Fewer Students, Bigger Budgets: The Public Education Paradox

American public schools are shrinking yet spending more than ever.

Reason Magazine recently laid out a stark trend. Since 2019, nationwide public school enrollment has dropped by 1.4 million students, or about 3 percent, according to data from the National Center for Education Statistics (NCES). Yet, over that same period, total spending on public education rose 34 percent, pushing average per-student spending from roughly $13,187 to $17,644.

Much of that surge traces back to the nearly $190 billion in federal pandemic-era relief funds Congress distributed between 2020 and 2021. Now that the money has largely run out, district leaders are nervous. A RAND survey found 54 percent worry about looming budget shortfalls, even as inflation-adjusted spending remains elevated.

Part of the disconnect comes from “hold harmless” provisions. This legal stipulation, used by roughly 60 percent of states, guarantees districts receive the same funding as the prior year regardless of how many students enroll. That’s how New York City can justify allocating $290 million in 2027 to prevent cuts at shrinking schools.

And despite all the extra money, student outcomes haven’t improved. Nationwide, academic proficiency and other benchmarks remain below pre-pandemic levels. In 2024, only 6 out of 10 fourth-graders could read at or above a basic level, the lowest performance benchmark used by NCES.

Pennsylvania tells a similar story—only more stark.

Enrollment has shrunk exponentially in recent years. The commonwealth now has 319,000 fewer students than it did in the 1999–2000 school year. Eight of ten Pennsylvania school districts are currently experiencing enrollment decline.

But thanks to hold-harmless, school districts are receiving record funding. On average, Pennsylvania districts managed to spend almost $24,000 per student in 2024–25, about $4,000 above the national average, with total K-12 spending topping $38.4 billion. Supplemental “adequacy” funding grew 442 percent since 2019, while districts hoarded more than $7 billion in reserve funds—about $2 billion more than in 2019–20.

Despite this record-level spending, Pennsylvania kids still struggle academically. Based on statewide testing, more than half of Pennsylvania kids are not proficient in math, English Language Arts, and science.

Clearly, money isn’t the problem—at least not in the sense that these districts are underfunded. The numbers raise a genuine question: If fewer students and more money didn’t improve academic outcomes, what would?

Education funding should, instead, follow the student. Programs like Pennsylvania’s tax-credit scholarship programs or the newly adopted federal scholarship program (which Pennsylvania Gov. Josh Shapiro has yet to opt the state into) empower parents when their kids are assigned to failing school districts. If these districts are shrinking and underperforming, these families can vote with their feet and find the schools that work best for their kids.

Educational choice offers a viable alternative to the educational paradox so many American families endure.

Read the following resources to learn more:

• 2026 State of Education Spending in Pennsylvania
• Federal Scholarship Tax Credit Myths and Facts
• Tax Credit Scholarship Myths and Facts
• Federal Scholarship Tax Credit
• The Choice That Changed My Life (podcast)