state legislatures now in session across the country, policymakers in states like Oklahoma and Texas are considering school choice proposals, Iowa is celebrating passing universal education savings accounts, and states like Arkansas and Missouri may take up the issue of open enrollment. New research on these key education issues can help policymakers and stakeholders.

For example, with rural lawmakers and school districts often opposed to school choice, a new report suggests that students residing in rural areas may have much to gain from school choice policies. A report by Heritage Foundation’s Jason Bedrick and Matthew Ladner finds most children living in rural areas are often closer to private school options than some might think. In fact, seven in 10 students living in rural areas live within 10 miles of a private elementary school. The report also found that the number of tax-credit scholarships awarded to Arizona students living in five rural counties increased by 163% between the 2010-11 and 2020-21 school years, showing how school choice policies can benefit students living in rural areas. 

Arizona’s robust school choice options, which “reach further into rural areas than in any other states,” have not been a death knell for rural school districts, the report says. In fact, since charter schools were first introduced in 1994, the state has only consolidated rural school districts in two counties, closed one school district (which had no charter or private schools in it), and created one new school district, Bedrick and Ladner noted.

This phenomenon is not unique to Arizona. Last year, Ron Matus and Dava Hankerson of Step Up for Students released a report showing the positive effects of school choice policies for families living in rural Florida. During the past 20 years, the number of private schools in the Sunshine State’s rural counties expanded from 69 to 120. Matus and Hankerson point out that, “In Florida’s rural counties, the number of students using ESAs [education savings accounts] has grown from 65 in year one to 731 last year, to 1,985 and counting this fall.” This demonstrates that the education marketplace can respond to demand when given a chance to compete with the public school districts’ monopolies. 

This year’s National School Choice Week also made it clear that more policymakers across the country are realizing that education freedom and rural school districts can thrive side by side. As Matus and Hakerson noted, “School choice doesn’t make the sky fall on rural district schools. But it does help part the clouds for rural families who need options for their children.”

And this rural education marketplace should also include public school open enrollment, a valuable school choice policy. A new Reason Foundation report also highlights how states can implement open enrollment funding policies that allow state and local education dollars to follow students to their public schools of choice. “States can take three different pathways to improve portability: comprehensive school finance reform, targeted solutions, and creating a distinct funding mechanism that supports open enrollment,” the study shows.

A competitive education marketplace can be the tide that raises all boats. 

From the States

State policymakers continue to introduce energetic school choice proposals across the nation.

Iowa Gov. Kim Reynolds signed the Students First Act, which would provide universal education saving accounts to Iowa families. The new law makes all K-12 students in Iowa eligible to receive a $7,598 voucher. Iowa is now one of three states to have universal education savings accounts.

The Utah House and Senate both passed a proposal (House Bill 215) that would provide 5,000 K-12 students with approximately $8,000 in scholarships. Scholarship recipients could use them to pay for tutoring, private school tuition, and homeschooling. Utah Gov. Spencer Cox signed the bill into law this past weekend.

In Missouri, a proposal by Rep. Ben Baker would require all school districts to participate in open enrollment. If passed, HB 559 would make Missouri’s open enrollment law the strongest in the nation.

Texas policymakers introduced two school choice proposals in January. Rep. Mayes Middleton introduced Senate Bill 176–the Texas Parental Empowerment Act would establish parent-controlled accounts which can be funded through tax credits. Parents could use these accounts to pay for approved education expenses, such as private school tuition or fees, books, or tutoring. House Bill 557, filed by Rep. Cody Vasut, would reimburse Texas parents for private school tuition and other education-related expenses, such as transportation costs.

Virginia Lt. Gov. Winsome Sears and State Delegate Glenn Davis introduced a proposal (House Bill 1508) for education success accounts. Eligible students could use these accounts to pay for private school tuition and other approved educational expenses. Upon parents’ request, Virginia would transfer a percentage of the state funds that would otherwise have been allocated to the school district in which the student resides. The Virginia House Education Committee recently voted to advance the proposal, assigning it to the appropriations committee.

What to watch

Kentucky Anti-Charter School Lawsuit Riles School Choice Proponents. Although charter schools have been legal in Kentucky since 2017, none have ever opened. A 2022 law requiring two pilot charter schools in northern Kentucky aimed to change that, but the Council for Better Education, Jefferson County Public Schools, and Dayton Independent Schools recently filed a lawsuit to block the law from going into effect. 

Dayton Public Schools Faces Heavy Fine for Failing to Bus Charter School Students. Dayton Public Schools could be fined up to $750,000 by the Ohio Department of Education for not complying with a state law that requires school districts to provide transportation to students enrolled in charter schools that reside inside the school district. Dayton Public Schools stated that it couldn’t provide necessary transportation because of conflicting bell schedules and bus driver shortages. The school district is suing the state over the citation.

The First Round of West Virginia’s Hope Scholarships Distributed to Families. Approximately 1,800 recipients received their scholarships which can be used for private school tuition. Nearly 90% of recipients received the full annual amount of about $4,298. Earlier this month, the West Virginia treasurer filed an emergency amendment that would allow scholarship recipients to use their funds to pay for microschool tuition. If the secretary of state does not approve the rule by Feb. 15, it will automatically take effect. 

Recommended Reading 

Pandemic Schools and Religious Renewal
Lewis M. Andrews at National Affairs

“Senior centers, YMCAs, town halls, and other community venues that might normally have been available were, as a result of the pandemic, either closed, operating on limited hours, or committed to their own emergency efforts. By process of elimination, many families realized that the one place large enough, safe enough, and empty enough to run a small school during the workweek was the local parish.”

We Need to Prepare Now for The School Closures That Are Coming
Tim Daly at Fordham

“My advice to cities grappling with falling enrollment is to begin planning now. Engage in robust processes to take community input on which schools will close and when. But do not drag your feet hoping for a miracle that saves you from the scourge of closures altogether… Instead, invest your time and resources in helping families transition… Give families a real voice in determining their child’s new placement—and offer assistance in the pursuit of seats in charter schools, as well as traditional district schools.”

