November 2025

Under Pressure

The Factors Squeezing K-12 Budgets — and How States and Advocates Can Respond

Linea Harding, Indira Dammu, and Bonnie O’Keefe

Introduction

After a decade of rising K-12 revenues, the education funding outlook is shifting across the country. In recent years, increased state and federal investments — much of it through temporary COVID-19 pandemic relief aid that has now expired — enabled states to launch new programs and expand student supports. That period of growth is giving way to tighter budgets and fiscal trade-offs, even as many schools still face a long climb in the academic recovery from the pandemic and in addressing long-standing opportunity gaps for students.

This report examines the major factors exerting pressure on K-12 education funding, including federal retrenchment, state budget constraints, and district and school dynamics in all 50 states, the District of Columbia, and U.S. territories (Note: for the purposes of this report, these are referred to as “states”). It also analyzes every state’s education funding situation against six risk indicators, finding that 47 states are high risk in at least one indicator and 30 states are at high risk in at least two indicators. State leaders and advocates can use the Under Pressure data tool to view a snapshot of their state’s fiscal position and identify where pressures on education funding may be most acute.


Three Categories of Budget Pressures

Public K-12 funding is especially vulnerable in moments of economic stress and uncertainty, since K-12 spending represents one of the largest shares of most state budgets and depends heavily on state and local tax revenues that rise and fall with the broader economy.1 States provide about 47% of all K-12 education funding nationwide and must balance their budgets each year, leaving schools exposed when revenues dip.2 Federal funding — though a smaller share of overall K-12 revenue — plays a critical stabilizing role, especially for programs serving students from low-income families, English learner students, and students with disabilities.3 Cuts or delays at any level can therefore ripple quickly through school systems. This report considers the biggest pressure points on state education budgets in three main categories:

Federal Retrenchment

  • Proposed 15% cut to the fiscal year (FY) 2026 U.S. Department of Education budget, including potentially eliminating Title III funding for English learner students and reducing funding for schools in low-income communities, among other significant reductions on the negotiating table. In November, Congress passed a continuing resolution to fund several agencies including the U.S. Department of Education, but that resolution expires on January 30th, 2026.4 If Congress does not come to an agreement before January 30th, there could be another partial federal government shutdown.5
  • Reduced federal workforce and downsizing at the U.S. Department of Education signal a smaller federal role in K-12 with fewer guardrails and greater flexibility for states.6 
  • Cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) create new state costs and reduce supports for families, with direct and indirect impacts on schools.7

State Budget Constraints 

  • Once adjusted for inflation, the state revenue picture is largely stagnant. In FY26, eight states project flat or declining general fund revenue, and 35 states expect growth of less than 5%.8 States’ planned spending is slowing accordingly, with 24 states projecting actual spending declines in FY26.9
  • More than 20 states have enacted personal income tax cuts since 2021, contributing to slower growth in income tax and overall tax revenues.10 
  • Other state education priorities and commitments are competing for limited dollars, including early childhood education, postsecondary education, pensions, capital costs, and private school choice. Health care, housing, and public safety costs are also pulling on state budgets.11

District and School Dynamics 

  • K-12 districts must accelerate learning, with national assessments showing achievement in reading and math stagnant or declining, and achievement gaps growing in most states since the pandemic.12 Doing so requires sustained funding for interventions such as tutoring, extended learning time, and additional staff support. 
  • Enrollment in K-12 public schools is down 1.2 million students since 2019, and student needs are changing, with the share of students qualifying for special education and English learner supports growing.13
  • Staffing, operating, and facilities costs continue to climb, squeezing already tight budgets.14

 

Strategies for State Leaders

While there is substantial variation among states, no state is fully immune from the current pressure on education budgets. Other recent analyses have identified similar challenges playing out at the district level.15

Still, state policymakers have choices available to meet this moment in ways that prioritize students furthest from opportunity, including students from low-income families, English learner students, students with disabilities, and others who face systemic barriers to educational success. Doing so requires a clear grasp of the fiscal and policy forces shaping school finance and the levers available in response. Advocates can help ensure those choices lead to results by pressing for transparency and sustained investment in the students at greatest educational risk. 

Current challenges also bring an opportunity for states to bring greater clarity and purpose to how education dollars are allocated and used — or, if they respond with short-sighted or across-the-board cuts, a risk of deepening inequities and weakening essential supports for students. State leaders should consider strategies such as: 

  • Strengthening state and local reserves to stabilize K-12 funding during downturns. 
  • Setting guardrails to protect K-12 funding from disproportionate cuts. 
  • Modernizing and streamlining funding systems to make them more effective, equitable, and efficient. 
  • Protecting and growing revenue sources to ensure sustainable education investments. 
  • Supporting districts with tools and guidance to plan and budget effectively. 

Federal Retrenchment

Federal policymakers are signaling a retreat from their role in funding K-12 public schools, with the Trump administration and the House of Representatives’ FY26 plan proposing a 15% cut to education funding.16 States, including the District of Columbia and U.S. territories, will have different levels of vulnerability to these cuts: As of FY23, 19 states relied on federal funds for more than 15% of their education revenues.17 This included now-expired federal funding intended for pandemic recovery in schools. K-12 districts will also be affected in varying ways, with the largest effects on schools serving students with greater educational needs. Proposed cuts target funding for English learner students, low-income communities, professional development for teachers, and after-school and wraparound supports, among other programs.

As of Nov. 12, 2025, the federal government re-opened with federal spending extended at FY25 levels until Jan. 30, 2026. If Congress is unable to reach agreement on a budget by then, for the U.S. Department of Education along with many other federal agencies, a partial government shutdown would ensue.18 Even as budget debates continue, federal funding actions have proven unpredictable, with about $6.8 billion in federal funds unexpectedly withheld and then released in summer 2025, and many smaller discretionary grants canceled midstream.19 Until an agreement is reached, states and districts face growing uncertainty about when and at what levels federal support will resume.

