PUSD Finance Director Kathie Manning

“There’s not going to be a (fixed asset) tag that we’re going to find that says, ‘Here’s your garbage disposal.’ It’s probably still there, but we’re not going to be able to see it because it’s not visible.”

Kathie Manning

Director of Business Service

The pandemic has upended school budgets across the state through a combination of big enrollment declines and the state’s reduced funding for online classes.

A rush of federal funding has cushioned the blow this year, but the state had not changed per-student funding formulas — posing a potential budget crisis for the upcoming school year and beyond.

Overall, K-12 public school enrollment has declined by 4%, but the drop varies dramatically from one district to another, according to a study released by the Arizona School Boards Association, based on state enrollment data.

In Gila County, the Payson school district saw a 12% decline — roughly three times the state average. However, the Miami elementary school district saw a 45% increase. Countywide, enrollment dropped only 1.4% — less than half the state average.

Some changes reflect long-term enrollment declines in many districts — especially rural school districts that haven’t shared in the ongoing population growth of Maricopa and Pima counties.

However, charter school enrollment grew — with many offering smaller classes that enabled them to remain open for in-person classes. Still, the 12,000 students gained by charter schools did not make up the 40,000 students lost by district public schools.

Some of those missing students have gone to private schools, which weren’t affected by the state mandates on school closures and remained eligible for both state and federal funding in the pandemic.

“We don’t know how many have gone to private schools, because we don’t have private school data available to us,” said Dr. Anabel Aportela, director of research for the Arizona School Boards Association.

Moreover, educators speculate many parents shifted to home schooling — especially in the elementary school grades. Enrollment for K-8 fell much more sharply in most districts than in high school. That’s ironic, since studies show that younger children were much less likely to get sick from COVID but much more likely to suffer serious learning losses in the shift to online classes or home schooling.

“The enrollment loss is mostly concentrated in elementary grades, with a small overall loss of enrollment in high school,” said Aportela, who conducted the study. (to see an interactive map of her findings go to (https://azednews.com/declining-enrollments-impact-on-arizona-schools/).

Statewide, enrollment in public, K-12 schools dropped from 1,114,478 to 1,074,973.

“For those districts that were losing enrollment before the pandemic, the pandemic may have accelerated the decline,” said Aportela. “For others, it has stopped or reversed their growth.”

For instance, Payson suffered a loss in enrollment during the last recession — and had been slowly rebuilding in the two or three years before the pandemic. But enrollment plunged when COVID hit, with a 12% decline.

The state budget essentially locks in those enrollment declines when it comes to state funding for schools in the upcoming school year. Districts may recover funding if students return — but that will come months after the district has signed its contracts with staff. If students don’t come, districts throughout the state will likely face a budget crisis next year.

The combination of the big enrollment decline and the 5% lower state funding for students in online classes has resulted in a record-breaking drop in public school funding, said Dr. Chuck Essigs, director of governmental relations for Arizona Association of School Business Officials.

“I have never seen reductions in school budgets like schools are experiencing this year,” said Dr. Essigs. “The loss of funding just due to the 5% reduction factor for students in distance learning is over $250 million.”

Gov. Doug Ducey had promised to use federal funding to maintain overall school funding levels during the pandemic, regardless of enrollment declines. The state payments fell far short of that promise this year, not counting the funding reduction for online classes. The state’s school budget for the upcoming school year makes no attempt to cushion the impact of the enrollment declines, which will likely carry over into next year.

In fact, the state legislature is considering a bill that would dramatically increase eligibility for taxpayer-funding vouchers for private school tuition through the Empowerment Scholarship Accounts program, which could lock in those enrollment losses for public schools.

The enrollment declines were especially pronounced in kindergarten.

“One possibility is that parents kept kindergartners home, decided to skip a year, and enroll in kindergarten next year. Another possibility is that people are home schooling and we just don’t know it,” said Aportela.

The enrollment of preschool students with disabilities — the only group of children that age the state will pay for — dropped by 20%. Those students may face big difficulties next year in catching up.

The one category showing a significant increase involved students in full-time distance learning programs — for which districts get a lower payment.

“The increase occurred in both districts and charter schools, and it is not clear if these students are expected to return to in-person instruction at some point,” said Aportela.

Contact the writer at paleshire@payson.com

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