As you finalize your district’s budget within the next few weeks, make sure you’ve considered these financial risks in today’s economic climate.
At a time when federal funding for schools is determined by whether or not leaders comply with federal policy like Title IX, questions like “How can we forecast at a time like this?” and “What else is coming down the pike?” are top-of-mind for superintendents.
Leaders at Georgetown University’s Edunomics Lab—a research center aiming to provide education leaders with knowledge on complex finance issues—offered leaders answers in a recent webinar outlining the looming financial risks for school districts.
For instance, Edunomics Lab Director Marguerite Roza reviewed every major financial risk that might play out during Trump’s second presidency. The chart below is a summary of her prediction:
| Title I | Low (no) risk |
| IDEA | Low (no) risk |
| Unspent ESSER | High risk for a few districts/SEAs with remaining ESSER |
| Medicaid | Partial risk. Medicaid is <1% of budgets. Can be trimmed in reconciliation. |
| Battles over DEI, transgender services | Some risk for locales that violate Title VI or Title IX |
| A recession triggers a reduction in state funds | ~50% chance (major effect since it impacts the largest funding source) |
| Decline in migrant arrivals reduces revenue | High risk for locales w/ migrants (proportional to prior migrant arrival rates) |
| A reduction in all types of funds with a drop in enrollments; school closures due to enrollment declines | Steady risk over the next decade, proportional to enrollment losses |
| Layoffs, reduction in force at the school/district level | High risk |
| Special ed costs for cuts elsewhere in budget; Test score declines | Depends on the district; Depends on the district and state |
More from DA: How Trump’s ‘skinny budget’ impacts K12 funding
Many consequential budgeting decisions are made in the spring. Given the various risks outlined above, Roza offers some mitigating solutions for district and state leaders.
Superintendents should remain laser-focused on student outcomes while prioritizing things like:
- Maintaining “allowable” reserves
- Avoiding recurring financial commitments, including multi-year labor contracts
- Tracking enrollment and sharing those trends with the community
- Controlling rising special ed costs
- Ensuring legal compliance with Title VI
On Title VI, she recommends resources like the Education Rights Institute’s “Practical Resources for District Leaders in Protecting Students from Race, Color, and National Origin Discrimination.”
“Of course, there will be a debate over DEI,” said Roza. “What districts don’t want to do is find themselves actually out of compliance with Title VI as it’s interpreted broadly even before these battles over DEI.”
Check out District Administration’s recent interview with Roza below, where we discuss tariffs and their indirect impact on school district financing.
