How Does Declining Enrollment Affect School District Funding and Resources?
Lee and Scafidi (2026) examine how changes in public school enrollment affect district funding, spending, staffing, and other resources. They analyze National Center for Education Statistics data for 11,688 U.S. public school districts from 1998–99 through 2018–19. They find that declining enrollment generally did not reduce resources per student. Instead, declining districts experienced larger increases in per-pupil revenues, expenditures, and staffing than growing districts. Over 20 years, staffing per 100 students rose 33.2% in declining districts versus 18.4% in growing districts. Districts with long-term enrollment declines also spent more than $1,700 additional per student and employed 2.55 more staff per 100 students than growing districts.
Why This Article Was Selected for The Policy Scientist
Declining enrollment is increasingly important because demographic change, school choice, and post-pandemic enrollment shifts are altering the fiscal environment facing public schools. Understanding whether fewer students translate into fewer resources is therefore central to long-term decisions about staffing, facilities, and school finance. This study is especially timely because national enrollment is projected to continue falling. Its unusually comprehensive district-level data provide strong national coverage and substantially improve generalizability over earlier state-specific studies. Scafidi has published extensively on education finance and related K–12 policy issues. The fixed-effects and spline models are well suited to describing differences between growing and declining districts. The research was published in Education Finance and Policy, a leading specialized journal published by MIT Press that focuses directly on education finance and policy research.
Full Citation and Link to Article
Lee, M. H., & Scafidi, B. (2026). Enrollment, fiscal, and resource changes in American public school districts, 1998 to 2019. Education Finance and Policy.
Central Research Question
The study asks how changes in public school district enrollment are associated with changes in district revenues, expenditures, staffing, and other resources available to students. The central policy concern is whether declining enrollment places districts under fiscal pressure because many funding formulas depend partly on student counts while many district costs are difficult to reduce quickly. The authors therefore compare districts with rising enrollment to districts with falling enrollment and examine whether the two groups experience different changes in per-pupil resources.
The analysis considers these relationships over one-year, four-year, and twenty-year periods. This distinction is important because districts may respond differently to short-term enrollment fluctuations than to persistent demographic decline. A district may retain teachers, administrators, buildings, and transportation systems after a modest enrollment loss, while larger and sustained declines may eventually require significant organizational adjustment. The study therefore examines whether the fiscal consequences of enrollment change differ across short-, medium-, and long-term horizons.
Previous Literature
Earlier research on enrollment decline largely emerged from the sustained national enrollment contraction that occurred from the late 1960s through the mid-1980s. Rodekohr (1975) and Easton (1993) found that districts experiencing enrollment declines tended to have higher per-pupil expenditures than districts experiencing enrollment growth. However, both studies relied on relatively small samples from individual states, limiting their national generalizability.
Odden and Vincent (1978) examined districts in Michigan, Missouri, South Dakota, and Washington. They found that declining enrollment was associated with larger increases in per-pupil expenditures across several categories, including operations, transportation, administration, instructional salaries, maintenance, and capital spending. They also found a positive relationship between enrollment growth and pupil-staff ratios. Their analysis, however, did not control extensively for differences in district characteristics.
Cavin, Murnane, and Brown (1985) provided a more sophisticated analysis using data from 509 Michigan school districts from 1971 to 1980. Their fixed-effects regression model used a spline specification that allowed enrollment increases and declines to have different relationships with expenditures. They estimated that a one-percentage-point decline in enrollment was associated with approximately a 0.79 percent increase in current expenditures per pupil. By contrast, a one-percentage-point increase in enrollment was associated with about a 0.10 percent decrease in current expenditures per pupil. The current study extends this earlier work by using national data, a broader range of fiscal and staffing outcomes, more recent observations, and spline specifications for both enrollment and control variables.
Data
The study uses the National Center for Education Statistics Common Core of Data. The analytic sample includes 11,688 traditional public school districts observed from the 1998–99 through 2018–19 academic years. These districts are located in 47 states and Washington, D.C. New Hampshire and Vermont are excluded because their supervisory-union structure complicated district-level fiscal measurement, while Ohio is excluded because of identified problems in the reporting of state revenues.
The authors examine state, local, and federal revenues per pupil; total and current expenditures per pupil; salary and benefits per staff member; district net funds; and capital expenditures. Staffing measures include total staff, teachers, administrators, aides, counselors, and other personnel per 100 students. Fiscal measures are adjusted for inflation and expressed in constant 2019 dollars.
