Public schools are failing to prepare for fewer kids

Enrollment in U.S. public schools fell sharply during the COVID-19 pandemic as the shift to remote classes and all-around disruption of everyday life led some families to opt for homeschooling or in-person private schools and some to give up on schooling altogether. Public schools managed to stabilize their numbers after that, with enrollment rising slightly in the 2022-2023 academic year. But now they’re facing a longer-term problem — a lack of children. The number of annual births in the U.S. is down by about 700,000, or 16%, from its 2007 peak.

Births fell even further and faster in the wake of the 1946-1964 baby boom, only to make a comeback as baby boomers themselves had kids. But with the giant millennial generation that resulted already aging out of its peak childbearing years, it’s hard to see where another such baby boom would come from. Immigration could make up some of the difference, but birth rates are also falling in many of the countries that send immigrants to the U.S., and at the moment net immigration to the U.S. is close to zero. For U.S. public schools, the best guess is that the enrollment declines are just getting started.

In theory, an entirely foreseeable shift like this in the demand for government services provides an opportunity for thoughtful restructuring of how those services are provided. In reality, that’s not how things are going to play out. Retrenching is hard for any organization, but especially so for large public entities with unionized workers and vocal and often-organized customer bases (that is, parents). Meanwhile, the shrinking share of Americans younger than 18 is likely to further reduce overall public support for education, with property tax revolts already threatening school budgets in several states. And while there’s no evidence of a shift in enrollment toward private schools, even with more and more states offering vouchers to partly offset their costs, homeschooling has been on the rise for a quarter century and seems likely to continue to siphon off potential public school attendees.

All in all, it’s shaping up to be a rough decade or two for public schools in the US. And while there are certainly places where schools will be under less pressure than others, every region of the U.S. (as well as all but nine states and the District of Columbia) experienced enrollment decline from fall 2019 to fall 2024.

Getting ahead of the problem by cutting spending and redirecting resources might help, but as noted that’s not something public schools are great at. A couple of recent studies have found that school districts are much slower to reduce employee headcount when enrollment falls than increase it when enrollment rises. Even with public-school enrollment declining since the onset of the pandemic, the number of teachers and other education workers employed by local governments in the U.S. has actually risen by about 200,000 — to more than 8.2 million, or nearly four times the size of the federal civilian workforce (excluding the U.S. Postal Service) that Elon Musk’s Department of Government Efficiency took a hatchet to last year.

It was federal pandemic aid that enabled this employment increase, and as Erin Hudson of Bloomberg News detailed last week, its expiration is beginning to force some school systems to lay off teachers and other employees. The evidence from the past half-century is that declines in revenue are a bigger driver of education cutbacks than declines in enrollment, with public-school employment interrupting its long rise only in the wake of the deep recessions of the early 1980s and late 2000s and — briefly — the pandemic downturn. Real spending per student also flattened out for a few years in the 1990s as enrollment increased rapidly but didn’t drop during the pandemic.

One good result of this increased spending has been lower pupil-teacher ratios. Their decline was interrupted by the cutbacks of the early 2010s, and National Center for Education Statistics data through the 2022—2023 school year shows a ratio still higher than in 2008, but its projections and the employment numbers available from the BLS indicate that it has probably hit new lows since then.

You can get even lower pupil-teacher ratios by teaching your kids at home, and the rise of homeschooling is one of the most important developments in education in recent decades. Its extent is not especially well measured, but Census Bureau estimates of the percentage of American children enrolled in school, while somewhat noisy from year to year, show a clear decline starting in the 1990s.

In a 2023 NCES survey, homeschoolers named "a concern about environment of other schools" as the top reason for instructing their children at home, with "a dissatisfaction with academic instruction at other schools" and "a desire to provide religious instruction" among the other main reasons. The increasing availability of online instruction seems to be another driver, with about half of homeschooled pupils in the survey taking at least some courses virtually and an estimated 2.5% of school-age kids not counted as homeschooled but taking all of their courses virtually. There are surely limits to how many families will want to adopt these approaches but also no reason to think the trend toward home and virtual schooling will reverse anytime soon. Coupled with the shrinking supply of school-age children, it means years of public-school enrollment declines to come.

For those attending public schools this isn’t necessarily bad news — barring another recession, pupil-teacher ratios may fall some more. But for school administrators and local governments, it’s eventually going to force a lot of hard decisions.

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of "The Myth of the Rational Market."