Freedom to Learn

Marguerite Roza on Declining Birth Rates, Closing Schools, and the Fate of Education Funding

• Ginny Gentles • Season 1 • Episode 4

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The education world is fixated on the fate of the U.S. Department of Education, but federal funding is a small portion of school budgets. Dr. Marguerite Roza, director of Georgetown University’s Edunomics Lab, joins the podcast to break down the financial realities currently facing U.S. school districts. Financial mismanagement by school districts across the country is leading to tough budget decisions about staffing and school closures. The problems are exacerbated by the end of Covid-era temporary ESSER funding and smaller student enrollments. Roza addresses the demographic cliff affecting K-12 education, how districts spent ESSER funding, and the importance of state leadership in driving educational outcomes.

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Ginny Gentles (00:00)

Welcome to Freedom to Learn, the podcast that champions choice in education, defends parental rights, and exposes the harm caused by school unions. I’m Ginny Gentles, director of education freedom and parental rights at DFI, the Defense of Freedom Institute in Washington, DC.

The ESSER era is over. The 190 billion Elementary and Secondary School Emergency Relief Fund Federal Gravy Train has ended. Without ESSER funds to plug budget holes, school districts can no longer ignore the harsh reality of fiscal pressures and declining student enrollment that's being driven by plummeting birth rates.


Dr. Marguerite Roza joins Freedom to Learn today to discuss how districts spent the ESSER funds and address the consequences of the K-12 system's financial dysfunction. Marguerite Roza is a research professor and director of the Edunomics Lab, a research center at Georgetown University focused on education finance policy and practice. She also leads the McCourt School of Public Policy's Certificate in Education Finance. Dr. Roza authored Educational Economics, Where Do School Funds Go? and taught thermodynamics at the Naval Nuclear Power School while serving in the US Navy. 


Stick around for the final segment of today's Freedom to Learn podcast. Special myth-busting guest, Patrick Graff, with the American Federation for Children addresses the claim that students attending residentially assigned public schools are harmed in areas with school choice programs.


Dr. Marguerite Roza, welcome to Freedom to Learn. 


Marguerite Roza (01:30)

Happy to be here.


Ginny Gentles (01:31)

There's a lot of talk about abolishing or reallocating the funds of the US Department of Education in DC right now. Should schools be bracing for big cuts in federal funding?


Marguerite Roza (01:43)

No. So I think people get confused. They think the Department of Ed is like the Department of Defense. And they're very different. So education is really run out of the states for the most part. And most of the money, like 90% of it or even more, generally comes from state and local sources. The federal slice is a small, we call it a two-bit player in public education. Compared to the Department of Defense, all of the money for the military comes from the federal government, and it's run centrally. But education is really mostly from the purview of state and local governments. And I would say that the big programs at the federal government are things like Title I and IDEA. And those are popular on both sides of the aisle. I don't think they'll disappear.


They could be run out of a different agency. Both of them got their start before we had a Department of Ed. So they weren't contingent on the Department of Ed. So I think those programs will likely continue, at least the funding lines would continue, even if in the relatively small chance there was an end to the Department of Ed. So we've been telling school districts, don't expect massive changes in your federal dollars. And just a reminder, most of your money doesn't come.


Ginny Gentles (03:03)

I'm sure they're finding that reassuring, even if, as you say, it is a small portion of their overall budget. It seems like the big K-12 issue that everyone should be discussing is not the fate of the U.S. Department of Education, but the fate of city school districts and the financial dysfunction that they're struggling with right now. So what's going on with the big districts?


Marguerite Roza (03:25)

They are in difficult financial times right now. Part of it is because the federal relief dollars that they got, ESSER, just ended. And those were always intended to be temporary monies, and large urban districts got more of them, even more of them per pupil than other districts got on a per pupil basis. And that's because the money went through the Title I formula. The Title I formula prioritizes large districts and they also have more, high rates of poverty. So they got a lot of money. Now, many of them spent that money in ways that were not easy for them to dial back, even though they knew the money was one-time funds.