At the same time, the federal role in education is shrinking in ways that go beyond funding. In early 2025, the U.S. Department of Education laid off roughly half its workforce before reinstating some positions, and the Trump administration has signaled its intent to further downsize the agency and devolve responsibilities to states.20 During the fall 2025 government shutdown, the U.S. Department of Education furloughed thousands of employees and laid off nearly 500, halting most program operations and grant activity.21 The agreement to end the government shutdown requires the reversal of the most recent workforce reductions, but the future of the U.S. Department of Education is uncertain.22

The Trump administration has also encouraged states to seek waivers under the Every Student Succeeds Act, giving them opportunities to bypass certain accountability and improvement requirements.23 While that may give state leaders more flexibility, it also means fewer federal guardrails.

Federal cuts and changes in Medicaid and SNAP will also affect K-12 districts. Beginning in FY26 and FY27, the federal government will reduce its financial contribution to Medicaid and SNAP and require states to shoulder a larger portion of program costs while also expanding work requirements for adults.24 These changes will have both direct and indirect effects on schools. 

SNAP reductions and stricter eligibility rules could cause as many as 1.4 million school-age children to lose benefits nationwide, disrupting access to free school meals and creating new administrative and cost pressures for districts.25 These changes will also add new state cost obligations starting in FY27 and FY28.26 Districts serving higher concentrations of students from low-income families could see rising food service costs and declining reimbursement rates, adding further pressure. 

Medicaid changes will similarly shift costs to states and are expected to reduce eligibility, including for the Children’s Health Insurance Program (CHIP), which provides coverage for children and pregnant women in families with incomes too high to qualify for Medicaid but too low to afford private insurance.27 The Congressional Budget Office projects federal Medicaid and CHIP spending will fall by more than $1 trillion over the next decade, leaving states with difficult choices in the coming years about how to sustain coverage and balance competing budget priorities, including education.28

State Budget Constraints

Across the country, state revenues are slowing after years of strong growth; data from the National Association of State Budget Officers (NASBO) show that eight states are projecting flat or declining general fund revenue in FY26, and an additional 35 states are expecting growth of less than 5%.29 Spending is shifting accordingly, with 24 states projecting general fund spending declines in FY26 (Figure).30


Figure: General Fund Revenue and Expenditure Nominal Percentage Changes, Fiscal Years 2025 to 2026

Note: Due to formatting issues, data for Guam are not included in the map but its General Fund revenue and expenditure changes from FY25 to FY26 were 0.1% and -2%, respectively. FY26 data are unavailable for the U.S. Virgin Islands. Source: NASBO, “Fiscal Survey of States,” 2025.


Learn more about your state using Bellwether’s Under Pressure data tool.

The shifts in state revenue across the country began to take shape in the past year.31 By the end of 2024, overall state tax revenue was 3.2% below its 15-year trend — a sharp reversal from early 2022, when collections were 14.9% above trend, the highest deviation in at least 15 years.32

Past tax cuts and other economic conditions are driving this trend. Since 2021, nearly 60% of states have reduced the rate of a major tax, often in ways that disproportionately benefited higher-income households.33 More than half of all states cut individual income tax rates (most lowering the top marginal rates) and 13 states cut corporate income tax rates.34 Many of those reductions are still being phased in, and others include automatic triggers that will drive rates lower in the future, setting states on a path to long-term revenue reductions.35

Many states are entering this period with historically strong reserves. According to data from NASBO’s Fiscal Survey of States, at least 30 states are expected to maintain rainy-day fund balances equal to or exceeding 10% of their general fund spending.36 Twenty-nine states increased their reserves in 2025, and most are projected to continue growing them next year.37 However, rainy-day funds are not unlimited or easily accessed: All but six states require specific fiscal conditions before withdrawals can occur, and many place additional guardrails to ensure reserves are used for short-term stabilization rather than ongoing budget gaps.38 These balances provide a cushion against short-term revenue declines, but sustained shortfalls would still force state leaders to choose among using reserves, raising revenue, or cutting programs, including K-12 education.

States are juggling competing priorities that stretch limited resources. Within education, rising demands in early childhood education (ECE), postsecondary education, pensions, and school choice are creating various fiscal pressures that compete with K-12 public schools’ operating budgets for funding. Outside education, other pressing priorities, like health care and emergency management, demand budgetary attention.