Public Schools Have Lost over a Million Students. Here’s Where They’re Going
Matthew Lee and Lynn Swaner at National Review

“Rising enrollments in choice schools, particularly in private schools, not only provide evidence of a continuing school-choice wave sweeping the country but also demonstrate how these learning environments will continue to be an important part of the United States’ educational fabric.”


Are you a state or local policymaker interested in education reform? Reason Foundation’s Education Policy team can help you make sense of complex school finance data and discuss innovative reform options that expand students’ educational opportunities. Please reach out to me directly at for more information.  

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Pennsylvania public schools need funding reform, not more money Mon, 30 Jan 2023 06:00:00 +0000 Data show Pennsylvania schools are well funded. But how this funding gets to students is a problem.

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On the campaign trail this year, Josh Shapiro championed more money for public schools. Now that Democrats control Pennsylvania’s House of Representatives for the first time in over a decade, the state’s governor-elect will likely find ample support for that goal.

“Everyone knows that our schools are chronically underfunded,” said state Rep. Matthew D. Bradford (D-Montgomery County) in a recent press conference concerning Pennsylvania election results. 

But data show Pennsylvania already spends plenty on public education.

Between 2002 and 2020, Pennsylvania’s real education revenue skyrocketed by 49%, going from an average of $14,434 spent per student to $21,524 per student, placing the Keystone State at fifth-highest in the country for K-12 per-student funding. During this time, Pennsylvania’s public school enrollment plummeted by 11.7%, but the state still increased its share of inflation-adjusted funding by some $3.4 billion.

Incredibly, these figures don’t even account for more recent spending and enrollment trends, including record-breaking education appropriations in each of the past two years and a nearly 3% public school enrollment decline since the start of the COVID-19 pandemic.

In short, more money is being spent on fewer students – but where are all those dollars going?

For starters, they aren’t boosting teachers’ take home pay. Despite historic funding levels, Pennsylvania’s teachers are taking home less on average, as real salaries fell by 3.7% between 2002 and 2020. Instead, the state’s education dollars increasingly go to two main expense categories: employee benefits and new staffing positions.

From 2002 to 2020, real per-student spending on employee benefits – which includes expenses such as teacher pensions and healthcare – grew by 173.6%. This growth exceeded that of every state’s except Hawaii and Illinois, and Pennsylvania now spends $5,656 per student on benefits alone. A key driver of this spending is the increasing cost of paying for pension debt. Pension debt, also known as unfunded liabilities, is the shortfall in assets needed to pay for retirement benefits already promised to current and future retirees.  

Research by the Reason Foundation shows that Pennsylvania’s teacher-pension unfunded liabilities grew from $8.22 billion in 2002 to $49.28 billion in 2020, due in part to unrealistic investment-return projections combined with insufficient contributions. As a result, education dollars have increasingly gone to cover this shortfall, with employer pension contributions now accounting for 34% of payroll expenses, according to the retirement-research organization Equable Institute.

Additionally, Pennsylvania’s public schools have been on a hiring binge despite losing over 207,000 students in the last two decades. In 2020, there were 4.9% more teachers and 15.8% more non-teachers compared to 2002 levels, as a total of 23,321 staff members were added to public school payrolls. Non-teachers – which include support staff, administrators, and instructional aides – now outnumber teachers in the state.

The merits of these staffing trends are debatable, but there’s no doubt that public schools have doubled down on hiring and have more staff in schools than ever before.

With the state’s Commonwealth Court set to rule on a years-long school finance case, there will be calls for even more public school spending. But Shapiro would be wise to focus on structural reforms that make better use of education dollars, starting by addressing teacher pension costs and eliminating a hold-harmless provision in the state’s funding formula that both Republicans and Democrats recognize as unfair.

He should also continue to back Lifeline Scholarships, which give some students access to funding for educational expenses, including private school tuition. Shapiro strayed from Democrats’ typical opposition to school-choice programs by voicing his support for the scholarships, and doing so may have given him a boost this November. A recent poll by EdChoice shows that most parents favor this type of policy. 

Finally, the governor-elect should push for changes to the state’s antiquated public school student-transfer law, which makes it hard for students to access available seats across school district boundaries. A recent study by the Reason Foundation gave Pennsylvania’s student-transfer policy low marks, hitting only one-of-five best-practices benchmarks. States such as Wisconsin, Arizona, and Florida all have open-enrollment policies that make it easier for students to exercise public school choice.

At a time when public school enrollment is plummeting and funding stands at record levels, Pennsylvania policymakers need to find ways to put public education dollars to better use for students.

A version of this column was previously featured in RealClear Pennsylvania.

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How state education funding formulas work Fri, 27 Jan 2023 06:00:00 +0000 Funding formulas collect and distribute education dollars to schools.

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Many school finance formulas can be traced back to the 1920s, when foundation programs were designed to guarantee school districts a funding floor while accounting for their ability to raise local education dollars. The key feature of this approach is that state and local tax revenue contribute to what is essentially a single pot of dollars that funds school districts. Although lower-wealth districts receive a disproportionate share of state formula aid under foundation programs, all districts are ultimately funded according to state formula calculations.

Foundation formulas take different forms across states (and not every state uses one), but generally operate using three basic steps:

STEP 1: Determine School Districts’ Revenue Entitlement: The state calculates how much revenue each district will receive, commonly referred to as a “revenue entitlement.” States have varying approaches, but formulas are often based on some combination of enrollment counts, student characteristics, and district characteristics.

STEP 2: Determine School Districts’ Local Share: The state calculates the share of each district’s revenue entitlement that can be covered by local revenue sources—often property taxes. Usually, this calculation is based on a uniform local property tax rate that is either assumed or mandatory for districts to levy. The higher a district’s local wealth (i.e. its ability to pay), the greater its local share will be. Nebraska’s formula, for example, assumes each school district will impose a local property tax rate of $1 for every $100 in assessed valuation.