So they gave out pay raises or things like that. That's hard for school districts to wind back down. And many of them, you know, have contentious relationships with their local unions and the local unions then push for committing to more staff. And so now they've got to kind of walk back these investments and that tends to be harder for them. Many of them are also facing enrollment declines.


There are declining birth rates in our country. I mean all districts are going to be facing some of that, but the enrollment declines were steeper in urban areas. And so they have some hard decisions to make. And that might mean you have too many schools, you've got to close some schools. Maybe you have too many staff. and Urban districts especially struggle with making those kinds of financial decisions. And so a lot of them are facing some mayhem right now.


Ginny Gentles (05:01)

You call on the adults to figure this out.


Marguerite Roza (05:04)

Well, we do because some of them have seen the financial gaps in their budgets for a while and have been unwilling or unable in some sort of way to make the kinds of decisions that districts are making all around the country. So there are districts that have closed schools, sometimes neighboring these big districts, but the big districts have a policy, “we will not close schools.” Or


pink slips have been all over the country, you know, the staff being laid off and urban districts will say, “we're not gonna lay off staff.” So they tied their own hands in some ways in some of these situations, many of them running out the clock and now facing bigger problems. Some of them have made missteps in their financial calculations and sort of woke up and realized, oh my gosh, we have a bigger gap than we thought. So yeah, I think at this point, school districts, their budgets are going to grow and contract, their enrollments are going to grow and contract, and this is one of those times where they're contracting, and they do need to make, step in, and make some hard decisions on behalf of their budgets in order to preserve good schooling for their students. And their students are kind of counting on them to do that.


Ginny Gentles (06:15)

Let's talk about a district that was perhaps heading the wrong direction as far as making wise decisions and that's Chicago. There were some headlines talking about an attempted payday loan in order to pay the bills. What's happening in Chicago?


Marguerite Roza (06:29)

We put Chicago kind of at the top of our list. And part of it is that it is still operating under mayoral takeover. So the mayor appoints the board, normally school boards are elected locally. Because the mayor appoints the board, we're in this limbo time. I think they're returning the board elections back to the voters and they've been, they voted in the first batch of them, but the mayor still has a majority. And then the board hires the superintendent. They have a capable, strong financial superintendent in there. And he is resistant to taking out a loan to balance the budget. But the union has made a lot of demands. And the mayor is instructing the district to give in on some of these demands for no layoffs and pay hikes and so on.


And so the math just does not work out because Chicago is also a city that's seen enrollment declines across the last five to eight years and probably has way too many under enrolled schools by any definition. And there's this pressure to not close schools. And really there's no strategies left other than to demand more money. They've gone to the state, the state said no. So now the mayor has been instructing the district to take out a high interest, short-term loan thinking that right around the corner more cash is coming. And I think that is really dangerous because what we could end up with is a district that can't pay its bills, closes the doors before the end of the school year, leaves lots of kids in the lurch, mayhem with some staff getting you know, erratically laid off in not a thoughtful way. And all of this is because you can't seem to right size.


Ginny Gentles (08:12)

Right, so the adults need to figure this out. Okay, we're gonna dig in more into ESSER for sure. But I want to go back to what you were talking about with the demographic cliff, or I've heard it called a birth dearth that school districts are facing. I have to tell you, they talk about the demographic cliff in higher education all the time. It's hitting higher ed in 2025. That is clear as can be. They've known for a long time it's coming. They've been talking about it. I wouldn't say that they're ready for it, but they know about it and they talk about it. I feel like I barely hear about it in K-12 education and it's already hit. Birth rates started declining after 2008, right?