  • ECE: In the 2023-24 school year (SY), states spent a record $13.6 billion on early childhood education, up 17% from the prior year, largely due to continued expansion.39 State ECE funding rose in all but five states.40 Among those that increased investments, California, Colorado, Maryland, New Jersey, New Mexico, and Texas each boosted spending by more than $100 million.41 Enrollment also hit new highs — 1.75 million children nationwide, an increase of 111,000 (7%) from SY22-23.42 Two states — California and Colorado — accounted for nearly 60% of that growth as they moved toward universal pre-K, while 10 others, including Delaware, Hawaii, and New Mexico, saw enrollment gains of 20% or more.43 Per-child state spending rose to $7,888, another record high, even as federal relief dollars declined.44
  • Postsecondary Education: Public institutions of higher education rely on a mix of revenue sources, but two of the most significant — tuition and federal funds — are weakening. Enrollment declines drove tuition revenue down 3.7% in FY24, the biggest drop since 1980.45 Meanwhile, the latest House budget plan and Trump administration messaging signal cuts to student aid, college access programs, and research funding.46 At the state level, support for higher education has risen for five consecutive years, with per-student appropriations increasing for 12 years in a row.47 All of this is unfolding amid rising operational costs and intensifying pressure around affordability and student debt. These stressors disproportionately affect students of color and those from low-income households: Black students face higher average unmet need (a $9,000 gap between college costs and what grant aid plus family resources can cover), and institutions that enroll higher proportions of students of color often receive less public funding per student.48
  • Pension Obligations: Unfunded public pension liabilities — the gap between what states have promised in retirement benefits for all public employees and what they have set aside to pay those benefits — reached $1.37 trillion in FY25, equal to about two-thirds of the revenue states raise from their own taxes, fees, and other sources.49 While some states have improved their funding practices, investment losses and years of underinvestment have left many public pension plans underwater.50 In Illinois, unfunded pension liabilities amount to nearly 200% of annual state revenue, with Connecticut, Kentucky, Mississippi, and New Jersey not far behind.51 In K-12 specifically, national teacher pension costs reached about $83 billion in 2023 — about one out of every $10 that taxpayers provide for public education, or $1,700 per student.52 States and districts now contribute an amount equivalent to 20% of teacher salaries toward retirement, but nearly 80% of those dollars go to paying down past debt rather than funding current benefits.53 Because contributions are set in state law, pension costs must be paid regardless of other budget pressures. These costs are shared between states and K-12 districts, and districts in many states are responsible for paying a significant portion of teacher pension costs directly.54 After years of underfunding and investment losses, many states and districts are now paying more just to keep their systems solvent, leaving fewer dollars available for salaries, classroom resources, and other needs.
  • Private School Choice: State policies to support private school choice (e.g., vouchers, education savings accounts) have expanded rapidly and now operate in at least 33 states, plus the District of Columbia and Puerto Rico, with more than 19 states having at least one program aiming for universal accessibility.55 In 2025 alone, 16 states created new or expanded existing school choice programs.56 The scale and fiscal impact of these initiatives vary widely: In FY25, six states — Arizona, Florida, Indiana, Ohio, Oklahoma, and Wisconsin — devoted more than 5% of their state education budgets to private school options, with Florida leading at 22% and Arizona at 12%.57 While designed to expand choice, these efforts can generate substantial new costs for state budgets, particularly when universal eligibility extends subsidies to families already paying for private school.58 Arizona’s universal voucher program illustrates how quickly such costs can escalate: Lawmakers estimated that expanding eligibility would add $64 million in FY24.59 Estimates show that, in FY26, Arizona could spend more than $1 billion on its school voucher program.60
  • Priorities Beyond Education: States also face growing demands outside education that pull at the same limited dollars. Health care is a major driver: Medicaid alone accounted for nearly 30% of total state expenditures (including federal funds) in FY24, according to NASBO.61 When looking only at state-generated revenue, states spent 15.1% of every dollar on Medicaid in FY23, a 17.8% ($44 billion) increase over the prior year and the largest single-year rise in at least two decades.62 That makes Medicaid states’ largest expense after K-12 education.63 Housing needs are also straining budgets. Home prices are up 60% nationally since 2019, rents remain historically high, and homelessness is on the rise.64 Many states and localities have used federal recovery funds to expand affordable housing and, nationally, voters approved $640 million in state and local affordable housing bonds in 2024; still, more investment is needed to solve affordable housing and homelessness issues.65 Emergency management and public safety spending is also rising. States are responding to more frequent and costly natural disasters, with emergency management agencies now being asked to handle nontraditional crises like homelessness and the opioid epidemic.66 Meanwhile, governors and state legislatures are under pressure to invest more in corrections and public safety, adding another claim on revenues.67 

District and School Dynamics

Schools must address academic challenges that predate the pandemic but were sharply exacerbated by it. National Assessment of Educational Progress long-term trend data show that after steady gains through the early 2000s, reading and math scores began to stagnate and then decline around 2012.68 While achievement was already trending downward, the arrival of the pandemic accelerated these losses: Between 2019 and 2022, scores dropped by five points in fourth-grade reading and six points in eighth-grade math, and 2024 results remain below pre-pandemic levels.69 Today, average scores in fourth-grade reading and eighth-grade math are roughly where they were 30 and 25 years ago, respectively.70 While students who entered the pandemic on track have begun to rebound, those who were off track have fallen further behind.71 Achievement gaps have widened between students at higher and lower levels of academic progress and across student groups. Black and Hispanic students, economically disadvantaged students, English learner students, and students with disabilities continue to score lower than their peers.72 These poor scores and widening gaps have created intense pressure on districts to accelerate learning, improve instructional materials and strategies, expand tutoring and extended-day programs, and provide more individualized student supports.

Enrollment is shrinking even as student needs are growing. Public school enrollment peaked in 2019 at around 50.8 million students nationally and has been slowly declining since, driven by falling birth rates, interstate migration, and demographic shifts.73 During the pandemic (FY19-FY22), this trend only accelerated, with K-12 public schools losing 1.2 million students nationwide and 39 states seeing enrollment declines.74 Projections suggest that 40 states and the District of Columbia will face further enrollment declines through 2031, with eight states expected to see drops of more than 10%.75 At the same time, student needs are shifting, with a growing number of young people requiring additional supports and services to succeed in school. The number of students identified for services under the Individuals with Disabilities Education Act Part B, the federal program supporting special education and related services, grew by 1.1 million from SY12-13 to SY22-23, and English learner student enrollment grew by more than 628,000 students from fall 2011 to fall 2021.76 These shifts mean a growing number and share of students need more and different supports to succeed in school, even as overall enrollment declines.

Staffing accounts for roughly 80% of district budgets, and leaders are navigating tensions between sustaining the workforce and maintaining fiscal stability. In recent years, K-12 districts have expanded staffing even as enrollment has declined.77 In SY23-24, public schools hired roughly 121,000 additional staff despite serving 110,000 fewer students, leaving three-quarters of districts (and 43 of 50 states and the District of Columbia) with lower student–teacher ratios than before 2020.78 Many used federal COVID-19 relief dollars to fund these positions, aiming to reduce class sizes, strengthen specialized supports, and accelerate academic recovery. The investments may have provided critical short-term supports for schools and students, but they also created ongoing salary and benefit obligations that will be difficult to sustain now that federal aid has expired.

At the same time, growth in overall staffing has not resolved persistent shortages in key areas. The Learning Policy Institute’s latest national scan found that about one in eight teaching positions — more than 400,000 nationwide — were either unfilled or filled by teachers who were not fully certified.79 Teacher shortages are especially acute in high-poverty districts and in specialized areas such as special education and bilingual education, where 74% and 69% of schools, respectively, reported difficulty filling roles ahead of SY24-25.80

Compensation sits at the center of these challenges. Pay influences where teachers work, how long they stay, and how competitive the profession remains. Recent National Education Association data show the average teacher salary rose 3.8% in SY23-24 to $72,030, and starting salaries increased 4.4% — the largest jump in 15 years.81 Yet, after adjusting for inflation, teacher pay has actually declined about 5.1% over the past decade.82 Low and uneven compensation contributes to persistent turnover: Roughly 16% of public school teachers leave the classroom each year, and replacing them can cost districts up to $25,000 per teacher, not to mention the disruptions to students and school stability.83 Paying teachers adequately is essential for recruitment and retention, yet locking in multiyear raises or new pay scales can create long-term fiscal pressures if revenues weaken, leading to layoffs or hiring freezes.84

Operating and facilities costs are rising due to inflation, interest rates, and global trade pressures. Since early 2025, inflation has hovered between 2.3% and 3%, dipping to a low in spring 2025 before rising again to 2.9% in August 2025, still above the Federal Reserve’s 2% target.85 This translates into higher costs for everything from transportation and food services to energy and classroom supplies.86 Districts are also feeling the effects of broader inflationary pressures, including higher tariffs that have increased the cost of construction materials, technology, and other supplies.87 These price increases make it more expensive for districts to maintain existing operations and plan new investments.

