Budget & Finance From Our Research Center

Inflated Costs, Growing Needs: Why Educators Are Pessimistic About School Budgets

By Mark Lieberman — April 18, 2023 5 min read
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With federal COVID relief aid running out, fixed costs rising, and student challenges growing more complex, educators are bracing for a confluence of financial challenges that could strain budgets in the coming years.

The pandemic is in the rearview mirror for many educators, but the disruption it wrought is far from over. Teachers have struggled to make headway on catching students up on learning they missed. School staff continue to shoulder the burden of increasingly complex mental health and social-emotional needs. And districts are having trouble filling open positions or raising wages enough to remain competitive.

These concerns and other factors have many educators pessimistic about the future when it comes to funding and finances for the schools where they work, according to nationally representative survey data released Tuesday.

The survey was commissioned by Allovue, an education finance software company, and conducted by the EdWeek Research Center between Nov. 17 and Dec. 16 of last year. The 1,303 respondents included teachers, principals, assistant principals, and district leaders.

(Jess Gartner, the founder and CEO of Allovue, serves on the board of trustees for Editorial Projects in Education, the nonprofit publisher of Education Week. The Education Week newsroom did not participate in the survey project, but is independently reporting on the results.)

Asked to identify which factors are playing a role in rising per-pupil expenses, more than half of respondents cited higher levels of need among students.

That concern was top of mind for more educators than any other option. Next highest: Declining enrollment.

In most states, districts lose money when they enroll fewer students, even if the costs of educating the students who stay—compensating their teachers, keeping electricity and water running—remain constant.

And declining enrollment is a real concern. America’s public schools enrolled 1.3 million fewer students in the fall of 2021 than before the pandemic, in the fall of 2019, according to the National Center for Education Statistics, with many students opting for homeschooling, departing for private schools, or disappearing from view altogether.

As districts prepare for the upcoming fiscal cliff when a temporary infusion of federal COVID aid expires, nearly 30 percent of educators surveyed said the level of relief funding they got was sufficient to make only a minor difference, or no difference at all. Only 3 percent of respondents said the one-time funding was “transformational,” and another 18 percent said it made a “very important difference.”

That’s likely in part because districts received vastly different sums of money per student that were proportional to the sums of money they get annually from the federal Title I program. Some districts got tens of thousands of dollars per student, while others received virtually nothing.

“These are great enhancements from where we were pre-COVID, but they are not enhancements from what public schools were in the not so recent past,” said Erik Edoff, superintendent of the L’Anse Creuse school district in Troy, Mich.

Pessimism abounds as concerns pile up

The survey asked respondents to rate their level of confidence in their district’s fiscal outlook, ranging from the most pessimistic (-100) to the most optimistic (+100).

The average score among all respondents was -38. But some groups on average were far more likely to express pessimism—teachers’ average rating was -56, and school finance officials’ average was -67.

Worries about financial challenges to come are particularly common among districts that enroll more than 50,000 students. Respondents from those large districts, which enroll slightly more than one in five of the nation’s children, gave a financial outlook of -76 on average. The smallest districts—those that enroll fewer than 2,500 students—offered an average of -30, still pessimistic, but far less so.

The list of factors worrying the pessimists who participated in the survey is wide-ranging. Two-thirds of pessimists said they expect funding to fall short of the pace of inflation in the coming years, and nearly three in five worry about expenses like health insurance that are growing even faster than inflation.

The business staff in Edoff’s district have been working extra hard to find deals and bid aggressively, but inflation has hounded them anyway. A long-awaited project to replace auditorium lights is set to cost 50 percent more than it would have a couple years ago, Edoff said.

Half of the pessimistic respondents believe political fights over public education could lead to a drop in funding. Thirty-seven percent cited inequitable funding formulas, many of which have been in place for decades and often prove difficult to amend. And 36 percent worry about losing funding as a result of state-level school choice initiatives, including expansions of private school vouchers and education savings accounts that allow parents to use the per-pupil allotments for their children to pay for any number of educational expenses.

If the funding shortfalls many districts expect come to pass, professional development, extracurricular activities, and building maintenance projects could be first on the chopping block. Those are the most-cited expenses, along with dipping into savings accounts, that school and district leaders said they’d look to cut if resources tighten.

Nearly one in five administrators said they’d look to cut paraprofessional salaries in the event of mandatory budget cuts. But paraprofessional salaries are already quite low compared with compensation for teachers and administrators.

Any budget cuts are likely to be painful for district leaders tasked with figuring out where to make reductions. Asked to point to a current expense their district should trim, 41 percent of school leaders and 37 percent of district leaders said they couldn’t think of one.

Edoff said policymakers need to focus on meeting current legal obligations . The federal government has underfunded its original commitment to special education costs for decades. And several states fail year after year to fully fund their existing formulas.

“Short-term, we’re in a good position,” Edoff said. “I think that there needs to be a harder conversation about a more sustainable long-term future.”

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Data analysis for this article was provided by the EdWeek Research Center. Learn more about the center’s work.

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