Marguerite Roza (08:53)

So first I feel like when we talk about Chicago, I should also point out there are school districts all around the country who are making thoughtful decisions, who did take their federal relief funds and think ahead and warn some staff, your position is temporary, thank you for coming, or do one time pay bonuses when there was inflation or scarcity of staff. So it's not the case that all districts are operating in this


financial dysfunction But it is more common in these urban districts. And all around the country there are locally elected board members and superintendents that are buckling down, making hard decisions and offering stable schooling for their kids. I just


Ginny Gentles (09:35)

And they don't make the headlines.


Marguerite Roza (09:36)

Yeah, they don't make the headlines and it's hard work, you know? And so congrats to them. So the enrollment declines I do think have caught K-12

by surprise, even though, like you said, you could see these patterns in birth rates for sure. For many of them, the pandemic was a step change in enrollment, right? So families switched to homeschooling, moved out of cities, they dropped out of school, went to private schools, went to charter schools, whatever it was. But all the while, enrollment was sort of slightly drifting down, like a half a percent a year, but suddenly some of these places lost 5%, 8%, even 10% of their enrollment and thought maybe it's all going to bounce back. But what was really underneath it all was the slow decline.


Obviously populations move around. So universities capture students from a much larger geographic area generally than say a regional school district does. And you can open a new business and people can move in and suddenly you can see enrollment go up or your community can be a destination for immigrant families and suddenly enrollment goes up. So they were probably tracking this as carefully. But the birth rates are down and it's not sort of a wave where it goes down and up and down and up. It's really the case that in modern industrialized nations are seeing a decline in birth rates. I blame the young people. Get off your phone and have more kids.


But either way, they're not. And you can very much see it in kindergarten, first grade, second grade enrollments. That's where most of that decline is. And it's it's going to continue. And that may that does mean that the United States has too many schools, sort of any way you add it up for the population that's coming toward it. And closing schools is, of course, really hard. But


School districts have grown and shrunk and grown and shrunk for decades, right? We saw population decline in the rest belt. School districts had to shrink. They had to close some schools. You saw movement into the cities, out of the cities, back into the cities over the years. And so being nimble and changing the shape of your school district for the population that you serve is something we should expect school districts to be able to do. But many of them have been caught off guard this time.


Ginny Gentles (11:56)

Right, we as Gen X were part of a birth dearth of sorts, post baby boom generation So I'm sure districts contracted back when our generation was coming along. But I guess there isn't an institutional memory on how to do that And perhaps there's a sense of somebody's gonna come to the rescue.


Marguerite Roza (12:12)

After Gen X became the Millennials, there was another baby boom. And so they thought, hey, if we just hold on to these underworld schools, we're going to need them again. But that's not the pattern we're seeing this time. If you look at some of our peer nations across Europe and Japan and so on, what you really see is a much, much, much steeper decline in birth rates that doesn't look cyclical. It really looks like a change in advanced nations having children. And so I'm not sure that if we wait five years, it'll start to turn itself around.


Ginny Gentles (12:48)

Are people listening to you when you say this?


Marguerite Roza (12:51)

So remember, school board members are locally elected people. They don't, haven’t studied public education for their lifetime and then ended up in this. And some of them, you know, their neighbor pulled their kids out of public school during the pandemic. And so when they saw enrollment declines, they said, you know what we need to do? We need to get everybody to come back and not realizing that the underlying issue is a decline in birth rates. And so, you know, maybe we're distracted by those, those, the movement we saw during the pandemic. 

And so they said, we need to do a campaign. We need to get kids to come back. And we saw that city after city after city, and that ends up burning up a bunch of time and ends up being distracting for leaders. Rural districts have seen a decline in populations that's been longer and they have been reacting. So some of them start, I remember there was an article in Ed Week maybe, I don't know, eight years ago about a district that was trying to recruit a population from nearby districts and then sort of realized they couldn't do that. And that this idea that you can go out and find students to repopulate your schools, it's not practical. And in most rural districts, they're making accommodations over time to serve their now smaller population.


Ginny Gentles (14:08)

Easy to look for somebody to come to the rescue, easy to look for someone to blame. Certainly I hear unions blaming quote unquote voucher programs for this, but let's be honest, there are a lot of things at play here, including this birth dearth or demographic cliff.