Costs for new or renovated facilities and other capital investments are also rising. Bonds are the primary way K-12 schools finance new construction and major repairs, but higher interest rates make that kind of borrowing more expensive.88 At the same time, inflation drives up the price of materials and labor. According to the Bureau of Labor Statistics, the cost of new school construction rose 54% between May 2014 and May 2024.89 For example, the average cost of a new school in Tennessee more than tripled from $15 million in 2012 to $51 million in 2022. 90 National estimates point to an $85 billion annual gap in school facility funding, leaving districts with growing backlogs of deferred maintenance.91 These pressures are leading districts to delay repairs and new construction or to pay higher costs for projects that squeeze already tight budgets.

At the same time, property tax relief measures are reshaping local revenue dynamics. In 2024, at least a dozen states enacted some form of property tax relief, most often through expanded homestead exemptions, rate caps, or assessment limits.92 Many others debated similar proposals in response to rising home values and affordability pressures. While these policies can ease household tax burdens, they also reduce local tax bases and limit districts’ flexibility to fund operations and repay facility bonds.93 The result is growing tension between efforts to lower taxes and the need for stable, predictable school funding.

These factors, along with the federal retrenchment and state budget constraints, will mean tough choices for local education leaders. Major adjustments might include restructuring academic programs, merging schools or grade levels, reducing staff, or consolidating extracurriculars and student services to stretch limited dollars. In some communities, particularly those experiencing sustained enrollment declines, districts may ultimately need to close schools to align resources with student needs. While such decisions can be painful for communities, they are sometimes necessary to sustain quality instruction and maximize opportunities for students.

When reductions are unavoidable, state and district leaders can help ensure they are made strategically and equitably. This requires using data on student needs to guide policy decisions, sustaining investments in high-poverty schools, and updating funding formulas to direct resources more effectively.

What matters most is how these changes are carried out. Research shows that school closures and consolidations have historically fallen disproportionately on low-income communities of color, and Bellwether’s Systems Under Strain report warns that poorly planned or reactive decisions can deepen those inequities.94 

State-by-State Risk Analysis

Pressures including federal retrenchment, state budget constraints, and district and school dynamics exist to different extents and combinations in every state. To help leaders understand how these dynamics are taking shape where they live and work, Bellwether developed the Under Pressure data tool, featured below. Drawing on data from NASBO, the U.S. Census Bureau, the National Center for Education Statistics, and other public sources, the tool provides a concise view of each state’s fiscal outlook and exposure to risk.

The tool brings together recent data on six indicators, as outlined below, that provide a window into how different fiscal pressures appear across states. Overall, 44 states are at “high risk” on at least one indicator.

INDICATOR NUMBER OF STATES AT “HIGH RISK” WHAT IT CAPTURES
Per-Pupil Revenue  15 The total amount of funding available per student from federal, state, and local sources — reflecting the overall resources supporting schools. 
Federal Revenue Share 19 The proportion of K-12 funding that comes from federal programs — showing how reliant a state is on federal support and how exposed it may be to federal budget changes. 
Enrollment Change  17 Shifts in student enrollment that affect funding levels — in most states, district revenues rise or fall with student counts. 
General Fund Revenue Change  8 Whether overall state revenues are projected to grow or contract — shaping the state’s fiscal capacity to maintain or increase education funding. 
Rainy-Day Fund Balance Change 
 16 Whether states are building or drawing down reserves that can cushion short-term shocks and stabilize budgets. 
State Tax Collections Change 
 16 Broader trends in state revenue and economic health that influence long-term capacity to invest in education.

 

Notably, each indicator reflects a different time horizon. Some, such as reliance on federal funding amid planned cuts and changes in state general fund revenues, are already shaping school budgets and require near-term attention. Others, including enrollment shifts and rainy-day fund balances, reflect states’ medium-term resilience and flexibility: Steady enrollment helps maintain stable per-pupil funding in districts, while drawing down reserves can signal emerging fiscal strain. Over the longer term, state tax collection trends point to structural changes in tax policy and economic conditions that influence a state’s fiscal stability. Together, these indicators provide a starting point for understanding both immediate and long-term risks and identifying where deeper analysis may be needed. 

Each indicator includes a risk rating — high, medium, or low — along with a brief explanation of what the data suggest about the state’s fiscal outlook. These ratings are not predictions or value judgments; they highlight areas where state policymakers and advocates may need to take a closer look. A higher-risk rating could reflect fiscal strain, or it could simply highlight a trend worth monitoring. Because each state’s fiscal, demographic, and policy conditions are unique, these ratings are best understood as guides for further inquiry, not final judgments. 

As it only focuses on six indicators, the Under Pressure tool is best used alongside other resources that provide complementary insights into state fiscal and education trends, including: 

  • Education Law Center’s Making the Grade — a resource for state funding efforts, equity, and adequacy. 
  • KFF’s Medicaid analyses — a resource to track implications of federal and state health policy changes for state budgets. 
  • Bellwether’s Fortifying Funding tool — an interactive resource to examine local, state, and federal education revenue and student enrollment trends over time in each state and nationally. 
  • Federal budget proposal trackers and analyses from EdTrust and the Urban Institute, among others — resources to track potential changes to K-12 and related programs, depending on budget negotiations.

Use the tool below to see how these pressures are playing out in states across the country. For greater functionality, view the Under Pressure data tool in a separate window.

Understanding where a given state faces the greatest fiscal pressures is an important first step. The next step is determining how to respond. The following sections cover strategies for state policymakers and advocates to translate Under Pressure tool insights into action.