STEP 3: Determine School Districts’ State Aid: A school district’s local share is then subtracted from its revenue entitlement to determine its state aid. If a school district can’t raise its full revenue entitlement from local sources, the difference is backfilled with state aid. Generally, most school districts require state aid to meet their revenue entitlement under a foundation program. However, many states have at least some districts that are off formula, meaning they raise their entire revenue entitlement locally and don’t receive any state aid. Off-formula districts tend to be property-wealthy and are generally unaffected by the state’s funding formula.

Map of how an education foundation funding formula works

This column is an excerpt of Public Education Funding Without Boundaries: How to Get K-12 Dollars to Follow Open Enrollment Students.

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Public education funding without boundaries: How to get K-12 dollars to follow open enrollment students Tue, 24 Jan 2023 15:00:00 +0000 How to ensure state and local education funds flow seamlessly across district boundaries.

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States are increasingly enacting open enrollment policies that give students options across school district boundaries. But this is only half the equation. Policymakers must also ensure that education dollars follow the child to the school of their choice, a concept referred to as funding portability. Without sufficient portability, school districts have weak financial incentives to enroll transfer students and may limit opportunities for families. Non-portable dollars also reinforce district boundaries, which lock families into public schools based on where they can afford to live, not what is necessarily best for their children.

The primary culprits inhibiting funding portability are districts that are entirely locally funded due to high property wealth, and both local education funding and state funding streams that aren’t sensitive to changes in enrollment.

New Hampshire provides a valuable case study that illustrates these problems. In total, 39 of the state’s 237 districts are off-formula and don’t generate additional state aid when new students enroll. Moreover, nearly two-thirds of New Hampshire’s non-federal education dollars are generated locally and aren’t portable across school district boundaries. As a result, most districts only receive a fraction of their average per-pupil spending amounts when enrolling additional students, which weakens financial incentives for an open enrollment program.

Ideally, school finance systems should “attach” dollars directly to students so that all state and local education funds flow seamlessly across district boundaries. States vary considerably with how close they are to this vision, and the first step for policymakers is to take stock of funding portability in their state. From there, states can take three different pathways to improve portability: comprehensive school finance reform, targeted solutions, and creating a distinct funding mechanism that supports open enrollment. While all solutions are worth considering, the most direct approach is to follow Wisconsin’s lead by establishing a stand-alone funding allotment for public school open enrollment. Three best practices can help policymakers craft this funding policy.

Uniform: Start with a Single Statewide Base Per-Pupil Amount

Open enrollment funding policy should center around a single per-pupil amount that follows students across school district boundaries, an approach Wisconsin has successfully employed for more than two decades. This provides robust transparency while also guaranteeing that all school districts are operating under the same set of financial incentives. There are numerous ways to set this amount, but policymakers should strive to maximize the share of overall state and local per-pupil funding attached to students.

Responsive: Account for Students’ Needs

Policymakers can attach weights or additional per-pupil amounts to students with disabilities and other categories of need. For example, Wisconsin provides a greater per-pupil amount for students with disabilities, plus reimbursement for costs that exceed this amount up to a specified limit, which is paid for by students’ home districts.

Incentivize: Tap into Local Education Dollars

Ideally, states should ensure that local dollars follow the child across school district boundaries. One way to do this is to deduct a per-pupil amount from home school districts’ state aid for each student who transfers out and allow it to follow the child across district lines. Tapping into local dollars ensures that districts’ incentives are maximized, and this approach negates the need for district-to-district billing of local dollars, which is undesirable because it reinforces the idea that dollars belong to districts, not the students.

Fundamentally, establishing portable education funding moves states closer to a boundaryless public education system—an idea first pioneered by Milton Friedman. In its purest form, this means eliminating residential assignment and funding students directly so that they can choose whatever option best fits their needs.

Download the full policy brief: Public Education Funding Without Boundaries

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Three areas in K-12 education that need more transparency Wed, 18 Jan 2023 15:50:03 +0000 Data and information on special education services, student transportation and school capacity is not readily available to parents or policymakers.

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Parents’ rights groups continue to raise concerns about K-12 public schools not being forthcoming with what their children are learning in classrooms, an issue state policymakers across the country addressed with curriculum transparency bills during 2022 legislative sessions.  But beyond what’s being taught in classrooms, there are other areas in K-12 education that need more reporting. 

Taxpayers and the tens of millions of families who rely on public schools to educate their children should expect transparency and accountability in all aspects of education operations. But public schools still have a lot of work to do to provide stakeholders with better data—particularly when it comes to special education, school capacity, and student transportation.

Special Education

Available data indicates that public school special education populations grew substantially over the past few decades. What’s more, the growth of special education populations has varied substantially between states. These trends alone raise important questions about why this population is growing and how these students are being served. But beyond basic federal data showing special education population trends by state, and national snapshots of students in various disability categories and how much time they spend in regular classrooms, researchers and advocates lack quality data to work with.

Most states provide district-level data on special education populations and disability subgroups and other data that are necessary to comply with federal law. Questions remain as to how districts place these students on individualized education plans (IEPs), the kinds of services special education students receive, and how these students are performing academically. Remarkably, even the question of how much public schools spend on special education services lacks a clear answer at the national level and isn’t reliably answered at the state level.

There are a few potential reasons why special education data is limited, one being that smaller school districts can’t report granular disability data without violating student privacy. Also, dividing expenditures by student need groups can be tricky because of how services are often shared across different subsets of students.

Paraprofessionals and specialists often divide their time between different students and schools, and they aren’t always working exclusively with IEP students. Additionally, districts vary widely in their IEP placement practices and the services they offer to students with certain needs. This creates challenges for having standardized data collection at the state and federal levels. Nonetheless, until state and local professionals can navigate these issues, policymakers and families will continue to be in the dark as to how they can better serve special education students.

School Capacity

Open enrollment is an increasingly popular form of public school choice that allows families to transfer to public schools outside of their residential assignment zones and in neighboring school districts. But according to a recent 50-state study published by Reason Foundation, most states have weak open enrollment policies and fail to give families ready access to public schools that have space. A key component of a strong open enrollment policy is for states to require that schools report how many open seats they have so that families know where they have options. But according to the Reason study, only seven states have policies requiring schools to annually report open seats.