Marguerite Roza (14:24)

Well, and a lot will ask the state to do some sort of hold harmless. And the hold harmless policies fund phantom students or ghost students or something like that. the students aren't there anymore and they're funding their spots still. And most states over time realize that that's sending a signal that you don't have to be nimble and adjust to your population. And that what it ends up doing is being really inequitable, that you're finding a lot of districts that don't have kids anymore and they don't have the money for the ones that do have kids. So we always say beware of the hold harmless policies.


Ginny Gentles (14:58)

Let's jump back to federal education funding, the elementary and secondary school emergency relief funding, 190 billion or so in supplemental emergency funding that went out to states and school districts in response to the COVID era. You've been looking at ESSER all along and have reached some conclusions, including that there's no simple spending recipe. What do you mean when you're looking at ESSER and that's what you're concluding?


Marguerite Roza (15:26)

The mantra of the last 10 years has been, “we know what works, if you give us the money, we can invest it and we will get these outcomes for kids." And it's not that simple. And it's really not. Even when we examine the data and we say, “Let's examine the school districts that did tutoring versus the ones that did other things,” we don't find districts that spent their money on tutoring, saw disproportionately more progress than their peers.


Some did, some didn't, right? So It's not not, if you invest in X, you are guaranteed some sort of outcome on the other side. And that's not surprising. School districts are very human intensive businesses or operations.


The humans matter a lot. And so you can fund a counselor in one school and it can have a really big effect. And you can fund a counselor in another school with similar students and not see any value really at all. It's always been more complicated than that. What we have seen for the last, certainly during ESSER, was that our country kind of took our foot off the outcomes pedal. We didn't think as much about reading scores and math scores. 


And certainly as our money went out without any sort of ask in return in scores. And we didn't prioritize scores. We didn't focus that much on it. And what we found was actually that the states that seemed more focused on getting student outcomes did see more student outcomes than the states that didn't mention it at all. And I'm


roughly explaining what we guess is why we see such big differences across states in progress from those ESSER dollars. So I think it's not, we can't drill down and say it's because this one spent it on X and this one spent it on Y, but we can say is that focusing on student outcomes and measuring the data and being clear-eyed about where we are seems to be one pathway to deliver better outcomes. So, again, it's that, what are we doing on the accountability side of that?


Ginny Gentles (17:32)

Well, you've said ESSER funds came in the form of a blank check. Did that surprise you at the time? So let's remind everybody that ESSER came out in three batches, a small batch in the CARES Act, March of 2020, another batch at the end of that year, and then the big one in the ARP funding bill in March of 2021. That was the big one that the Biden administration likes to take credit for. 


But again, it was three batches and all of them essentially a blank check. Although by the time ARP rolled around, they were saying set aside 20% of the funds to address learning loss, right? Like at that point they were like, wait, oops, we probably should have given some instructions to prioritize what really matters. And that's gonna be the student outcomes. Did that make a difference?


Marguerite Roza (18:20)

Well, there was no measurement of anything, right? So, in fact, because ESEA requires states to have some sort of testing scheme at their state, you might have hoped that states would be paying attention to the scores year after year, but many states


Ginny Gentles (18:37)

Well, they stopped testing during Covid


Marguerite Roza (18:39)

Well, they did stop testing, but when they restarted, they changed their tests, they changed the cutoff points to their tests, they, you know, released the results on the late Friday before the three day weekend. 


So not all of the states, some states really, really pushed hard on these test scores. I'm thinking of places like Tennessee. So if we maybe pushed out that ESSER and said, “Hey, by the way, we're going to do NAEP every year now. We really want to see some progress on NAEP. So make sure you get it done. And we're going to be looking at these dollars against some sort of outcome measure,” then we might have seen that. But we pushed the dollars out and then didn't really say anything about math or reading or anything like that. And you heard, initially a lot of, well, every district knows what they need, but districts were looking for signals on what do you want us to do with all this money? And in the absence of signals, they turned to their communities and said, “What do you want us to do with this money?” And, you know, you got a little bit of everything. There were sports facilities, there were pay raises for staff.