Strategies for State Policymakers

State policymakers shape how education systems can weather this moment of fiscal stress and uncertainty. While external factors such as federal budget changes or inflation are beyond their direct control, legislators, governors, and state education leaders hold powerful levers to respond to these challenges in ways that mitigate harm and support students. In the past, states often responded to fiscal crises with across-the-board percentage cuts, which disproportionately hurt schools with less wealth and greater student needs.95 There are several steps state leaders can take to help K-12 districts navigate current fiscal and policy challenges.


Strengthen State and Local Reserves  

States can help stabilize school funding by strengthening their rainy-day funds and enabling districts to use local reserves more flexibly. Healthy reserves give schools a buffer to sustain operations and plan responsibly without resorting to sudden cuts when expected revenues fall or suddenly shift. Reserves are not meant to prop up unstable budgets over the long term, but to create the space for thoughtful and intentional restructuring. They allow states and districts to reorganize programs, adjust staffing, and align spending with current enrollment and fiscal realities rather than making abrupt or reactive cuts.

At the state level, policymakers can ensure that rainy-day funds are structured to reliably support K-12 obligations during economic downturns. This means setting clear rules for deposits during strong revenue years and transparent withdrawal rules during lean years. The Government Finance Officers Association advises governments to keep at least two months of operating revenues (about 16%) in reserve, with higher levels recommended if revenues are volatile or risks are greater.96

At the district level, state laws also shape how much schools can hold in reserve and how those funds may be used. In some states, caps or restrictive rules prevent K-12 districts from saving adequately even as they face rising costs and shrinking federal support.97 Research has found that districts with stronger reserves were better able to weather difficult financial time periods.98 Updating caps or adopting risk-based reserve policies that account for enrollment volatility, inflation, or exposure to state budget shifts could improve local resilience.

STATE EXAMPLE

  • Connecticut adopted a “volatility cap” in 2017 that automatically diverts unusually high income tax collections into its rainy-day fund instead of the general budget. This prevents temporary revenue spikes from being used for ongoing spending and builds long-term reserves. In 2023, lawmakers strengthened the policy by raising the maximum allowable balance in the fund, giving the state a larger cushion for future downturns.99

 

Explore Statutory Guardrails to Protect Education Funding

One way states can safeguard school budgets during downturns is by establishing minimum requirements for how much revenue must flow to K-12 education each year. Some states use statutory or constitutional provisions that guarantee education receives at least a fixed share of state revenues or a defined portion of specific tax collections. Others set a base cost minimum — requiring the state to fund a foundational level of per-pupil allocations that cannot decline, even if revenues do. Both approaches help ensure that education funding does not fall below a certain threshold even when revenues decline or other spending pressures grow, giving districts more predictability and stability. Setting guardrails for education spending is worth consideration, but on their own these protections do not necessarily prioritize students and communities with greater needs, so they should be paired with other policy actions.

STATE EXAMPLES

  • California’s Proposition 98, adopted by voters in 1988, establishes a constitutional requirement that a minimum level of funding flow to K-14 education each year. That “minimum guarantee” is calculated using formulas tied to General Fund revenue, per-capita income, and student attendance. If initial funding falls short of the final guarantee, the Legislature must make “settle-up” payments in future years.100
  • Missouri’s Foundation Formula sets a “State Adequacy Target” (SAT), which represents the base cost of educating a student, calculated from the spending of successful districts. By law, the SAT is recalculated every two years, capped at 5% growth, and cannot decrease — ensuring the base per-pupil amount does not fall during downturns. The Legislature may appropriate less than the full amount, but the statutory floor provides a minimum level of support. For FY25, the SAT is $7,145.101

 

Modernize and Streamline Funding Systems for Equity

States can strengthen education budgets by eliminating outdated programs and redirecting dollars through formulas that prioritize student needs. By consolidating, updating, and weighting funds more effectively, states can ensure limited dollars flow where they matter most. Policymakers should consider options including: 

  • Consolidating outdated and overlapping funding streams. A large number of states operate many small, separate funding streams to address specific priorities. Many states allocate dollars on a per-pupil basis, without consideration for relative student need or local revenue. Over time, some become duplicative or so small that the administrative costs outweigh the benefits. Consolidating or phasing out these programs can reduce red tape and open up funding for other pressing priorities. 
  • Reassessing spending restrictions that limit how districts can use their funds. Some states’ rules substantially restrict spending from certain state sources or mandate extensive staffing and programmatic requirements that constrain district leaders’ choices when times are tough. In some cases, relaxing these restrictions can give districts the flexibility to adapt resources and budgets more strategically and creatively to meet students’ needs. 
  • Addressing provisions that send disproportionate funds to wealthier districts. Some state K-12 funding systems still rely on flat per-pupil grants that provide the same amount of funding to every district regardless of student needs or local context, rather than directing more resources to districts serving higher-need students or facing higher costs. Minimum state share policies, which guarantee every district a baseline level of state funding even when local revenues are sufficient to cover costs, may similarly direct funds to high-wealth communities instead of those with greater need. States can correct these imbalances by redesigning aid formulas to better account for local revenue and wealth.102
  • Updating funding formulas to prioritize and reflect student needs. As state school funding formulas age, many no longer reflect the real costs of serving higher-need students, including those from low-income families, English learner students, students with disabilities, or students in rural areas. Adjusting weights and multipliers to match research-based best practices and acknowledging the growing share of students needing additional supports can better direct resources and prioritize higher-need students and communities. 
  • Revisiting how states identify and fund economically disadvantaged students. Many funding formulas rely on proxies such as free and reduced-price meal eligibility, SNAP participation, or Medicaid enrollment to fund economically disadvantaged students, but shifts in federal eligibility rules may make these criteria less reliable. States should explore alternatives such as multipronged identification systems or updated income measures and weighting at the community or neighborhood levels to ensure schools serving students and communities with greater needs get the additional resources they need.

