4 Things Districts Should Do Right Now — Before the Fiscal Cliff

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Schools are about a year out from a budgetary cliff. The combination of declining student enrollment and the expiration of federal relief funds will make the spring 2025 budget season particularly painful in many districts across the country.  

So what can leaders do now to batten down the hatches while this perfect storm is still on the horizon? Here are four concrete actions: 

Review layoff provisions 

Labor is by far the biggest line item in school district budgets. The one-time infusion of ESSER money allowed districts to artificially inflate their staffing levels, so schools may need to lay off a lot of workers in the coming years.

How many? Imagine if staffing counts fell back to the same levels they were in the last year before the pandemic, in 2018-19. If that scenario plays out, districts will need to lay off 384,000 full-time staff, or an equivalent number of part-time staff. Since schools tend to lay off part-timers first, this figure may be undercounting the total jobs at risk. 

To put these numbers in perspective, layoffs of this magnitude would be worse than the Great Recession that hit schools in 2009-10. At that time, public schools shed the equivalent of 110,000 full-time teaching jobs and 364,000 full- and part-time positions overall. 

There are a lot of uncertainties in these projections. Still, layoffs anywhere near this size would be destabilizing for many schools and districts, especially in the low-income communities that received the largest infusions of ESSER money. Besides the affected workers, layoffs hurt student achievement and tend to set back staff diversity efforts.

Now is the time to avoid, or at least minimize, these problems. According to a 2023 analysis from the National Council on Teacher Quality, about one-third of districts largely or solely rely on last-in-first-out layoff policies and another third use them in combination with other factors. Those approaches are blind to a teacher’s classroom abilities and ignore factors like whether the educator works in hard-to-staff schools or subjects.

Instead, district leaders should review their policies now to shield the lowest-performing schools and hardest-to-staff roles from the biggest cuts. Could they set a policy protecting, say, the lowest-performing 25% of schools and any teaching position that had less than three applicants? These may not be the right cut-offs for every district, but simple numerical rules like this would help minimize the worst impacts of layoffs. 

Close underenrolled schools and help students and staff transition  

The 74’s Linda Jacobson worked with researchers from the Brookings Institution and found 4,428 schools across the country that had suffered student enrollment declines of 20% or more. Thanks to declining birth rates, more schools are projected to be on this list in the coming years. 

Like layoffs, closures of underenrolled schools can be harmful to students and staff. But districts that delay painful decisions eventually have to make bigger, even more disruptive changes. Students would be better off if districts were honest about their budget problems and took steps, like matching displaced young people with dedicated counselors or giving them priority access to the best schools, in order to make those transitions easier. If districts wait to close underenrolled schools until they’re under true financial duress, it will be harder to put any of those types of transitional supports in place. 

Compete for all the kids in your area 

It turned some heads last fall when news came out that New York City was proposing to spend $21 million on an ad campaign to boost enrollment. It’s not crazy for a district to advertise its offerings, but it needs to be realistic about costs and benefits. For example, one crude way to look at it is to calculate the break-even costs. With New York City spending $30,000 per pupil, it would take about 700 newly enrolled students to cover its advertising budget. 

This isn’t just about competing with public charter schools, private schools or homeschooling. In many states with open enrollment policies, districts have a financial interest in persuading as many local families as possible to enroll their children in their schools.

Evaluate everything

It’s probably too late for districts to use their ESSER funds to put all the necessary processes and data collections in place for formal, rigorous program evaluations, but it would still be smart to use any remaining money to invest in data analyses. If the district expanded or created a summer or tutoring program, did the participating students make gains? How did students, parents or staff experience the program? Even simple data comparisons would be helpful for pointing out what went well and what didn’t and making the case for continued investment. 

As NWEA’s Lindsay Dworkin noted recently, “It has always been important to understand which programs or interventions are working, for which students and at what cost.” Those types of questions are now more important than ever. 

When Congress created the Elementary and Secondary School Emergency Relief program, everyone knew the one-time money would eventually run out. Districts only have a few months left to start preparing for the financial storm that’s coming. 

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