Many of them did over time start to realize our math scores or reading scores are pretty low, let's put in some professional development, redesign our instruction or do some tutoring or after school programs. But that was really decided district by district across the 14,000 districts in this country. And the range of decisions they made were all over the map. The level of progress we got for students is all over the map. Some got some progress, some saw their scores continue to decline. And I think that we sometimes talk about the averages. The averages really mask a lot of variation across districts.


Ginny Gentles (20:22)

You've already alluded to the fact that state leadership appears to matter. There were some states that did some impressive things with the funds and during this very difficult era.


Marguerite Roza (19:02)

Mm-hmm, and some more progress in Ohio and Tennessee and North Carolina. A few other states really saw, Mississippi for sure, outsized progress in terms of their recovery. And we have some states that actually saw their scores continue to slide.


Ginny Gentles (20:50)

As congressional offices, members of Congress, are talking about future appropriations, Title I funding, and they're hearing from various DC lobbyists, they probably should also make sure that they're checking in with their state chiefs to get the full story, their state education leaders, and making sure that they're on top of things and learning from them if they are some of these stronger state leaders.


Marguerite Roza (21:12)

Some of those states, we have no idea how well they did because they're not doing regular tests year to year that allow us to see trends.


Ginny Gentles (21:21)

Wait, that's a federal requirement though.


Marguerite Roza (21:24)

Yeah, and I don't think, it's been waivers and then states sort of ignore it and then they change their cut points so you can't really tell. So in the states where we see progress, those are actually states that are committed to measuring something over time. That's why I think, you we do NAEP, which is our national assessment. It's a sample. It only tells you state by state. It doesn't tell you district by district. But it seems time that we need to up the frequency of that because the state assessments aren't giving us the information we need to know whether systems are performing. And if we did the NAEP every year, we could more clear-eyed be able to see where states are slipping and where states are making progress. And I think that would probably activate states more.


Ginny Gentles (22:10)

Yeah, I live in Virginia, which is one of the worst offenders for the honesty gap between NAEP and the state standards. Before Governor Youngkin came in, the state had lowered the standards. You've been mentioning that other states are doing that. Governor Youngkin and his state chief, Secretary Aimee Guidera, have been trying to address that.


Marguerite Roza (22:28)

Well, there are plenty of them that are lowering standards. What actually even makes me more worried is the states that we don't have data. And there's some waivers for you can use, you can switch to a different kind of test that you're using during the middle of the year and, or we've changed our assessment, so there's no way to line it up with the prior year. So there's a lot of that going on. And I think we're literally at about half of our states are making it impossible for researchers to track over time what progress looks like. And that is just really worrisome. And if we can't track it over time, then we don't know if the kids in a state are really on the wrong path. Their parents don't know. Their legislature doesn't know.


That's the bigger issue. That's kind of why, you know, we've, we've this, the new NAEP scores, which are normally right now every other year. And I think that's just too infrequent. People forget what they are. They're not really as powerful. Reporters forget what they are, but the next batch of NAEP scores is coming out this January, I think. And so that'll be really telling for the rest of these states.


Ginny Gentles (23:35)

Marguerite, thank you so much for your commitment to transparency and accountability and ensuring that students truly benefit from education funding. And thank you for joining Freedom to Learn.


Welcome Patrick Graff of the American Federation for Children. We're so glad that you've joined us here on Freedom to Learn to address myths and misconceptions out there about school choice, education freedom, both public and private. Patrick, what is your role at AFC?


Patrick Graff (24:03)

Hi, Ginny. Yeah, great to be here. So my role with AFC is director of legislative policy. And so I work on school choice policy across the country and many states that are looking to pass a new school choice programs. And I've got a background in education research as well as teaching. I used to be a third grade teacher and so I love education and love talking about this.


