State leaders should assess six funding-stability policy areas to reduce district revenue volatility¶

Strategy · All strategies
Evidence · 3 claims (2 for, 1 mixed) · 1 study (1 associational), q2 · 0 of 1 report an effect size · 3 claims rest on one study

Description¶

The brief identifies six state policy areas that foster fiscal resiliency: guaranteed funding floors, rainy day funds, hold-harmless provisions for declining enrollment, reducing unfunded pension liabilities, flexible staffing and class size policies, and facilitating districts' ability to offload unused buildings. It states that "State education funding policies play a crucial role in ensuring the stability of funding for school districts, especially during economic fluctuations and periods of declining enrollment." The policies are presented not as prescriptions but as areas for state leaders to assess against their own context, listed in order of highest potential impact without undue burden on the state.

Design Implications¶

Context¶

Requirements¶

• State leaders assess their current state-level policies in these areas to determine whether their districts are vulnerable to revenue volatility
• Leaders within each state determine which policies have the highest impact and are most feasible and appropriate within their state's context

Constraints¶

• The policies do not represent a set of specific strategies to apply; they are intended to prompt state-level self-assessment
• Not all policies will make sense for every state, and any policies to support revenue stability will have some drawbacks

Target Learners¶

• State education leaders and policymakers
• K-12 students in districts facing revenue volatility

Target Learning Goals¶

• Maintaining stable educational services and staffing during revenue declines and economic downturns

Claims¶

• K-12 public school enrollment is declining and projected to fall 3.7 percent by 2031, reducing funding in the 35 states and DC that use student-based funding formulas [~W]
• Rainy day funds buffer education budgets during downturns, and the median state rainy day fund balance is projected to reach 14.4 percent of general fund expenditures by the end of fiscal year 2025 [+W]
• Unfunded pension debt diverts state spending from current students, reaching roughly $16,000 per student in California, $10,000 in Texas, and $15,500 in Florida [+W]

Related Strategies¶

• Three-part state response: align funding policy with enrollment and student needs, build local capacity for managing change, and conduct strategic communication and case-making

Examples¶

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Key Sources¶

• Caparas, R., Jarmolowski, H., Krausen, K., & McClellan, P. (2025). How well will your state's schools weather the next financial storm? WestEd. https://eric.ed.gov/?id=ED673492