The analysis also incorporates changes in student characteristics that can influence school funding and costs. These include the shares of students qualifying for free or reduced-price lunch, receiving services through Individualized Education Plans, and classified as having limited English proficiency. Race and ethnicity measures are examined in some specifications, although inconsistent reporting prevents them from being included in the preferred models.
Methods
The authors estimate district fixed-effects models relating percentage changes in enrollment to changes in fiscal and resource outcomes. The principal methodological feature is a spline specification that separates enrollment growth from enrollment decline. Rather than assuming that a one-percent enrollment increase has the exact opposite effect of a one-percent enrollment decrease, the model estimates separate relationships for growing and declining districts.
The dependent variables generally measure percentage changes in revenues, expenditures, and resources. For net funds and capital expenditures, dollar changes are used because percentage changes can become extremely large when baseline values are small or when capital expenditures fluctuate sharply across years.
The analysis is conducted separately for one-year, four-year, and twenty-year changes. Preferred specifications include controls for changes in student characteristics. The district fixed effects account for persistent differences across districts, while the spline structure allows fiscal systems and district responses to operate differently under enrollment growth and decline. The authors emphasize that their estimates are descriptive rather than causal because enrollment changes may themselves result from demographic, economic, or institutional developments that also affect district finances.
Findings/Size Effects
The principal finding is that declining enrollment generally was not associated with declining resources per student. Instead, districts losing students typically experienced larger increases in per-pupil funding, expenditures, and staffing than districts gaining students.
Descriptive comparisons illustrate the magnitude of these differences. Over twenty years, declining districts lost an average of 20.9 percent of their enrollment, while growing districts gained 27.6 percent. State revenue per pupil increased 48.5 percent in declining districts compared with 46.3 percent in growing districts. The contrast was considerably larger for local revenue, which increased 72.6 percent in declining districts and 40.9 percent in growing districts. Federal revenue per pupil increased 108.4 percent in declining districts compared with 103.6 percent in growing districts.
Expenditure patterns were also substantially different. Over twenty years, total expenditures per pupil increased 59.7 percent in declining districts compared with 41.1 percent in growing districts. Current expenditures per pupil rose 53.6 percent among declining districts and 37.8 percent among growing districts.
Staffing differences were particularly pronounced. Total staff per 100 students increased 33.2 percent in declining districts, compared with 18.4 percent in growing districts. Teachers per 100 students increased 14.0 percent in declining districts but only 3.5 percent in growing districts. Administrators per 100 students increased 74.6 percent in declining districts compared with 47.7 percent in growing districts.
Regression estimates reinforce these descriptive patterns. Over twenty years, the elasticity of total staff per 100 students with respect to enrollment decline was 0.525. For growing districts, the corresponding estimate was -0.102. The authors calculate that a district experiencing a 10 percent enrollment decline would have staffing growth per 100 students approximately 6.3 percent greater than an otherwise comparable district experiencing a 10 percent enrollment increase.
Local revenue effects were also large. Over a twenty-year period, a one-percentage-point decline in enrollment was associated with approximately a 1.484 percent increase in local revenue per pupil. By comparison, a one-percentage-point enrollment increase was associated with a small decline in local revenue per pupil. A hypothetical district losing 10 percent of its enrollment would therefore experience an estimated 14.45 percent increase in local revenue per student relative to a district with unchanged enrollment.
Conclusion
The study challenges the common assumption that declining enrollment necessarily produces fewer resources for students who remain in public school districts. Across multiple time horizons, declining districts generally experienced larger increases in per-pupil revenues, expenditures, and staffing resources than growing districts. The differences were especially notable in local and federal revenues and in staffing per 100 students.
Several mechanisms may explain these patterns. Local revenues do not necessarily decline proportionately when student counts fall, while state and federal funding systems sometimes contain provisions that temporarily or permanently protect districts from enrollment-related revenue losses. Fixed costs also mean that staffing and facilities often decline more slowly than enrollment, mechanically increasing resources per student.
At the same time, the authors emphasize substantial variation across districts. Some districts experiencing enrollment loss may still encounter severe financial stress, particularly when enrollment decline reflects broader economic deterioration. The results therefore describe average relationships rather than universal outcomes. The study concludes that future work should develop stronger causal estimates and examine how differences in state funding formulas, local tax systems, and the underlying causes of enrollment change shape the fiscal consequences of enrollment decline.
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