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With students going online, moving to private schools and homeschooling, school districts fear funding shortfall

By Jillian Berman

Public-school funding is tightly tied to enrollment, which is declining this year as parents look for alternatives

Like many school districts across the country, Savannah-Chatham County Public Schools began classes remotely in August.

The COVID-19 positivity rate in Georgia, where the district is located, has hovered around 8% (link) over the past month, and officials suspected that parents would be hesitant to send their children to school in person in that environment. But when the school year started online, about 700 fewer students than officials expected, showed up. That could amount to a loss of funding of between $1.5 million and $2 million for the district, said Larry Jackson, the public school system's chief financial officer.

Georgia, like many states, ties public school funding in part to how many students are enrolled in a given school. That enrollment figure is based on a weighted average of the number of students attending school on certain days of the year, known as "count days." The count day scheduled for mid-October carries a heavy weight in that formula, Jackson said.

Nearly half of the 700 students who haven't enrolled so far should be in kindergarten, Jackson said. District officials suspect many of those families chose to continue with in-person daycare programs instead of signing up for remote public school. The district is launching hybrid programming for younger students on Oct. 5, earlier than they'd planned, in hopes of luring those kindergarteners.

"Hopefully, we can capture some of those kids that are in those daycares out there and we can get our enrollment up," Jackson said. "If they show up in January after the first of the year, it's a little bit too late for us," funding wise, he added.

Officials had hoped case positivity rates would be lower when they started offering in-person classes, Jackson said, but given the funding challenges they could face and parent pressure, they couldn't wait. "Our back is against the wall," he said.

Jackson's district is likely one of thousands across the country preparing for a loss in funding in the coming years. With so much uncertainty surrounding this school year, some parents, who can afford it, have been turning to alternatives (link) to their local public school. But the decision could have consequences for their school districts that linger even after those students re-enroll in public schools.

Families with school-aged children are confronting a number of issues this year, including how best to manage synchronous, remote classes -- or those that require that all students sign on at the same time, similar to a traditional bell schedule -- with parents' conference calls and Zoom ZM (ZM) meetings, said Jessica Calarco, an associate professor of sociology at Indiana University. They're also coping with constantly evolving reopening plans (link) from public-school systems.

"There are certainly parents who are saying I could do this easier on my own," said Calarco, who has been interviewing parents during the pandemic as part of her research.

Some parents are aware that pulling their children out of their public school could have financial repercussions for their district; Calarco said she has seen some parents ask on message boards whether they could make a donation or take other actions to mitigate a loss in funding. But for a lot of parents, the connection between enrollment and public-school funding "is new and surprising," she said.

The combination of parents choosing to pull their children out of school this year and the increase in students who will struggle to participate (link) in classes because they can't access laptops or a strong Wi-Fi connection, will likely lead to "a pretty significant drop in public school enrollment," Calerco said. "And that will have a significant impact on public-school budgets."

Many school districts were already coping with funding shortfalls following the Great Recession, which squeezed state budgets. In 17 states, legislators cut per-student funding by more than 10% in the years immediately following the downturn (link), according to the Center on Budget and Policy Priorities, a think tank focused on the impact of budget and tax issues on inequality and poverty.

Even by 2017, seven states were still funding (link) their public schools at per-student levels that were 10% lower than the funding they provided in 2008, CBPP found.

The pandemic-induced downturn will likely only exacerbate those funding challenges. States depend on income and sales taxes for 70% of their tax revenue, said Michael Leachman, vice president for state fiscal policy at CBPP. Those two sources of funds have taken a hit during the pandemic with businesses shuttered and millions out of work, he said. That means the services they fund, including education, will be facing cuts too, Leachman said.

"When the state is really struggling, it has a big effect on schools' ability to pay teachers and other staff and to buy textbooks and equipment and such," he said. "Schools often have to cut back and it often affects the quality of the education."

These kinds of cuts can have a particularly devastating impact on under-resourced schools that disproportionately serve Black and Hispanic students, Leachman said. These schools are already under-funded and they have less of an ability to raise funds through local taxes because property wealth in those districts is lower, he said.

In Indianapolis, Jeff Butts, the superintendent of the Metropolitan School District of Wayne Township, is bracing for state funding cuts.

"We look at the revenue forecast for the state of Indiana and we look at the cash reserves that have been spent down, we know that the General Assembly is going to be looking to areas to reduce their budget," Butts said. "Schools are over 50% of Indiana's budget so obviously that's a place that we believe they're going to be looking at."

This year has been more expensive to operate than previous years, Butts said. His district is offering three modalities -- in-person, hybrid and fully remote -- which requires more teachers than typical and pandemic-specific staff, like a contact tracer. Despite the range of options, some students still aren't showing up.

Over the past few years, the Wayne Township school district has grown by about 150 to 200 students. This year, officials estimate they've lost 400 students, Butts said. (The state's count day already took place and school districts are currently in a dispute resolution period to sort out cases where two districts claimed the same child.)

"We expected a little bit of a drop, we did not expect 400 children," Butts said. The enrollment decline will lead to a loss of about $3 million in funds, he said. "We don't yet know where they all went," Butts said of the students.

But officials suspect some went to private schools, others enrolled in charter schools that have always operated exclusively online, and some are being homeschooled. In the past, Indiana lawmakers have considered providing public funding (link) to children participating in homeschooling.

"That's obviously worrisome especially if those children are able to come back after count day," Butts said. "The public school has not received funding."

Butts believes the legislature will revisit the topic again this year when it prepares its budget, which provides appropriations for the next two years. Butts said he's preparing to discuss the topic with state lawmakers if that's the case. He's also bracing for the impact of funding declines, which could lead to staff cuts.

The school system will initially look to cut staffing in areas that don't impact the classroom, Butts said. Still, that's no guarantee.

"We'll be negotiating a contract next fall based on student enrollment and funding," Butts said. "That could be quite a challenge if our funding is cut and we're at the negotiating table with our teachers."

In Virginia, the state superintendent association is urging lawmakers to reconsider how it's allocating funding this year, given the pandemic's unprecedented impact on school enrollment, said Ben Kiser, executive director of the Virginia Association of School Superintendents. Across the state over 37,000 children have not officially registered or enrolled this school year, he said. That could result in a potential shortfall of $155 million to these districts if the students do not return to school.

During a typical year, school divisions use indicators like new home construction, change in workforce capacity, industry coming or leaving a region, fluctuation in an area's immigrant population, and the state's enrollment projections to forecast how many students they expect to show up, Kiser said.

Based on that projection, the divisions are allotted a certain amount of funding from the state, but if enrollment on the two count days -- one in September and one in March -- is significantly different from the projections, "there's a scramble," to cope with the funding shortfall, he said. Average enrollment on the two count days can also impact funding for future school years, Kiser said.

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