In spring 2025, the U.S. Census Bureau released its updated fiscal year (FY) 2023 Annual Survey of School System Finances data. These data amplify the national budgetary and enrollment impact of the COVID-19 pandemic and subsequent federal-related relief packages on K-12 schools, as well as how education revenue sources have shifted over the past few years in several key ways.

Explore the Data: See updated, inflation-adjusted data and learn more about your community’s local, state, and federal education funding and student enrollment from FY08 to FY23 in “Fortifying Funding: An Interactive Bellwether Education Finance Tool.” 

Fewer states experienced total and per-pupil K-12 funding increases than in recent years

In last year’s analysis, we noted that the increase in total per-pupil funding was smaller from FY21 to FY22 (26 states) compared to the increase from FY20 to FY21 (48 states). Updated, FY23 inflation-adjusted data in Bellwether’s interactive education finance tool demonstrate that this pattern holds true when examining the change from FY22 to FY23, with only 23 states experiencing an increase in total per-pupil funding (Figure 1).  

Figure 1: Twenty-three states saw an increase in total per-pupil funding (local, state, and federal) between FY22 and FY23.

Source: U.S. Census Bureau’s Annual Survey of School System Finances for FY22 and FY23. Chart made with Flourish.

A similar pattern emerges when analyzing changes in total funding. From FY22 to FY23, 23 states experienced an increase in total education funding, which is fewer than the changes from FY21 to FY22 (32 states) and FY20 to FY21 (40 states).  

Despite these year-to-year declines in the number of states experiencing increases in total per-pupil and total funding, a longitudinal analysis from FY20 to FY23 shows that 47 states saw an increase in total per-pupil funding. This indicates that although more states experienced declines in total per-pupil funding between FY21 and FY22 and between FY22 and FY23, the increases from FY20 to FY21 offset these declines.

One-time federal COVID-19 relief funding drove the increases in total K-12 per-pupil funding

The increases in total per-pupil funding were primarily driven by the rise in federal per-pupil funding, with every state experiencing an increase in federal per-pupil funding from FY20 to FY23 (Figure 2). These funding increases are attributable to one-time COVID-19 funding from the Elementary and Secondary School Emergency Relief Fund, which was distributed largely based on the existing federal Title I formula that allocates federal funding to economically disadvantaged students.

However, as these federal funds expired in September 2024, states and districts were left to confront the “funding cliff” of losing these supplemental dollars, which had supported many districts as they dealt with budgetary pressures related to declining enrollment, rising costs, and budget deficits. 

Figure 2: From FY20 to FY23, every state saw an increase in federal per-pupil funding, largely due to one-time ESSER federal relief funding.

Source: U.S. Census Bureau’s Annual Survey of School System Finances for FY20 and FY23. Chart made with Flourish.

The number of states that experienced per-pupil funding increases rose

From FY22 to FY23, per-pupil state funding increased in 24 states, up from the nine states that experienced a rise from FY21 to FY22 (Figure 3). However, this is still lower than the 34 states that had a rise in their state per-pupil funding from FY20 to FY21. With the expiration of federal COVID-19 relief dollars, state funding is an even more vital resource for districts. A nationally representative survey indicated that nearly half of district leaders plan on using state dollars to cover ongoing expenses.

Figure 3: From FY22 to FY23, per-pupil state funding increased in 24 states.

Source: U.S. Census Bureau’s Annual Survey of School System Finances for FY22 and FY23. Chart made with Flourish.

Even fewer states are experiencing recent enrollment declines, most states have lower enrollment than in FY20

Every state experienced a drop in enrollment between FY20 and FY21, which would have contributed to higher state per-pupil funding as fewer students meant state dollars were spread over a smaller base. By comparison, just 19 states reported enrollment declines from FY21 to FY22, and 20 states had enrollment declines from FY22 to FY23. Despite fewer states experiencing recent enrollment declines, 42 states have lower overall enrollment in FY23 compared to FY20 (Figure 4).

Shifts in state per-pupil funding across these three time periods — FY20 to FY21, FY21 to FY22, and FY22 to FY23 — can partly be attributed to the widespread adoption of temporary “hold harmless” policies by many states during the pandemic. These hold harmless policies were designed to mitigate the financial impact of the school closures and remote learning disruptions on K-12 student attendance and enrollment. 

Figure 4: Forty-two states have lower enrollment in FY23 compared to FY20.

Source: U.S. Census Bureau’s Annual Survey of School System Finances for FY22 and FY23. Chart made with Flourish.

Next steps for state K-12 education funding

School districts and states are navigating a challenging budget environment. Birth rates remain low across the country and enrollment decline projections continue for at least 39 states through FY31, underscoring long-term financial pressures on K-12 education budgets.

At the federal level, proposed significant budget cuts threaten key K-12 programs, including those for English learners and other systemically marginalized student groups, heightening fiscal stress for states and districts.

Amid these fiscal pressures, states are primary stewards of K-12 funding, and state policymakers and leaders play a crucial role in ensuring funding stability and equitable resources for all students. Bellwether’s “Fortifying Funding” report remains a relevant resource for policymakers looking to diversify and expand revenue streams, avoid rigid hold harmless policies, and use statewide enrollment data for strategic fiscal planning to mitigate these pressures.

For more on this topic, read Bellwether’s “Fortifying Funding: How States Can Strengthen Education Finance Systems for the Future”  report with recommended state policy actions and our 2024 data update.