STATE EXAMPLE

  • California consolidated three-quarters of its categorical programs in 2013 into the Local Control Funding Formula, creating a single, more flexible mechanism.103 The new system eliminated many spending restrictions, giving districts more freedom to direct dollars toward local priorities while ensuring additional funds flow to higher-need students.104

 

Protect and Grow Revenue to Stabilize School Funding

Stable education funding depends on a healthy, predictable revenue base at both the state and local funding levels. During downturns or shifts in economic conditions, state policymakers can strengthen long-term funding for schools by both safeguarding existing tax streams and pursuing new or underused sources of revenue. However, many states’ recent moves to cut income and property taxes puts K-12 education and other essential state services at risk. Instead, states should consider ways to: 

  • Review tax breaks to ensure they are effective and aligned with current priorities. Many states maintain tax credits, deductions, or exemptions that were created years ago and have not been reassessed for effectiveness or fiscal impact. Research from the Pew Charitable Trusts and the National Conference of State Legislatures (NCSL) discusses how regular evaluations of state tax incentives help policymakers identify which provisions achieve their intended goals and which do not.105 NCSL highlights several best practices in tax policy design that can help with this, including automatic sunset or review provisions, annual fiscal caps, and transparent reporting requirements for both agencies and beneficiaries.106 Some states also require performance metrics, such as job creation or return on investment, to be publicly reported as a condition for renewal of a tax incentive.107 The Government Accountability Office similarly recommends periodic reviews of tax expenditures to determine whether the public benefits justify their costs.108 Strengthening or phasing out underperforming incentives can free up resources for core priorities such as education and other essential services without raising tax rates.  
  • Pursue responsible tax policy that maintains a stable revenue base. Experts at the Tax Policy Center and Center on Budget and Policy Priorities (CBPP) warn that broad tax cuts, especially when coupled with market fluctuations, can exacerbate revenue volatility and disproportionately benefit higher-income households.109 CBPP recommends that states maintain a balanced mix of tax structures and avoid overreliance on volatile revenue sources to support long-term fiscal stability.110 Research from the Fiscal Policy Institute and Economic Policy Institute finds that progressive revenue options, such as modest surtaxes on high incomes or capital gains, can raise substantial revenue in ways that protect middle- and lower-income taxpayers.111  
  • Consider trade-offs around local revenue. At the local level, property taxes remain the primary source of school funding in most states. Property taxes are a historically stable revenue stream, which can be especially important at a time of heightened financial risk, but they are also a major contributor to inequities, since wealthier communities can raise far more funding more easily than their neighbors.112 As with other revenue sources, states should avoid broad property tax caps or cuts that destabilize district budgets. Additionally, research from the Lincoln Institute of Land Policy shows that programs linking property tax relief to household income — sometimes called “circuit breakers” or income-based exemptions — are more equitable and cost-effective than across-the-board cuts.113 States should also consider how to equalize and address disparities in local revenue.114

STATE EXAMPLES

  • Oregon requires a biennial “tax expenditure report” that reviews all state tax credits, deductions, and exemptions. The report estimates the revenue loss from each provision and evaluates its effectiveness, giving lawmakers a structured way to decide whether provisions should be continued, revised, or allowed to expire.115
  • Maryland expanded its sales and use tax in 2021 to include digital products and digital codes, applying the state’s 6% rate to items such as streaming subscriptions, digital books, and software delivered electronically.116 The change was intended to modernize the tax base as consumer spending shifts from tangible goods to digital equivalents, and the state was one of the first to make such a move. Subsequent updates in 2022 clarified exemptions for business software and enterprise services while retaining the broader application to consumer digital goods.117
  • Maine voters approved a 2016 ballot measure adding a 3% surtax on income above $200,000 to fund K-12 education, projected to raise about $110 million per year.118 Though ultimately repealed in budget negotiations a year later, it reflected public appetite for targeted tax measures to support education. 

 

Support Districts to Plan and Budget Effectively

Beyond major policy moves, states can also play a critical role in helping K-12 districts navigate financial pressures. With relatively small investments, state technical assistance, forecasting tools, and standardized planning resources can benefit districts’ financial health and student achievement. Clear, consistent communication from state agencies about expected revenue changes or formula updates can also help districts budget more accurately, especially those with limited financial staff. While these steps may not make headlines, they can determine whether a district faces sudden, disruptive cuts or is able to plan ahead. Strong tools and clear guidance help leaders manage uncertainty while keeping student needs at the center. 

Questions for Advocates

As states navigate this K-12 budgetary environment, education advocates have an opportunity to ensure state leaders chart a student-centered path. But with so much variation in state political and fiscal contexts, not every strategy will be relevant in every state. As the economic and educational environment continues to evolve, advocates should ask themselves guiding questions that emphasize equity, local flexibility, and transparency. Advocates can use the Under Pressure data tool alongside these questions to understand their state’s fiscal position and identify where deeper engagement or advocacy may be most needed. 

  • What is most at risk? Based on the Under Pressure data tool, what factors in your state’s fiscal or policy landscape warrant deeper exploration? Which programs, students, or communities appear most affected by these pressures? 
  • Who else should be at the table? How can advocates build broad, visible coalitions that cut across silos — bringing in business, faith, civil rights, and local leaders and partners in health care or housing, among others, to make the case that education funding is a shared priority? How can you use information from the Under Pressure data tool to start or deepen these conversations? 
  • How should strategies align to meet this moment? When K-12 dollars are constrained, which policy proposals best protect students furthest from opportunity, use existing funds more effectively, or improve local impact? What trade-offs are acceptable, and how can they be communicated clearly? 
  • What levers are available beyond legislation? Could administrative decisions, implementation practices, or regulatory processes offer more immediate or flexible paths to influence in your state? 
  • How transparent is the current funding picture? What data are missing, and how can you press for clearer visibility into where dollars are going and whether cuts or reallocations risk deepening inequities? 

Advocates can shape how states respond to fiscal pressure when it comes to K-12 education. By keeping the focus on protecting the students most at risk, advocates can help ensure that difficult budget choices do not come at the expense of opportunity. Even in lean times, strong advocacy can keep education at the center of state priorities. 

Acknowledgments, About the Authors, About Bellwether

Acknowledgments

We would like to thank the many experts who gave their time and shared their knowledge with us to inform our work, including Rebecca Sibilia, Eric Syverson, and Kathryn Vesey White. Thank you also to the Walton Family Foundation for its financial support of this project.