The lack of robust capacity reporting requirements makes it easy for school districts to reject open-enrollment students for arbitrary reasons. This limits parent options and prevents students from finding a learning environment that best meets their needs. More generally, taxpayers should be allowed to know which schools are under-enrolled when their districts want to raise money to expand facilities or hire additional staff.

Student Transportation

Just over half of students get to school using school district transportation services, most often riding a traditional yellow school bus. But that number has steadily declined over past decades as school bus driver shortages plague school districts and transportation costs climb. School transportation is in need of innovation—but that’s hard to do when there are insufficient public data on school transportation services.  

How far are students transported in each district, on average? How much space is there on school buses during their routes? How long is the average student’s bus ride? Answering these questions can allow districts, policymakers, and transportation providers to better serve kids en route to and from school. But in a 2017 paper, Bellwether Education Partners analysts Phillip Burgoyne-Allen and Jennifer Schiess noted “Most transit systems routinely account for basic information like the cost per ride, percent of seat capacity utilized, length of ride times, and rate of on-time departures and arrivals, but many school transportation systems fail to collect these data consistently, if at all.”

A good first step to improving any policy area is to enhance transparency so that stakeholders can find common ground on what the problems are. Heading into 2023 legislative sessions, state policymakers should take stock of the areas in which public schools aren’t providing sufficient data and prioritize transparency improvements.

A version of this column previously appeared in RealClear Education.

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Tennessee should ban public school tuition Mon, 16 Jan 2023 05:55:00 +0000 Tennessee public schools are allowed to charge tuition to students living outside a district’s boundaries.

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With the election behind us and the 2023 legislative session just days away, Gov. Bill Lee and state legislators should be looking at ways to build upon last session’s historic education funding reform, the Tennessee Investment in Student Achievement (TISA). The most immediate thing state leaders could do to improve education equity for Tennessee students would be to eliminate public schools’ ability to charge transfer students tuition. 

Although Tennessee offers some options for students to transfer public schools through the state’s open-enrollment program, public schools are allowed to charge tuition to students living outside a district’s boundaries. And schools across the state do so to the tune of thousands of dollars. 

In the 2020-21 school year, for example, Collierville Schools, a district outside Memphis, charged out-of-district families living in Shelby County $400 per student to transfer to its schools, and families who lived outside the county were charged $4,000 per transfer student. To the east, Cleveland City Schools and Greeneville City Schools charged out-of-county families nearly $2,000 to transfer last year.

Williamson County Schools, which includes Franklin, Brentwood and other high-income neighborhoods south of Nashville, charged out-of-county families $3,850 to enroll a transfer student for the 2020-2021 school year. 

Even though a high-quality Williamson County school is accessible from many Nashville (Davidson County) neighborhoods, this steep price tag prevents families from accessing schools in the award-winning district. 

Some of Williamson County’s own teachers are growing frustrated with public school tuition costs. In the spring of 2022, Williamson County Schools educators living in Davidson County implored the school board to reduce the tuition they pay to send their own children to the schools where they work.  Ultimately, the school board decided to reduce the enrollment charges for full-time employees to $2,000 per student with a plan to fully phase out tuition for employees’ children. 

But it shouldn’t just be the children of educators or relatively well-off Nashville families who have access to Williamson County Schools. Students transfer schools for a variety of reasons, including escaping bullying, accessing specialized programs and taking advantage of more accessible transportation routes for their parents. 

What’s more, today’s residential school assignments and school catchment zones often reflect the racially-driven redlining of decades past. Asking middle- and low-income families to pay thousands of dollars to overcome this segregation is wrong. 

School districts may say they need these tuition funds to cover the costs of educating transfer students, but the state’s new funding reform, TISA, will remedy this issue by attaching a fixed dollar amount to each student served by a district, whether they live within its boundaries or not. 

While school districts will receive state funds for a transfer student thanks to TISA, some schools may still argue they need to charge tuition because they can’t levy additional educational funds for the student through local property taxes. But other states, like Wisconsin, have found a way to address this funding gap without placing the burden on families. Wisconsin’s student transfer policy even provides extra funding for special-needs students and reimburses low-income families for some transportation costs. 

Twenty-four states already have laws on the books that prevent public schools from charging families tuition or fees to transfer public schools. During the 2023 session, Tennessee policymakers should focus on making the state’s public schools free and open to all students. 

A version of this column previously appeared in the Tennesseean.

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Cracking down on critical race theory in public schools was not a winning issue Tue, 03 Jan 2023 05:05:00 +0000 Rather than further politicize schools and classrooms in 2023, politicians should pursue policies that let parents choose whatever school is best for their children.

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As Republican Party leaders weigh future campaign strategies after their disappointing midterm results in 2022, they should carefully consider whether it’s worth continuing to push K-12 classroom controversies about critical race theory (CRT) and gender at the state level. While substantive education issues are important to voters, leaning heavily into classroom culture wars hasn’t won over large percentages of swing voters like Republicans expected. And it’s also bad policy. 

To be sure, some of the Republican Party’s top performers in the midterms cruised to re-election after signing laws restricting public schools from teaching “divisive concepts,” including Florida Gov. Ron DeSantis and Texas Gov. Greg Abbott. But these election successes could just as easily be attributed to the candidates’ minimally restrictive COVID-19 policies and being in comfortably red states. 

Republican gubernatorial candidates in other states like Michigan, Arizona, Pennsylvania, and Wisconsin who heavily campaigned against critical race theory didn’t get enough traction from the issue to win. Similarly, local and state school board candidates running to get CRT and other controversial subjects out of classrooms saw checkered results, according to reports by The Wall Street Journal and Associated Press.  

During the 2021 and 2022 legislative sessions, Education Week found that state legislators or state school boards in 17 states successfully adopted policies that limit how school staff can address certain “divisive concepts” with students. Most of these policies restrict how educators can discuss concepts of race, gender, sexuality, and more. 

