The most powerful force shaping the future of education is the sharp decline in babies being born in the United States and worldwide. As Americans have fewer children and fewer children immigrate from abroad, the school-age population will decline dramatically over the next few decades.
During the previous baby bust, declining school populations forced districts to close schools and lay off teachers. Job insecurity among teachers caused them to flock to teachers unions for protection, transforming them from local organizations concentrated in a few big cities into national political powerhouses.
As the share of the population with children in school declined in the 1970s, property tax revolts arose across the country, most notably with Proposition 13 in California in 1978. With access to local property taxes becoming more constrained, school districts turned to the state and federal governments for funds. The teachers unions were able to use their increasing membership and political power to get President Jimmy Carter to create the Department of Education in 1980, gaining an institutional ally in advocating for increased federal funding.
This shift from local property tax to state and federal sources of school funding was successful in reducing the extent of school closures and teacher layoffs, but it made schools more financially vulnerable to future reductions in enrollment. Unlike local property tax, state and federal money is typically allocated to districts on a per pupil basis. If the number of pupils drops, funding is cut by a commensurate amount.
As school enrollments start to plummet, so will their funding. The various tricks that districts have employed in the past to compensate financially are less available to rescue them. Districts might hope that state governments could significantly increase per pupil funding levels to offset enrollment drops, but state budgets are already stretched thin.
This is especially true as the increasing share of the population older than the age of 65 places more demands on states to fund health care. Given that the number of voters directly benefiting from government-funded health care far exceeds those benefiting from government-funded schools, districts should expect little financial relief from state budgets.
The same dynamics will play out at the federal level. School districts might hope that federal spending could bail them out and could point to the fact that, unlike state budgets, the feds need not balance their budget. But the inflationary surge following the COVID-19 pandemic impressed upon policymakers that even the federal government has limits on what it can spend. And with health care, crumbling infrastructure, and a host of other issues all in line for federal support ahead of education, districts should moderate their expectations for financial relief from the federal government.
With a larger and more sustained drop in enrollments coming and with less opportunity for financial rescue, the school closings and teacher layoffs are likely to be much larger than they were in the 1970s and 1980s. Education colleges will lose even more enrollment than they already have, and many will have to close their doors. Teachers may turn once again to the unions for protection. But unions cannot expand their geographic scope and will experience a drop in membership as the number of teachers declines, resulting in diminished political power.
The birth dearth will also make adopting important reforms of the education system more challenging in some ways. As we clearly saw in Arizona, expanding school choice is made more politically palatable when state governments are flush with cash and when public schools are overcrowded with growing enrollments.
When schools are filled with students and districts are at least partially held harmless from the loss of funds as enrollment shifts to private schools, the public school establishment doesn’t fight quite as hard to block new competition from private school choice. Going forward, passing new school choice programs will become more difficult as districts become more desperate to keep every student and every dollar those students generate.
Plummeting fertility rates, however, might provide a new argument for states to adopt choice programs. With fewer people being born, many states may experience shortages of labor, especially outside of the sunbelt where populations are already fleeing. Empowering parents to have more options and control over the education of their children may give states a competitive advantage in attracting or retaining those families and their labor.
This competitive pressure to adopt choice programs is becoming stronger as a critical mass of states have already enacted universal private school choice programs in which every child in the state is eligible to direct government funds or subsidies to their preferred educational setting. Once Texas adopts universal school choice, which appears likely to occur next year, almost 40 percent of all students in the country will be eligible for private school choice.
With many red states still gaining population aboard the choice bandwagon, it will be harder for other states to resist adopting similar universal choice programs. Georgia, Idaho, Mississippi, Tennessee, and Wyoming may find it difficult to explain to their voters why they won’t do what Alabama, Arizona, Arkansas, Florida, Iowa, Louisiana, North Carolina, Oklahoma, Texas, and Utah have already done. And once almost 20 red states have embraced universal school choice, purple and blue states will feel enormous pressure to do the same or face even larger migrations of families and labor force from their states to others that do empower families with options for educating their children.
In addition, because private choice programs cost significantly less per pupil than do traditional public schools, state policymakers will find the financial savings very attractive. It will allow them to cover those rising health care costs and somewhat increase the per pupil funding for students who remain in public schools.
That was why the Northwest Ordinance of 1787 set aside a parcel of land in each block for development as an endowment for building a local school, enticing families to move west and settle the Northwest Territory. Similarly, local communities added secondary education to their school districts to compete more effectively in luring families to move to their area.
As Fischel explained it, “Tiebout choice,” or the competitive market of local governments, produced the education system we now have. But existing arrangements are not set in stone and will continue to be reshaped by competition among local governments. Tiebout choice will soon lead policymakers to offer universal private school choice to attract families and their labor to their states. As birth rates plummet, the competition for labor will grow more intense, increasing the appeal of adopting policies that empower families with educational options.