We would also like to thank our Bellwether colleague Alex Spurrier and intern Jordan Mosby for their respective tool and research contributions. Thank you also to John Bellaire, Jennifer O’Neal Schiess, Carrie Hahnel, Krista Kaput, Biko McMillan, Sophie Zamarripa, and Bill Durbin for their input, and Ashlie Scott for her support. Thank you to Amy Ribock, Kate Stein, Andy Jacob, McKenzie Maxson, Temim Fruchter, Julie Nguyen, and Amber Walker for shepherding and disseminating this work, and to Super Copy Editors. 

The contributions of these individuals and entities significantly enhanced our work; however, any errors in fact or analysis remain the responsibility of the authors.  

About the Authors

Linea Koehler

LINEA HARDING

Linea Harding is a senior analyst at Bellwether in the Policy and Evaluation practice area. She can be reached at linea.harding@bellwether.org. 

Linea Koehler

INDIRA DAMMU

Indira Dammu is an associate partner at Bellwether in the Policy and Evaluation practice area. She can be reached at indira.dammu@bellwether.org.

Linea Koehler

BONNIE O'KEEFE

Bonnie O’Keefe is a partner at Bellwether in the Policy and Evaluation practice area. She can be reached at bonnie.okeefe@bellwether.org. 

 

Bellwether is a national nonprofit that exists to transform education to ensure systemically marginalized young people achieve outcomes that lead to fulfilling lives and flourishing communities. Founded in 2010, we work hand in hand with education leaders and organizations to accelerate their impact, inform and influence policy and program design, and share what we learn along the way. For more, visit bellwether.org.

