Public schools across the United States are facing a financial reckoning in 2025 as federal pandemic relief funds expire and student enrollment continues to decline, according to data from the Georgetown Edunomics Lab.
The funding crisis stems largely from the end of the Elementary and Secondary School Emergency Relief funds, which pumped billions of federal dollars into school districts during the Covid pandemic. As of September 2024, those funds have dried up, leaving an estimated 250,000 education jobs, worth $24 billion in labor, in jeopardy.
“We actually warned school districts in advance, be careful about this money,” said Marguerite Roza, director of the Edunomics Lab at Georgetown University. “Because if you take on recurring commitments, financial commitments, you’re going to really find that in 2025, we will be calling it the bloodletting.”
At the same time, public school enrollment has fallen nationally since 2020. In California, the drop has been especially steep, driven by lower birth rates and increased migration out of the state.
This drop in enrollment means not only that there is less money from the state, which typically funds schools based on the number of students, but that districts now have too many staff members. The staffing surge during the pandemic, which was intended to address student learning loss and provide social-emotional support, has left many districts overextended.
“It’s like if a family wins the lottery and says, ‘Wow, I have $1 million this year. I should buy a new house that has a $1 million mortgage,'” said Roza. “There’s no way you’re going to be able to pay that next year. You’re just using that money for this year.”
Education experts note that while some districts phased out temporary staff through attrition or early retirement incentives, others did not develop or execute exit plans. The result is a jarring financial cliff that could reshape the landscape of public education for years.
“Let me say this on behalf of all educators and all education administration folks: None of us got into this work to lay off teachers and counselors and librarians and nurses and aides and bus drivers,” said Mike Fine, CEO of the Fiscal Crisis and Management Assistance Team, a California state agency that helps school districts with financial and operational issues.
But, he said, “The dollars are limited, and we have to live within the bounds of the financial support that we have.”
Watch the video above to learn more about what declining enrollment means for school funding and student services.
