This fall, the student population of Chicago Public Schools could continue its dramatic downward slide and drop below 300,000 elementary and high school students. Ten years ago, CPS enrolled 378,000 students in kindergarten through 12th grade.
That’s the lowest predicted enrollment, based on current grade level enrollment and birth rate data, from researchers who specialize in using data to address civic problems. Last year CPS enrolled 314,500 students plus 15,000 preschoolers. The researchers predict K-12 enrollment could be as low as 262,000 by 2025.
Chicago Public School officials tell WBEZ they don’t expect a significant decline. Still, they noted in a statement that many public school districts across the country face similar challenges. On the high end, the researchers predict CPS could lose only 6,000 K-12th grade students this year and CPS could be down to 279,000 by 2025.
But the researchers stress the dip in enrollment, no matter the magnitude, could actually benefit the district’s remaining students.
“Revenue is declining at a much, much slower rate than the declines in student enrollment,” said Forest Gregg, a researcher at the technology company DataMade. “This actually suggests that there could be some very interesting opportunities for spending more per student.”
It comes down to simple math. CPS’ main revenue sources — state and local property taxes — are relatively stable and don’t decline significantly when enrollment drops, despite a perception otherwise. That means with fewer students, CPS actually has more money to spend on each child.
However, last week, the school district found out it will get less state money than anticipated, partly due to dropping enrollment. But that $30 million loss resulted not from enrollment decline generally but from a drop in low-income students specifically. Each year that additional dollars are added to the state budget for education, the state’s new funding formula funnels it to the neediest districts, defined by a variety of metrics, including income. As CPS has lost low-income students, it has moved from the neediest state tier to the second neediest.
This hurts CPS because it was counting on that money this year, but it’s a small amount against a $9.4 billion budget.
Despite that, the narrative that fewer students automatically means less money dominates and is used as justification for budget cuts and a scarcity mindset, said Denali Dasgupta, who founded a company called Higher Ground Data after working for Thrive Chicago, a nonprofit focused on Chicago youth. She worked with DataMade on the enrollment and revenue disconnect.
“I think that plays into a fiscal crisis narrative,” she said. Yet Dasgupta said fewer students without the loss of money could be viewed as an opportunity.
The way the school district distributes money to schools fuels this misconception, she said. Since 2014, CPS has distributed funds using a student-based budgeting formula in which schools get money for each student enrolled. This year, the school district started moving away from this method by providing more centrally-funded staff to schools. Also, special education clinicians, such as social workers and nurses, have always been allocated centrally.
And in their statement, CPS officials noted that student-based budgeting provides less than 50% of the money for schools and is “only one funding stream used to provide the necessary staffing, resources and services at each school.”
“We are committed to ensuring our students progress academically and have access to social and emotional resources,” officials said in a statement.
Still, classroom and enrichment teachers, such as art teachers and librarians, continue to be paid through student-based budgeting. As a result, schools that lost students received less money this year and some had to let teachers go.
Dasgupta said parents see the way their schools are funded and assume enrollment drives the entire school district’s budget, even though that’s not the case.
“Your favorite teacher isn’t coming back. That’s what people see and feel,” she said. “They kind of just assume that it comes from all the way up. That it is the way it has to be.”
While the researchers acknowledge there needs to be some correlation between the number of students and the number of teachers, and that the school district needs a system for allocating its limited dollars, they also point out that CPS class sizes are bigger than they should be so cutting teachers at this point doesn’t make sense.
Getting clarity on the role enrollment plays in CPS’ revenue is crucial because of what may lie ahead. Experts and officials predict that the district will face significant financial challenges soon, especially once federal COVID-19 relief money runs out in 2024.
To the extent that happens, the blame for CPS’ fiscal conditions should be directed at a lack of state funding and high debt and pensions costs, and not at enrollment decline, the researchers said.
And, in fact, lower enrollment could mean more dollars per student at a time when overall funding is limited, they added.
Trying to debunk an enrollment-revenue connection
The DataMade researchers note that the biggest chunk of CPS’ budget, from city property taxes, isn’t tied to enrollment.
Local property taxes account for 55% of CPS’ overall budget and the school district collects a fixed amount from taxpayers each year regardless of how many students are enrolled.
The next 30% of the school district’s funding comes from the state, which is tied to enrollment. But under the new state funding formula approved in 2017, the connection between a district’s enrollment and its state allocation was diminished, Dasgupta said.
In fact, schools will not see the core amount they receive from the state each year drop, regardless of enrollment, said Allison Flanagan, the associate director of the Center for Tax and Budget Accountability, a bipartisan Illinois research group.
But enrollment affects how much new state money districts receive, she said. That’s what happened last week when CPS learned it would receive a smaller portion of new state money. This was driven by three main factors: A 2.75% decrease in average enrollment over three years; a 4% decrease in low-income students over three years and an increase of a particular stream of state tax revenue, called the Corporate Personal Property Replacement Tax.
The new state formula is designed to channel any additional state money to needier school districts first, based on a formula that determines whether a district is providing its students an “adequate” education.
Under this formula, Chicago Public Schools is considered 74.6% adequately funded, up from 68% last year. The school district is significantly better off but, according to a new state calculation, is still more than $400 million short of what it needs to be adequately funded.
Flanagan is working with Chicago Public Schools to see if it could move its budgeting away from a focus on enrollment and toward a focus on ensuring an adequate education at all schools.
But the bigger problem is that CPS has only 68% of what it needs in local and state funding. The state is committed to increasing funding by $300 million a year, but it is predicted it will take nearly 20 years before all school districts have adequate funding.
This is one reason why student-based budgeting in CPS is criticized. The school district and the state agree average class sizes are too large and staffing ratios are insufficient in Chicago, but some schools have to make cuts based on enrollment.
Still, there should be some connection between the number of students in a school and the amount of money it receives, argued Daniel Anello, executive director of Kids First Chicago, which has gotten funding from CPS to look at enrollment trends and schools by geographic area.
Kids First Chicago issued a report last year that warned of dire consequences if enrollment continues to shrink. “This will ultimately lead to significant declines in federal, state and local funding for CPS — erasing the district’s academic progress and condemning currently enrolled students to a lifetime of the effects of budget cuts and insufficient resources,” the report reads.
But Anello conceded that much of CPS’ revenue is not tied to enrollment. He said the school district needs to think through what it means to have a smaller school district with many smaller schools.
“The challenge is we’re still a little bit trapped in the mindset of 10 to 20 years ago, or frankly, like the last 100 years,” he said. “We think a school building is a certain size, and it’s supposed to serve students in a classroom where 25 kids go in, and they sit in their rows. I think we have to kind of separate ourselves from that kind of old school conventional thinking about what a school building is meant to be.”
He said closing under-enrolled schools has not proven to be good for children or communities. Yet he said there will be budget implications if Chicago Public Schools, and other shrinking school districts across the country, don’t think out of the box on how to better serve a smaller number of students.