This wave of legislation came in response to a select number of troubling accounts — reported most prominently by the Manhattan Institute’s Christopher Rufo — going viral online as some local public school staff adopted highly politicized curricula. For example, one California school district asked its third-graders to sort themselves on “oppression matrices” by race, class, and gender.

While these individual instances are certainly disturbing, many of the one-size-fits-all state policies adopted in response have gone too far and raise serious questions of constitutionality.

Legislation passed in Texas, for example, flat-out banned any curriculum that requires an understanding of the 1619 Project, a New York Times Magazine project that, while flawed, even according to its critics, pursues “a worthwhile avenue of historical research.”

Oklahoma’s 2021 anti-CRT law caused two school districts to be at risk of losing accreditation for a teacher training video that discussed implicit bias toward minorities. This summer, a similar anti-CRT law in Tennessee law gave a parents’ rights advocacy organization grounds to sue one school district over its elementary English curriculum for reasons including its presentation of the civil rights movement, segregation, Civil War, and Greek mythology.

At face value, the concepts outlined in most of these policies seem trivially easy to avoid. It’s hard to believe many teachers want to teach students that one race is inherently superior to another or that an individual’s moral character is necessarily determined by their sex. But early rounds of litigation from various groups seeking to ban content from classrooms indicate these lawsuits and complaints will keep coming because concepts that some special interest group or parent object to can be detected when reading between the lines of almost any lesson plan. 

While taxpayers have a right to shape curriculum and hold schools in check when they get too ideological in classrooms, statewide policies that make sweeping, difficult-to-interpret prohibitions on lesson content are the wrong tool. Parents and voters have better avenues to express their views beyond asking governors and legislators to micromanage classrooms.

The best approach is for parents and policymakers to advocate for expanding school choice — which allows families to sidestep the culture wars and vote with their feet about the education environment they want by choosing the right school for their child. 

School choice is popular among voters, with a June poll from Real Clear Opinion Research showing 75 percent of Republicans and 69 percent of Democrats supporting the concept. By contrast, an April poll from National Public Radio found that just 18 percent of parents disagreed with what their child’s school taught about gender and sexuality. 

Leading with culture war issues like banning books and opposing teaching CRT in classrooms wasn’t the political juggernaut Republicans had hoped would help them gain ground in state and federal office, but school choice could be. Rather than further politicize schools and classrooms, politicians should pursue policies that let parents choose whatever school is best for their children.

A version of the column previously appeared in the Hill.

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School districts use ‘capacity’ to keep low-income transfer students out Tue, 27 Dec 2022 09:30:00 +0000 Arbitrary definitions of 'capacity' let schools deny low-income families educational choice.

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When Oklahoma state legislators approved a new K-12 open enrollment law in 2021, school choice advocates celebrated the reform for providing students with more options within the public school system. Implemented at the onset of the 2022-23 school year, Oklahoma’s mandatory cross-district open enrollment policy allows nonresident students to enroll in neighboring school districts regardless of their educational needs, academic performance, or athletic ability. The law also allows transfers at any point during the school year and allows applications to be denied only if a school district lacks open seats in the appropriate grade level.

But despite having a strong open enrollment law, Oklahoma is still dealing with a problem faced by other states with strong student transfer policies: how to ensure school districts aren’t arbitrarily defining capacity to keep neighboring students out. 

Even in school choice-friendly states like Arizona and Florida, problems with protectionist school districts have lingered. In many cases, there seems to be a desire to preserve a public school system where families must purchase expensive real estate to access these public schools—thus, keeping low-income students out. Objecting to open enrollment legislation in Kansas, for example, two school district superintendents submitted written testimony last year that admitted, “Without intending to sound elitist, it is nonetheless true that housing costs in our districts often provide a check on resident student growth now.”

These problems raise important questions about how public school districts can be held accountable when they don’t open their doors to transfer students. 

An October report from Oklahoma-based public radio station KOSU indicated that nearly 11,000 students in the state requested a district transfer under the new law during the summer leading into the 2022-23 school year. At the time, roughly 8,400 of these applications were approved, 500 were pending, and 2,000 were denied. Most of the denials were reportedly due to insufficient school district capacity, i.e., a lack of space. 

In the fall of 2022, the Oklahoma Council of Public Affairs observed that the definition of capacity is set by individual school districts, causing the transfer rules to “appear haphazard or even arbitrary from district to district.” This variation in definitions has disproportionately affected city students, with KOSU noting that although denials were relatively uncommon, the denials were “mostly concentrated in suburban and exurban areas around Oklahoma City and Tulsa.”

Lacking a standardized definition of district capacity isn’t a problem unique to Oklahoma. Arizona’s open enrollment law requires its school districts to report each school’s capacity by grade level and update the figure every 12 weeks — but never elaborates on how districts should determine capacity in the first place.

Florida’s Controlled Open Enrollment law includes more language on how school districts should assess school capacity, saying they can’t exceed a statewide maximum class size limit and must “incorporate the specifications, plans, elements and commitments contained in the school district educational facilities plan and the long-term work programs.” But even this definition of capacity still affords districts plenty of room to deny transfer applicants arbitrarily. 

But there are other routes that could circumvent this problem. The Foundation for Excellence in Education has suggested that school districts reserve space for nonresident students up front, making lack of capacity an unacceptable reason for denial. While intriguing, this proposal could go too far since there are certainly instances where schools truly don’t have space for additional students. Some flexibility is needed.

Another promising solution is to focus on more carrot and less stick. States should consider strengthening incentives for school districts to accept transfer students. While some states are worse than others, all state funding systems have provisions that prevent education dollars from following students who cross district lines. These nonportable dollars often come from local tax levies or state funding streams that aren’t sensitive to changes in enrollment. For districts evaluating transfer applications, it’s easy to see how a lack of funding portability can make them reluctant to receive a nonresident student.

Research from California’s Legislative Analyst’s Office shows that funding portability can have a real impact on how willing school districts are to participate in open enrollment. To strengthen incentives, state legislators should reduce school district reliance on these kinds of local revenue streams or find ways to make these funds move with students to the schools of their choice. 

