Demographic projections from the California Department of Finance show the state’s K-12 school districts entering a long period of declining enrollment and predict a decrease of almost 7 percent in the next decade (compared to a 1.5-percent decrease over the past decade). Furthermore, this decline is expected to be permanent. A new report from the Public Policy Institute of California examines the factors contributing to this decline, what some districts are already doing to address its effect on their budgets and recommendations on how the state can help districts adjust to a new financial reality.
Contributing factors to declining enrollment
Both California’s birth rate and migration patterns have taken a toll on school enrollment over the past decade. The state’s birth rate has decreased and done so at a faster rate than most other states, while more families with children are leaving the state than moving to it. In addition, more families with children have been moving from the state’s more expensive coastal areas to inland regions, affecting local but not statewide enrollments.
In the last decade, 30 of 58 California counties lost enrollment (a total of 230,000 students), with 11 counties losing 10 percent or more of their student base. Over the next decade, 31 counties are projected to see enrollment declines, for a total of 478,000 students.
Implications for districts
Because districts receive funding based on average daily attendance, fewer students means less money. Researchers at PPIC investigated how cost savings from lower student enrollment compare to the loss of ADA and found an unequal division. “At best, the direct savings from fewer students only adds up to about half of the ADA loss,” said lead author Paul Warren at a Feb. 27 event in Sacramento discussing the report. “That means districts have to cut costs from things like transportation or district staff. These declining enrollments create some difficult decisions for districts.”
There is a short-term silver lining: districts with declining enrollment actually experience an increase in per-pupil funding due to the one-year adjustment that calculates funding levels based on the prior year’s ADA. This gives districts some planning time to adjust budgets to deal with their new reality.
Districts large and small will feel the effects differently and face varying challenges in preparing for declining enrollment. A panel at the event held a wide-ranging discussion on how declining enrollment, and the factors that contribute to it, is affecting districts. Long Beach Unified School District, one of the largest districts in the state, is losing 1,500 to 2,000 students per year. Renee Arkus, the district’s executive director of fiscal services, explained that it is hard to keep up with that kind of loss spread throughout 84 schools. On the opposite end, Calaveras County — comprising four small school districts across a large geographic area — has also been experiencing declining enrollment, and with much fewer resources. “We just can’t cut anymore because the work has to get done, regardless of the size of the district,” said Claudia Davis, associate superintendent in the Calaveras County Office of Education.
One area in which cuts cannot be made is special education, which was cited as a contributing factor to budget concerns by all the panelists. Assembly Bill 602, which set the special education funding formula in California, is based on total SELPA (Special Education Local Plan Area) ADA, not on the number of students with special education needs. Thus, overall funding is decreasing due to declining enrollment, but, as a percentage of enrollment, special education costs are rising as more students require higher-cost services.
Difficulties in cutting costs and legislative solutions
Panelists spoke about the difficulties in finding cost savings and emphasized the importance of the Local Control and Accountability Plan in guiding district priorities. Especially important in that process is stakeholder engagement. Involving students, parents and the community in determining what the district’s core services are and communicating financial challenges is essential, said Michael Fine, Fiscal Crisis and Management Team CEO.
All panelists agreed that a huge issue at the state level is the proposed 2020–21 cost-of-living adjustment in the budget. “Not only is it relatively low at 2.29 percent, but it is quite a bit lower than what was forecasted seven months ago,” said Fine. “Combined with declining enrollment, there are real revenue challenges in this proposed budget.”
The PPIC report concludes with steps the state can take to help districts adjust to declining enrollment:
1. Increase technical assistance to districts. Districts need help with forecasting enrollment trends in order to take actions to prepare for any future budget pressures. The state can assist districts by creating and distributing information on best practices for tracking enrollment trends and managing declines.
2. Use Proposition 98 funds to increase base funding. Panelists advocated for the need to provide more funding to the Local Control Funding Formula base instead of one-time monies for targeted programs. “There is no one-size-fits-all solution,” said Davis of Calaveras COE. “It’s not one-time funding for ‘X’ that is going to help us.” She said the local community needs to be able to make decisions on what best will work for them and target money to those areas.
