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Why U.S. Schools Are Facing Their Biggest Budget Crunch in Years

After several cash-flush pandemic years, school districts across the country are facing budget shortfalls, with pressure closing in on multiple fronts.

A flow of federal dollars — $122 billion meant to help schools recover from the pandemic — is running dry in September, leaving schools with less money for tutors, summer school and other supports that have funded pandemic recovery efforts over the last three years.

At the same time, declining student enrollment — a consequence of lower birthrates and a growing school choice movement — is catching up to some districts.

The result: Districts across the country must make tough decisions about cuts that will affect millions of families as soon as the next school year. The cuts, which many districts put off during the pandemic, could interrupt the recovery of U.S. students, who by and large have not made up their pandemic losses.

“I’m concerned that too many state and district leaders had their heads in the sand about the coming fiscal cliff, and now they are being confronted with really painful decisions,” said Thomas S. Dee, a Stanford University professor who has studied student enrollment trends.

The cutbacks span districts rich and poor. In the Edmonds, Wash., school district, an upper-middle income area north of Seattle, music classes were a target of district slashes, mobilizing a local foundation to raise more than $200,000 to try to save them. In Montgomery County, Md., an upscale suburb, the district is slightly increasing class sizes to save money.

But experts say the cuts are likely to be felt most in low-income and urban school areas — districts that received larger shares of federal pandemic aid, and that have also been hit hard by declining student enrollment..

When students leave the public school system, districts receive less state and federal money. Losing too many students can strain district budgets, which come with fixed costs. Salaries and benefits, for example, make up about 80 percent of a typical budget.

In many districts, enrollment has been dropping for years. But the pandemic “accelerated that decline,” said Dr. Dee, whose research has found that U.S. public schools lost more than 1 million students between 2019 and 2022. About half of the decline can be explained by population trends, but much of the rest is driven by a sustained interest in private school and home-schooling, Dr. Dee found.

“It’s been clear for a while now — at least two years — that the enrollment declines appear to be the new normal,” he said.

High inflation in recent years has also driven up costs. Many districts gave out larger raises than usual to remain competitive, which is now more difficult for them to sustain, said Marguerite Roza, the director of the Edunomics Lab at Georgetown University.

At the same time, many states are facing slower revenue growth and “might not really be in a position to give out bigger than normal increases to districts,” Dr. Roza said.

Some districts used their pandemic aid to help plug holes in their budget, making the current moment particularly perilous.

That was the case in Minneapolis, which has been losing students andfaced a deficit of more than $100 million. About 300 teaching positions are being cut.

Without the extra funding, Minneapolis would most likely have had to lay off staff or make other dramatic changes earlier, just as students were trying to recover from the pandemic, said Ibrahima Diop, the district’s senior financial officer.

The district chose to continue to invest in instruction. “That is what everybody should have been doing, because doing that meant you were supporting students,” Mr. Diop said.

Hartford, Conn., made a similar trade-off: The district used stimulus dollars to fund 260 positions, including school counselors, social workers and academic tutors — positions that officials heard “loud and clear” were needed to support students, said Leslie Torres-Rodriguez, the superintendent.

But the district, which has dealt with budget woes and declining enrollment, now must shuffle employees to other positions in an attempt to reduce layoffs. “Those districts that are facing the most acute cliffs now are the ones that spent most of the money on servicing and programming for students,” Dr. Torres-Rodriguez said.

Some districts tried to stave off potential layoffs, but even they are planning cuts to programs.

Officials for Baltimore City Public Schools were “very careful from the beginning” to make investments that did not result in abrupt cuts once the relief funds ran out, said Alison Perkins-Cohen, the district’s chief of staff. District officials did not use the money to hire new permanent workers in schools or raise teacher salaries, she said.

Instead, Baltimore provided tutoring, gave one-time stipends to teachers and upgraded bathrooms, science labs and HVAC systems.

Yet Baltimore will still have to reduce some tutoring contracts and may have to scale back summer school next year, programs that had been funded with federal dollars.

Waterbury, Conn., has also been able to avoid layoffs, in large part because it tried not to hire many new staff members with the relief funds, said Verna Ruffin, the district’s superintendent.

Still, Dr. Ruffin said, officials will no longer be able to offer students a 24/7 virtual tutoring program for the coming school year. And they will have to scale back after-school enrichment programs that give students the opportunity to visit museums and attend plays and concerts.

Birmingham, Ala., is among the districts that have made outsize academic progress since the pandemic, but now must decide which programs to keep.

A program that gave students extra instructional time over fall, winter and spring breaks yielded promising results, according to an analysis by the Public Affairs Research Council of Alabama.

But the district must now cut one session — over winter break — and can no longer afford to pay teachers a higher, $60 an hour rate to participate, said the Birmingham superintendent, Mark Sullivan.

A free after-school program, which was subsidized with pandemic aid, will move back to a paid model, a change Dr. Sullivan was loath to make. He knows the cost — about $160 a month, for a single student — could be the difference between paying a bill for many poor and working-class parents in his district.

The district must also cut 70 positions financed with stimulus dollars.

Dr. Sullivan said he did not regret making the short-term hires of mental health counselors, math and reading interventionists and other specialists to get students through the worst of the pandemic. The federal aid represented a rare opportunity for his district, where money is tight and nearly 90 percent of students qualify for free or reduced-price lunch.

“When you are able to provide supports that students desperately need, even if we can do it for a short period of time,” he said, “I think that was worth it.”

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