With districts facing looming funding cuts and already planning school closures linked to weakening enrollment, states face a perpetual cycle of right-sizing school districts and funding formulas, in addition to balancing increased demand for nonpublic options. Additionally, President-elect Donald Trump's campaign promises of providing universal school choice and eliminating the federal Department of Education—though politically difficult—add uncertainty to future funding levels and initiatives in states. School districts across the country are preparing for potential cuts in federal education funding, which makes up about 10% of current K-12 budgets.

officials are navigating the country’s first full-scale implementation. The program has proved more popular than expected, driving up anticipated costs. Governor Katie Hobbs (D) proposed restricting eligibility to students previously enrolled for at least 100 days in public schools in the fiscal 2025 budget proposal, citing estimated savings of $244.3 million. Lawmakers rejected the governor’s proposal, and did not place any caps on ESA enrollment. This year will provide more clarity on costs and enrollment trends.

2020. In the meantime, student needs, such as those covered in individualized education plans (IEPs) and other learning accommodations, have increased demand for special education-related spending that might not be entirely covered by current funding parameters

These programs have existed since the 2010s, but the funds have typically been reserved for students from low-income households, with special needs, or in low-performing school districts.

According to the Urban Institute, roughly 40% of the national enrollment decline of 1.2 million from 2019 to 2022 was a result of students entering private schools or being homeschooled.

Delaware, which has faced multiple lawsuits regarding equity disparities in its funding system, passed a resolution in 2024 requiring the Senate to convene a committee to review recommended changes to the state’s formula and present them to the governor in the fall of 2025.

41 states saw higher percentages of students in need of special education services. I

Oregon’s current formula caps special education funding tied to IEPs at 11% of students statewide, even though the share of students with IEPs has grown to 15%.

the $190 billion in Elementary and Secondary School Emergency Relief (ESSER) Program funding from the federal government and the wave of state tax revenue have masked the