Coming up with a clear and enforceable definition of school capacity is difficult and won’t solve every problem in states’ open enrollment systems. Beyond getting more punitive with school districts that close their doors to outsiders, legislators should ensure that financial incentives make welcoming nonresident transfer students too lucrative for school districts to pass up.

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Funding Education Opportunity: K-12 student enrollment updates, 2023 education legislation, and more Tue, 20 Dec 2022 15:28:10 +0000 Plus: New Hampshire teachers' union sues state DOE, Oklahoma charter schools and more.

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K-12 public schools lost more than 1.1 million students from the spring of 2020 to the spring of 2022.

New data from Burbio, a service aggregating school enrollment and budget data, sheds light on how public school K-12 enrollments have fluctuated this school year (2022-23) in 15 states. Of the states reported, Burbio revealed that South Carolina (1.0% increase in K-12 students), North Dakota (1.3%), Massachusetts (0.2%), Utah (0.1%), Delaware (0.4%), Arkansas (0.6%), Georgia (0.6%), and Virginia (0.9%) experienced enrollment growth, while Indiana (-0.1% decrease in K-12 students), West Virginia (-0.3%), Wyoming (-0.4%), Mississippi (-0.5%), Idaho (-0.8%), Rhode Island (-0.8%) and Hawaii (-1.7%) saw enrollment drops.

  • Interestingly, Idaho’s public school enrollment growth of 1.8% from the 2021-22 school year was partly reversed with the state’s 0.8% decline this year.
  • Similarly, Wyoming experienced 7% enrollment growth between 2002 and 2020 but also saw student counts drop by 0.4% this year.

While most states have yet to announce their final enrollments for the start of the 2022-23 school year, preliminary reports from some large school districts may provide a sneak peek at trends. 

  • Recently, Minneapolis Public Schools reported it experienced a 2% decline in enrollment, and the school district’s finance committee announced an “impending financial crisis” due to the loss of students and expiring federal funds. 
  • Chicago Public Schools reported its K-12 enrollment dropped by 3% this fall.
  • And New York City Public Schools reported a 1.8% decline in K-12 enrollment. 

On the other hand, Arizona’s Department of Education announced in a preliminary report that the state’s K-12 public school enrollment has increased by 3.5% this school year.

Last school year, the states that experienced the largest declines in K-12 public school enrollment were New York (-2%) and California (-1.8%). K-12 enrollments still grew in about half of 50 states last year, with Montana, Idaho, Arizona, and South Carolina seeing the largest student growth in percentage terms. The net loss of public school students across the country was 91,000 students during the 2021-2022 year.

School districts grappling with changing enrollments must prepare for the fiscal consequences of fewer students, especially as federal emergency relief funds dry up. These factors mean that districts should do everything possible to prepare for slimmer budgets. Shortsighted spending decisions could have significant financial repercussions for school districts. Accordingly, school districts should shore up their budgets by rightsizing and using any remaining Elementary and Secondary School Emergency Relief Fund (ESSER) dollars on temporary commitments.

From the states

State legislators have already pre-filed various school choice proposals across the nation.

In Missouri, Rep. Josh Hulbert pre-filed five proposals advancing education savings accounts, one of which is a universal school choice bill that would expand the state’s current MOScholars program to be open to all students. 

Two Texas legislators pre-filed proposals that would establish tax-credit education savings accounts. Under the proposals, parents could use these versatile accounts to pay for a variety of educational expenses, such as tutoring or private school tuition.

Ohio legislators are considering a proposal that would expand eligibility for the state’s voucher program to all students regardless of their household income. The proposal also aims to increase the existing income tax credit for homeschooling expenses from $250 to $2,000 a year. 

In Tennessee, legislators are considering a proposal that would expand school district eligibility to participate in the Volunteer State’s education savings account program. Current law limits participation to school districts with 10 schools that performed in the bottom 10%, whereas the proposal would allow school districts with five or more schools that performed in the bottom 10% to be eligible.

What to watch

Kentucky Supreme Court Rules Tax-Credit ESA Unconstitutional
The Kentucky Supreme Court unanimously ruled that Kentucky’s Education Opportunity Account Program violated the state’s constitution. These accounts allowed eligible parents to use money donated to account-granting organizations to pay for education expenses, such as private school tuition, tutoring, transportation, and more. Individuals that donated to an account-granting organization would receive a tax credit. The court wrote, “If the legislature thinks the people of Kentucky want this change, [it] should place the matter on the ballot.”

Teachers’ Union Sues New Hampshire DOE Over Education Freedom Accounts
The New Hampshire arm of the American Federation for Teachers is suing the New Hampshire Department of Education over the agency’s Education Freedom Accounts–education savings accounts available to students in low or middle-income households. Account holders can use them to pay for a variety of educational expenses, such as private school tuition, tutoring, and books. More than 3,000 students currently have an Education Freedom Account. The Institute for Justice, which successfully defended the Granite State’s tax-credit scholarship program in 2014, will represent Education Freedom Account holders.

Vermont Must Now Pay for Private School Tuition Under the Town Tuition Program
A recent settlement in the wake of Carson v Makin ended discrimination against religious private schools in Vermont. The Green Mountain State’s Town Tuition Program required towns to pay for the private education of any student that resided in a town without a public school. However, towns were not required to reimburse eligible families that enrolled their children in religious private schools. Not only did the recent settlement deem this policy unconstitutional, but the Vermont Education Agency also issued a letter to school districts requiring them to treat private religious schools the same as secular ones.

Oklahoma to Open the Nation’s First Religious Charter School
The Oklahoma Attorney General released an opinion that prohibitions against religious charter schools are unconstitutional in the wake of recent Supreme Court decisions. The Archdiocese of Oklahoma City plans to submit an application for a virtual charter school authorization. If approved, this would be the nation’s first religious charter school. However, the religious charter school would likely face legal challenges from the Freedom from Religion Foundation.