Ginny Gentles (24:21)

There are claims out there that school choice programs, even public school choices like magnet programs or public charter schools, that those hollow out the traditional or residentially assigned public schools in the district, and therefore the students who are left attending those residentially assigned schools are harmed in some way. How do you respond to that?


Patrick Graff (24:46)

If you grew up with your own neighborhood school, A lot of times folks attach a very sentimental value to those types of schools, and it makes sense. Those are community institutions, and most folks really love their neighborhood public schools. But in many cases, neighborhoods can change.


For a lot of parents, safety is a primary concern for why they send their kids to a particular school or not. I think one issue is if parents are choosing not to be at your school, what is that saying about your school when choices are provided? Is it safe? Are students engaged and excited to learn in those schools? The challenge is, if you look at a lot of our large cities in particular, the populations, especially the student populations are shrinking. There's a decline in birth rates. There are fewer parents and kids living in big city centers. And so, whether your city has a lot of school choice or not, this is a problem that many large urban school districts are facing right now across the country of how do we design and right size our system for fewer students than we have served historically?


So this is true in Chicago where they've had modest population growth over the last 10 years, but their K-12 enrollment has shrunk by about almost 10,000 students. Up from kindergarten enrollment in 2009 was around 30,000 kindergartners, and now there's close to 22,000 kindergartners. So as those folks grow up, there's fewer and fewer kids to go to high school in Chicago. 


And so the easy target is the magnet program that is providing a choice for parents down the street, perhaps if their local public school isn't serving that need. But really there's a larger problem around how do you coordinate student enrollment across the district. And I think what is tragic in my mind is that, you know, this is often associated with, “Well, the kids in the public school are gonna do a lot worse because there's fewer students there than before.” A lot of the evidence actually points in the other direction because one benefit of kids, a few kids moving away from your schools is you actually have smaller class sizes in some of the schools that students choose to leave. And so it becomes a matter of right sizing those schools to fit the students that are there rather than saying, “We need to maintain the current system as it stands.” Chicago, they spend over $25,000 a year per pupil on students and that's up over 50% in the last five years. So that's a huge change. You know, the national average is around 18,600 per pupil and even that number is a few years out of date. And so, you know, if you look at what school choice has looked like in Illinois, on the private school choice side, they did have a tax credit scholarship program in Illinois. It was only a five year program. So they passed a program, it's going to be around for five years, and that program benefited nearly 10,000 kids in their last year all across the state of Illinois, including in Chicago. There are 20,000 low income kids on the wait list for that program.


Two thirds of the families made less than $50,000 a year for a family of four. So, these were families who wanted choice, had a need, and yet the cost of the scholarship per pupil was only $5,900 on average. And so you can imagine, especially in a place like Chicago, where the public schools are spending over $25,000 a year, if they were to lose, a number of students at a cost of $5,900 a year to the state, the state was actually saving money for every time a kid transferred schools in Chicago. 


So the reality is that you're ending up with more money per pupil in the public school system there in Chicago as a result of this tax credit program. The, unfortunately, democratic controlled legislature in Chicago failed to renew the program after the five years. So it had a five year sunset built in. It was overwhelmingly popular, had a wait list, it wasn't renewed. 


And so to me, this really speaks to the importance of things like the Educational Choice for Children Act, the ECCA at the federal level, because there was extremely high interest in Chicago among Latino and Black families looking for other options in that school system. And the politicians in the state of Illinois failed to renew that program. The teacher unions there played a huge role in stopping that renewal even though statewide polls in Illinois showed huge support for the program. Illinois voters supported it three to one, including 71% of Black voters and 81% of Hispanic voters. In my mind, this is an issue where legislators at the federal level can do so much to help a lot of those families in large urban centers around the country who are looking for another choice.


Ginny Gentles (29:19)

Thank you so much for joining us today on Freedom to Learn. We look forward to having you back to continue to tackle myths and misconceptions.


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