California Schools Risk ‘Colossal’ Loss Of Dollars As Enrollment Drops

As they await the release of Gov. Gavin Newsom’s proposed 2022-23 state budget, school district officials across California are worried about losing millions of dollars all at once, resulting in staffing cuts in a time when students need more attention than ever.

After two years of not being penalized for declining enrollment during the pandemic, school districts are bracing for a sudden drop in revenues next year as their funding gets recalibrated to match current enrollment, which plummeted since COVID-19 first closed California’s schools.

“I’ve never ever seen a drop in enrollment come all at once like this,” said Andy Johnsen, superintendent at San Marcos Unified in north San Diego County. “The pandemic changed everything.”

In 2020, state lawmakers decided to allow districts to use their pre-pandemic, 2019-20 enrollment and attendance figures to calculate their funding for the next two school years. But starting in the fall of 2022, funding levels will be determined by this year’s enrollment and attendance.

“Just to put it into perspective, we lost a few hundred students each year before the pandemic,” said Harold Sullins, an associate superintendent at San Bernardino City Unified School District. “Last year, we declined by 2,000 students. That’s about eight years’ worth of decline.”

Big Potential Losses Ahead

Without assistance from the state, San Bernardino City Unified could lose $27 million in funding due to the enrollment decline, a hefty chunk of the district’s $971 million budget. Districts statewide stand to take similar blows.

The impact of such cuts can vary by district. It could mean laying off employees or cutting language and art programs. Ultimately, it’ll mean eliminating services many students need, especially in the coming years as they try to recover from the challenges of virtual learning.

In 2018-19, California schools statewide lost about 23,000 students. Between the 2019-20 and 2020-21 school years, public school enrollment in California dropped by nearly seven times that figure, with more than 160,000 students dropping out.

To calculate what it pays to individual districts each year, the state uses average daily attendance, so not only does enrollment matter but so does making sure students are in class every day. A new bill introduced on Monday by State Sen. Anthony Portantino, a San Fernando Valley Democrat, seeks to change this policy and fund schools based on enrollment, which would generate $3 billion for schools statewide.

Before COVID-19, low birth rates and migration patterns caused the annual shrinkage of public school enrollment. During the pandemic, kindergarten enrollment fell by about 61,000 students, accounting for much of the overall decline.

“Kindergarten is not compulsory,” Sullins said. “At our earlier grade levels, a lot of our parents opted to hold their students back.”

When physical classrooms reopened in the fall of 2021, stringent rules about quarantine and independent study also hurt attendance. Districts failing to offer independent study to students in quarantine were required to count those pupils as absent, losing out on their attendance-based funding. Sullins said this policy had a “tremendous impact” on attendance rates.

District leaders said a sudden drop in funding would punish districts for both drops in enrollment caused by the pandemic and for failing to comply with unreasonable independent study requirements.

“The public doesn’t understand,” said Lisa Gonzales, the chief business officer at Mt. Diablo Unified. “We’re all facing colossal funding decreases next year.”

Gonzales said her 30,000-student, Northern California district could lose $24 million if the state does nothing.

Gonzales declined to comment on exactly where the district would make cuts, but she said she expects to issue layoff notices. She said when making cuts, school districts first figure out what they absolutely need to keep by law, like a teacher in every classroom and transportation for students with disabilities. Then they look at how they could enlarge class sizes and eliminate certain positions.

“You don’t have to have a librarian and a counselor,” she said. “Are they important and valuable? Absolutely.”

What's Next

Administrators interviewed by CalMatters raised several possible solutions, but they fell under two general categories — and seek to take advantage of the fact that the state anticipates a big budget surplus.

First, the state could increase overall funding to schools by adjusting the formula that determines most of the money districts receive from the state. The formula consists of “base” funding for all students and additional “supplemental” and “concentration” grants for districts serving English learners, foster children and students qualifying for free or reduced-price meals.

“In an ideal world, what would benefit is an increase to the base,” Gonzales said. “It could reverse the attendance issue we’re having.”

A second option: The state could cut funding gradually, giving districts more time to downsize.

A spokesperson for the governor declined to comment on the contents of the forthcoming proposed budget. The state Legislature is aware of the fiscal crisis looming over districts.

Mike Fine, the chief executive officer of the state’s Fiscal Crisis and Management Assistance Team, spoke at a Nov. 30 hearing for the state Assembly’s Education Finance Subcommittee and recommended that districts be temporarily funded based on their three-year average attendance rates.

Fine said that pre-pandemic, about 60% of districts were declining. Last year, all but one of the 58 counties in the state had a decline.

The governor and Legislature have tried to help districts recover from the pandemic. The 2021-22 state budget ushered historic investments in K-12 education. Much of that went to ongoing funding like sending more money to districts with higher concentrations of at-risk students.

Jonathan Kaplan, a senior policy analyst at the California Budget & Policy Center, said these commitments signal that lawmakers in Sacramento are aware of just how hard some communities were hit by COVID-19.

“The governor and Legislature deserve credit,” Kaplan said. “The bump in the concentration grant acknowledged there’s a legitimate need out there. Students in these communities need support.”

Even so, both the state and local districts underestimated just how low enrollments and attendance rates would plummet this year.

“Could they have really known there was going to be such large numbers of students who weren’t coming?” said Kaplan. “Could they really know how much hardship there would be? I don’t think so.”