Recommended reading 

Rerouting the Myths of Rural Education Choice
Ron Matus and Dava Hankerson at Step Up for Students
“Families in rural Florida, like families everywhere, are choosing learning options other than district schools. In 2021-22, 16.7 percent of students in Florida’s 30 rural counties attended something other than a district school, whether a private school, charter school or home education. That’s up from 10.6 percent a decade prior.”

ICYMI: How is the new transfer law affecting schools? It depends on which districts you ask
Andrea Eger at Tulsa World
“We’ve always lived on a lot of transfers, and I think we’re a well-kept secret,” said Superintendent Sherry Durkee, whose district has seen a 23% increase in transfer students compared with last year’s numbers. “There has been a big change in expectations with people wanting versatility to access education like they want it. We have made a concerted effort to maximize choice within the district because we have to get on board with the way of the future.”

The Ohio EdChoice Program’s impact on school district enrollments, finances, and academics
Stéphane Lavertu and John J. Gregg at Fordham Institute
“The analysis indicates that the performance-based EdChoice program led to lower levels of segregation among minority students, no change (and perhaps an increase) in district expenditures per pupil, no change in districts’ ability to generate local revenue (leading to an increase in local revenue per pupil), and higher academic achievement among the remaining district students.”

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How will K-12 student enrollment changes impact public schools? Tue, 20 Dec 2022 05:01:00 +0000 Pandemic enrollment loses and declining birth rates are bad news for many school district budgets.

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Enrollment in public schools nationwide has drastically declined since the onset of the COVID-19 pandemic in 2020, dropping by more than 1.2 million students between the 2019-20 school year and the 2022-23 school year. For many school districts, student enrollment projections remain uncertain as families have become more comfortable shopping for other school options like virtual private schools or homeschooling co-ops. This continued decline in public school enrollment, which is more pronounced in urban school districts, will have serious impacts on school district finances.

As American Enterprise Institute’s Nat Malkus and doctoral student Cody Christensen pointed out in Education Next, “If enrollment remains lower in the future, smaller districts could lose hundreds of thousands of dollars annually, and larger districts could lose millions, compared to pre-pandemic revenues.”

Declining U.S. Birthrate Likely to Impact Student Enrollment

Public school enrollment declined by 3% or more in 19 states between 2020 and 2022, according to the American Enterprise Institute’s “Return to Learn Tracker,” which has recorded K-12 enrollment trends since 2020.

But many states were experiencing enrollment declines well before the pandemic and March 2020. In fact, K-12 student enrollment dropped in 22 states between 2002 and 2020. While school districts in some regions might regain some of these students in future years, other factors, including low birth rates, will likely contribute to lower student counts going forward.

Between the 2010 and 2020 censuses, the country’s under-18 population decreased by 1%, from 74.2 million to 73.1 million, USA Facts reported in 2021. The smaller child population is in part due to the long-declining U.S. birth rate, which has been below replacement since 1971 and experienced a notable decline after 2007. 

In fact, the U.S. population under the age of 18 dropped in 27 states between 2010 and 2020. “When birthrates decline, we see a drop in kindergarten enrollment five years later that tracks from one school grade to the next,” Tulane University Professor Douglas N. Harris and Valentina Martinez-Pabon, postdoctoral associate at Yale University, pointed out in Education Week.

Although the United States has long bolstered its low birth rate with immigrant populations, net immigration fell by about 75% between 2016 and 2020. Moreover, immigrant fertility rates declined by 158,000 births between 2008 and 2019, even though the number of female immigrants who were of childbearing age increased by 9%. In 2019, “for what is almost certainly the first time in American history, the immigrant fertility rate was below replacement level,” wrote Steven A. Camarota, director of research at the Center for Immigration Studies, in National Affairs.

Declining U.S. and immigrant birth rates are bad news for many school districts’ budgets because states use student enrollment figures to allocate education funds. Thus, school districts with declining enrollments will likely face financial repercussions. 

However, not all school districts will feel the effects of lower student counts immediately. More than half of states have hold harmless provisions, which let school districts use previous years’ attendance records to calculate state funding. This practice allows schools to receive funding for students who are no longer enrolled. For example, Pennsylvania is one state that employs a generous hold harmless provision. According to the non-profit Children First, “The [Pennsylvania school] districts have lost a total of 167,000 students since 1991-92 — a fifth of their student body — but they haven’t lost any money, instead of receiving increased funding each year. They now have $590 million tied to students they no longer educate.”

During the COVID-19 pandemic, 22 states adopted temporary hold harmless provisions, which let school districts continue to receive funding based on student counts from before 2020. Most of these temporary hold harmless provisions were set to expire after the 2021-22 school year, but at least four states extended their pandemic hold harmless provisions through the 2023-24 school year.

Once these temporary provisions expire, however, some school districts will likely experience significant financial blows as their student counts reflect the pandemic-era exodus from public education. “Even a 1% loss of enrollment tends to be financially destabilizing for districts,” Hannah Jarmolowski and Marguerite Roza of the Edunomics Lab at Georgetown University wrote in a 2021 report

Urban School Districts’ Enrollment Challenges

Minneapolis Public Schools is one district that has found itself in financial straits due to its student population changes. The Minneapolis Public Schools (MPS) Finance Committee announced in November 2022 that the school district “is approaching an impending fiscal crisis” due to declining enrollment.   

Projections indicate that MPS enrollment will only be 23,000 students in 2028, 12,000 fewer students than in 2018. However, the pandemic merely exacerbated an existing enrollment exodus as the district’s enrollment had steadily declined since the 2002-03 school year when the district served more than 46,000 students. Moreover, the recent  MPS report showed that “the number of children ages 5 and under living in the city fell 17% between 2020 and 2021,” indicating that the district’s enrollment challenges will only get worse.  

Minneapolis is not the only urban school district facing difficult financial decisions. Earlier this year in California, Oakland Unified School District’s Board of Education voted to close seven schools over the next two years. Time Magazine reported that, as of February, the school district’s enrollment had declined by more than 4,000 students during the past five years. 

