Over the first quarter of the 21st century, schools built capacity to accommodate growing student populations by adding classroom space, teacher positions, and the many resources that go into a child’s education. The Covid-19 pandemic accelerated the recovery by injecting huge federal funds to supplement state and local budgets. More students will graduate from high school in 2025 than in any other year in American history. However, today the number of young people is declining sharply and this trend shows no signs of slowing down.
Districts across the country are seeing what happens to schools funded on a per-pupil basis when there are simply fewer students available. It’s a concern for teachers unions, whose leaders are desperately trying to get blue state governors to keep existing budgets intact. It’s a problem for rural communities that have experienced this before. And it’s a cause for concern for families who feel like their children are pawns in a murky and destructive process that has the greatest impact on already struggling communities.
It is very easy to find emotional reasons against closing underprivileged schools; It’s harder to argue against the cold, hard fact that it costs a lot of money to keep empty schools running while simultaneously leaving students with less access to quality programs, safe facilities and non-academic resources that can help provide a better path for struggling students.
This background makes a new analysis by Stanford’s Francis Pearman compelling. Using a synthetic difference-in-differences model, Pearman examined 796 California counties between 2011 and 2019 to determine whether closure decisions resulted in balanced budgets. The sampling design is important: Pearman examined school district finances after the Great Recession but before the pandemic. He excluded districts where school closures were underway at the beginning of the study period because the analysis requires a pretreatment baseline, and excluded individual school districts and all districts with missing data. These decisions allow for sophisticated statistical analysis but may exclude some districts that face similar circumstances to those making closure decisions today.
Pearman found that California’s closures reduced the number of students in a district by an average of 287 students, and reports that the closures “left districts’ funding shortfalls and the likelihood of achieving a balanced budget unchanged.” The zero result applied to districts in financial distress and to financially stable systems.
Why? Expenses fell by about $447 per student, with a standard error of $388 — nearly as large as the estimate — but revenue fell by virtually the same amount. California’s Local Control Funding Formula (LCFF) creates large discrepancies in state allocations based on the number of local students because state funding (approximately 55 percent of total funding at the start of the study period) decreases as students leave the district without a safety cushion. Additionally, despite closed buildings and a decline in student enrollment, the closure of schools had no impact on the total number of teachers and staff. Fixed costs such as required salaries and benefits have not changed following the closures.
Instead of truly right-sizing schools, districts appear to have simply moved around adults.
With more than three-quarters of all public school spending going to personnel costs and the average salary of California public school teachers reaching six figures in the 2024-25 school year, district leaders have limited tools at their disposal to adjust their budgets. California has the second-strongest teachers union in the country, according to Fordham’s latest analysis, and is working hard to protect its members’ jobs and increase salaries, even if those costs go beyond what districts can afford. Beyond union pressure, California’s regulatory environment limits the ability to rezone closed buildings to optimize revenues—a point Pearman considers when discussing how the state’s surplus land policy limits local districts.
https://www.educationnext.org/do-school-closures-save-money-study-california-districts-balancing-budget-enrollment-decline/
