How States Count Students Can Help Stabilize Funding Amid Declining Enrollment
Across the country, many districts are grappling with declining student enrollment. According to data from the National Center for Education Statistics (NCES), 62% of public school districts in the US experienced a decline in student enrollment between the 2013–14 and 2023–24 school years. This trend continues to persist and has coincided with increased student mobility and higher rates of chronic absenteeism following the pandemic. Even as the number of students declines, districts are unable to reduce costs for personnel and facilities at the same pace. For example, a school may lose several students but still need to operate the same number of classrooms, incurring the same costs for staff and space but with less funding. This dynamic places significant strain on local budgets and poses challenges for district resource allocation. As policymakers look for ways to cushion the impact of declining enrollment, one key lever worth considering is how states count students for funding purposes.
Every state’s approach to counting students has two main components: who is counted and how the count is done.
Who is counted depends on whether the state measures membership (counting all students who are enrolled) or attendance (only counting students who are physically present).
How the count is done refers to whether a state counts students on a single day, across multiple days, or averages student numbers over a period of time (ranging from several weeks to the full year). Counts can be based on current-year or prior-year student numbers.
These count choices have real impacts on funding stability and predictability for districts. Attendance-based counts can hurt districts that have high student mobility or chronic absenteeism. Using current-year enrollment figures tends to benefit growing districts, while prior-year counts are better for districts experiencing declining enrollment and may provide more predictability for all districts. Averaging student counts across a longer period often leads to lower student counts versus a single day or short window at the beginning of the school year.
Many states also consider multiple years of data to determine their funded student counts. Using multiple years of data can soften the financial impact of declining enrollment but may also limit funding for growing districts. A “better-of” approach, where funding is based on the highest student count from multiple options (such as the better of the current year, prior year, or three-year average), can offer a more balanced solution by supporting both growing and declining enrollment districts.
An APA review of student count policies in all 50 states and the District of Columbia found wide variation in how students are counted for funding purposes:
45 states use membership as the basis for funding, while 6 use attendance.
26 states use averaging, 15 use a single-day count, and 10 use multiple-day counts.
15 states fund districts based on current-year counts, 17 on prior-year counts, and 19 use a hybrid or multi-year approach that averages or blends several years of data.
These student count choices are not the only way that policymakers have approached the issue of declining enrollment. Other mechanisms include: (1) hold-harmless provisions which maintain funding at a fixed level (such as a specific year), or (2) year-to-year funding or enrollment decline caps, limiting how much a district’s funding can fall from the previous year.
The challenge, however, is finding balance. Funding losses that happen too quickly can destabilize districts, but declining enrollment provisions can also raise concerns about “phantom” students who are funded but do not actually exist. Further, stagnant hold-harmless policies can mean funding is not reflective of the current needs of the system and may prevent dollars from being directed elsewhere. State policymakers need to have well-designed student count and funding transition policies to ensure their state’s funding system is providing funding stability to districts while still being responsive to changing enrollment trends.
As state policymakers continue to explore how to address enrollment challenges, APA Consulting is here to lend our school finance expertise. Get in touch here - and in the meantime, follow us on LinkedIn for more.