Similarly, Boston Public Schools’ (BPS) enrollment dropped for the eighth year in a row, and the district has hemorrhaged more than 8,000 students over the last decade. The Boston Globe reported that “96 out of the district’s 120 schools were underenrolled” last year. In addition to the Boston School Committee voting to permanently close three middle schools in 2021 in response to low student counts, Boston Mayor Michelle Wu also proposed renovating or consolidating 15 schools by the 2025-26 fiscal year.

These examples are snapshots of the enrollment challenges that some school districts, especially urban ones, now face. Research has shown that urban school districts that relied on remote learning the longest has more enrollment loss. AEI reported that the school districts that stayed remote the longest lost 1.2% more students in the 2021-22 school year than in the previous year. On the other hand, school districts that returned to in-person learning sooner, oftentimes those located in suburban or rural areas, mostly experienced enrollment rebounds. 

Thankfully school districts can weather much of the potential financial storm by adapting to new enrollment figures. The University of Miami’s Bruce Baker showed that school districts across the nation rightsized after student counts dropped when many students opted for charter schools during the early 2000s. School districts like Newark City Schools in New Jersey and Kansas City Public Schools in Missouri reduced overhead or administrative expenses and, as Baker puts it, these school districts “have largely been able to achieve and maintain reasonable minimum school sizes, with only modest increases in the shares of children served in inefficiently small schools.” 

However, rightsizing is easiest when school districts plan for the long term by using actual student counts and avoiding overly rosy projections. Shortsightedness can lead to painful layoffs or substantial budget deficits, as experienced by the School District of Philadelphia and Detroit Public Schools last decade. 

A Guide to Rightsizing

A key to effective rightsizing is flexible spending options for district and school leaders. As Reason Foundation education researchers pointed out, right-sizing is about “optimizing all facets of operations with the goal of providing high-quality options to all students at a cost that aligns with revenues.” This means that state policymakers must resist the temptation to make overly prescriptive policies that tie the hands of school leaders. It is important to maximize flexible spending options for district leaders to ensure that education funds are not tied to well-intended but overly-specific schooling inputs or other mandates, such as class-size requirements. 

For example, when state education dollars are earmarked for specific music instruction or counseling services, school district leaders can’t repurpose those funds for more pressing priorities even when budget cuts are necessary. Prioritizing flexible spending options for school districts helps ensure that school leaders have more options when they have to reduce expenditures and lets them use funds in ways that are best for their students.

Amidst the economic uncertainty and high inflation, some states will need to tighten their fiscal belts, especially as federal emergency relief funds dry up. California’s Legislative Analyst’s Office published a report last month estimating the state will face a $24 billion deficit in 2023-24. The report urged California legislators to “consider saving reserves for a recession when the budget problem could be twice as large as the one identified in our outlook.”

School districts should act now to prevent flat-footed responses to potentially lower enrollments in the years ahead. The good news is that school districts can adopt a variety of policies that can relieve tight budgets. A few of these policies are discussed below.

Adopt Weighted Student Funding. This policy allocates education funding to students based on their real needs and the money follows the students to the school within the school district in which they enroll. For instance, students in Atlanta Public Schools receive additional dollars based on their grade level, prior academic performance, or if they are English Language Learners or living in poverty. Weighted student funding (WSF) ensures that resources are directed to the schools that students actually attend. This means that under-enrolled schools are no longer unfairly subsidized by schools with higher enrollment. As a result, school budgets are based on actual student counts instead of staffing positions.

“WSF mitigates these problems by equalizing dollars for similar students and by empowering local leaders with the flexibility to make budgeting decisions that are best for their communities,” Reason Foundation’s Christian Barnard wrote. In fact, a 2019 nationwide study by the U.S. Department of Education showed that “WSF district administrators reported that …53 percent… of their total operational spending was under school discretion, compared with 8 percent in non-WSF districts.”

Currently, at least 30 school districts and Hawaii have implemented weighted student funding. 

Adopt K-12 Open Enrollment. This policy lets students transfer to a public school with available capacity other than their residentially assigned one. Open enrollment breaks the artificial lines drawn by school district boundaries and catchment zones and allows students to enroll in schools that are a good fit for them. For districts facing declining enrollment, this policy presents an opportunity to attract new students from other school districts. In fact, rural school districts in Texas have been found to use open enrollment to keep the lights on when too few students live inside the district boundaries to support the district. These school districts actively seek to attract students from other districts to make ends meet. Currently, only 11 states have mandatory open enrollment laws.

Leverage Retirements and Staff Leaving. While labor might feel like a fixed cost to many school districts, it does not have to be. As aging teachers and staff retire or leave, school districts should resist the temptation to replace them if they’ve lost students in recent years. Labor is often a school district’s biggest cost so being wise with staffing is a key to balancing the budget. In fact, Edunomic Lab’s Marguerite Roza notes that staff turnover can be an “opportunity to stash more in reserves, use stipends to boost the pay for current staff to pick up some of the load or issue a service contract. Reducing the overall staff count results in fewer dollars tied up in benefits and more dollars available to retain existing staff in a downturn.” 

Closing Under-Enrolled Schools. Unfortunately, massive enrollment loss can mean that some school districts must prepare to close under-enrolled schools. Permanent school closures often face formidable pushback from affected families, even when the closures would benefit most students. As a result, school district leaders need to prepare a robust strategy that is transparent and shows parents why those schools must be closed and how students will be served.

Paul Hill and Parker Baxter from the Center for Reinventing Public Education have pointed out that a successful strategy for necessary school closures must include clear metrics for closures, public data on all schools, and transparency. They wrote, “School system leaders need to strike a balance between using simple, transparent criteria while providing enough leeway to consider subjective factors, such as school leadership quality or whether the low-performing school seems to be improving. These criteria also need to be spelled out in advance.”

While rightsizing a school district is often painful, it can make education funds more flexible and versatile, ultimately benefiting students. When education dollars are flexible and reflect actual student counts, school leaders can make the spending decisions that will help their students best. 

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