© 2025 Bellwether
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Footnotes

  1. Krista Kaput and Bonnie O’Keefe, Fortifying Funding: How States Can Strengthen Education Finance Systems for the Future (Bellwether, 2023), https://bellwether.org/publications/fortifying-funding/.[↩]
  2. Ibid.[↩]
  3. Indira Dammu and Bonnie O’Keefe, Federal Policy on the Social Safety Net: Early Action for States in Response to Recent Changes (Bellwether, July 2025), https://bellwether.org/publications/federal-policy-on-the-social-safety-net-early-action-for-states-in-response-to-recent-changes/?activeTab=1; Krista Kaput and Jennifer O’Neal Schiess, “How Do School Finance Systems Support Students with Disabilities?,” Splitting the Bill #16, Bellwether, May 2024, https://bellwether.org/wp-content/uploads/2024/05/SplittingtheBill_16_Bellwether_May2024.pdf; Indira Dammu and Bonnie O’Keefe, “How Do School Finance Systems Support English Learners?,” Splitting the Bill #13, Bellwether, March 2024, https://bellwether.org/wp-content/uploads/2024/03/SplittingtheBill_13_Bellwether_March2024.pdf.[↩]
  4. Continuing Appropriations Act, 2026, 119th Cong., 1st sess. (2025), https://www.appropriations.senate.gov/imo/media/doc/continuing_appropriations_act_2026_bill_text.pdf.[↩]
  5. Ibid.[↩]
  6. Cory Turner and Jonaki Mehta, “U.S. Education Department Says It Is Cutting Nearly Half of All Staff,” NPR, March 12, 2025, https://www.npr.org/2025/03/11/nx-s1-5324746/trump-education-department-layoffs-closure-reorganization#:~:text=The%20Education%20Department%20says%20it,nearly%2050%25%20of%20staff%20:%20NPR&text=Hourly%20News-,The%20Education%20Department%20says%20it%20will%20cut%20nearly%2050%25%20of,accepted%20voluntary%20resignations%20or%20retired; U.S. Department of Education. “U.S. Department of Education Initiates Reduction in Force.” Press release, March 11, 2025. https://www.ed.gov/about/news/press-release/us-department-of-education-initiates-reduction-force; Naaz Modan, “Layoffs, Cuts, Chaos: The Education Department in Trump’s First 90 Days,” K–12 Dive, April 21, 2025, https://www.k12dive.com/news/education-department-layoffs-heres-whats-changed-nces-naep-special-ed/745804/; Alex Spurrier, Biko McMillan, and Jennifer O’Neal Schiess, Block Grants: A Framework for States’ Response to Potential Flexibility in Federal K-12 Education (Bellwether, March 2025), https://bellwether.org/publications/block-grants-a-framework-for-states-response/?activeTab=2; Brooke Schultz, “Ed. Dept. Layoffs Are Reversed, But Staff Fear Things Won’t Return to Normal,” EdWeek, November 13, 2025, https://www.edweek.org/policy-politics/ed-dept-layoffs-are-reversed-but-staff-fear-things-wont-return-to-normal/2025/11.[↩]
  7. Indira Dammu and Bonnie O’Keefe, “Recent Federal Changes to Medicaid and SNAP,” in Federal Policy on the Social Safety Net (Bellwether, July 2025), https://bellwether.org/publications/federal-policy-on-the-social-safety-net-early-action-for-states-in-response-to-recent-changes/?activeTab=3.[↩]
  8. Fiscal Survey of States (National Association of State Budget Officers, 2025), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/Fiscal%20Survey/NASBO_Spring_2025_Fiscal_Survey_Full_Report_S.pdf.[↩]
  9. Ibid.[↩]
  10. Andrey Yushkov and Katherine Loughead, “State Individual Income Tax Rates and Brackets, 2025,” Tax Foundation, February 18, 2025, https://taxfoundation.org/data/all/state/state-income-tax-rates/; Wesley Tharpe, “States’ Recent Tax-Cut Spree Creates Big Risks for Families and Communities,” Center on Budget and Policy Priorities, November 30, 2023, https://www.cbpp.org/sites/default/files/11-30-23sfp.pdf; Fiscal Survey of States (National Association of State Budget Officers, 2025).[↩]
  11. Justin Theal and Riley Judd, “The Share of State Budgets Spent on Medicaid Posts Largest Annual Increase in 20 Years,” Pew, June 16, 2025, https://www.pew.org/en/research-and-analysis/articles/2025/06/16/the-share-of-state-budgets-spent-on-medicaid-posts-largest-annual-increase-in-20-years; 2024 State Expenditure Report: Fiscal Years 2022–2024 (National Association of State Budget Officers, 2024), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2024_SER/2024_State_Expenditure_Report_S.pdf; Biennial Report 2024 (National Emergency Management Association, 2024), https://nemaweb.org/wp-content/uploads/2024/05/BR2024-proof-3_5.10.2024.pdf; Anna Phillips, Jake Spring, Kevin Crowe, and Dan Diamond, “States Caught Unprepared for Trump’s Threats to FEMA,” The Washington Post, April 7, 2025,  https://www.washingtonpost.com/climate-environment/2025/04/05/fema-disaster-states-funding/.[↩]
  12. “Nation’s Report Card Shows Declines in 8th-Grade Science and 12th-Grade Math and Reading; Last in a Series of Post-Pandemic NAEP Data,” news release, National Assessment Governing Board, September 9, 2025, https://www.nagb.gov/news-and-events/news-releases/2025/declines-in-8th-grade-science-and-12th-grade-math-and-reading.html; “Home,” The Nation’s Report Card, https://www.nationsreportcard.gov/; National Center for Education Statistics, “Fast Facts: Long-Term Trends in Reading and Mathematics Achievement,” Institute of Education Sciences, https://nces.ed.gov/fastfacts/display.asp?id=38&utm.[↩]
  13. Matthew Joseph, “Why and Where Student Enrollment Is Declining,” in “Enrollment Decline: The Biggest Threat to Public Schools That No One Wants to Tackle,” blog post, ExcelinEd, June 25, 2025, https://excelined.org/2025/06/25/enrollment-decline-the-biggest-threat-to-public-schools-that-no-one-wants-to-tackle/#:~:text=Why%20and%20Where%20Student%20Enrollment,public%20school%20students%20by%202031; National Center for Education Statistics, “NCES Data Show Public School Enrollment Held Steady Overall from Fall 2022 to Fall 2023,” Institute of Education Sciences, December 5, 2024, https://nces.ed.gov/whatsnew/press_releases/12_5_2024.asp; Anna Merod, “How Can Districts Control the Growing Costs of Special Education?,” K–12 Dive, September 23, 2024, https://www.k12dive.com/news/growing-costs-special-education-asbo-conference/727749/; National Center for Education Statistics, Table 204.20, Institute of Education Sciences, 2023, https://nces.ed.gov/programs/digest/d23/tables/dt23_204.20.asp; Leslie Villegas and Jordan Abbott, “English Learner Changes over the Last 20 Years,” blog post, New America, September 22, 2025,  https://www.newamerica.org/education-policy/edcentral/english-learner-changes-over-the-last-20-years/.[↩]
  14. National Center for Education Statistics, “Public School Expenditures,” in Condition of Education (U.S. Department of Education, Institute of Education Sciences, 2024), https://nces.ed.gov/programs/coe/indicator/cmb/public-school-expenditure.[↩]
  15. Jonathan Travers, Kaitlyn Chantry, and Betty Chang, “5 Intertwining Financial Challenges Districts Are Facing,” ERS, August 12, 2025, https://www.erstrategies.org/tap/5-financial-challenges-districts-are-facing/?_hsenc=p2ANqtz–_Tuvg_XY7Nhf-eUQYRIZzEJx_DnS8DphFdudbwLkl44TZ6MIB3wQCpaSxiF2pIThWTdhLcUihfVZslufjRmIJelvPKw&_hsmi=381893494.[↩]
  16. Appropriations bill, 119th Cong., 1st sess. (2025); FY2026 budget summary, U.S. Department of Education (2025); Arundel, “House Panel Approves 26% Cut to Title 1 Funding for FY26”; Wilkes, “House Republicans Propose 15 Percent Cut to Education Department”; Lieberman, “House Lawmakers Endorse Some—But Not All—of Trump’s Education Cuts.”[↩]
  17. Analysis of 2023 public elementary-secondary education finance data, U.S. Census Bureau, https://www.census.gov/data/tables/2023/econ/school-finances/secondary-education-finance.html.[↩]
  18. Continuing Appropriations Act, 2026, 119th Cong., 1st sess. (2025); Jennifer Scholtes, Katherine Tully-McManus and Jordain Carney, “The next shutdown threat is around the corner,” Politico, November 13, 2025, https://www.politico.com/news/2025/11/13/shutdown-appropriations-january-30-00649414.[↩]
  19. Mark Lieberman, “Trump Admin. Cancels Dozens More Grants, Hitting Civics, Art, and Higher Ed.,” Education Week, September 16, 2025, https://www.edweek.org/policy-politics/trump-admin-cancels-dozens-more-grants-hitting-civics-arts-and-higher-ed/2025/09; Erica Meltzer, “Billions in Federal Education Funding Unfrozen by Trump Administration,” Chalkbeat, July 25, 2025, https://www.chalkbeat.org/2025/07/25/trump-administration-unfreezes-billions-in-education-funds-for-schools/; Linda Jacobson, “Court Blocks Shutdown Layoffs, but Experts Say Education Department Programs Still in Danger,” The 74, October 16, 2025, https://www.the74million.org/article/court-blocks-shutdown-layoffs-but-experts-say-education-department-programs-still-in-danger/.[↩]
  20. Jacobson, “Court Blocks Shutdown Layoffs, but Experts Say Education Department Programs Still in Danger”; Turner and Jonaki Mehta, “U.S. Education Department Says It Is Cutting Nearly Half of All Staff”; U.S. Department of Education. “U.S. Department of Education Initiates Reduction in Force.” Press release, March 11, 2025. https://www.ed.gov/about/news/press-release/us-department-of-education-initiates-reduction-force; Modan, “Layoffs, Cuts, Chaos: The Education Department in Trump’s First 90 Days”; Spurrier, McMillan, and O’Neal Schiess, Block Grants: A Framework for States’ Response to Potential Flexibility in Federal K–12 Education.[↩]
  21. Seung Min Kim and Stephen Groves, “Dozens of Education Department Employees Face Layoffs as Shutdown Continues,” Chalkbeat, October 10, 2025, https://www.chalkbeat.org/2025/10/11/education-department-layoffs-government-shutdown/.[↩]
  22. Brooke Schultz, “Ed. Dept. Layoffs Are Reversed.”[↩]
  23. Letter to colleagues from Hayley B. Sanon, U.S. Department of Education, July 29, 2025, https://www.ed.gov/media/document/dear-colleague-letter-esea-flexibility-and-waivers-july-29-2025-110440.pdf; Paige Shoemaker DeMio and Weadé James, “Public Education under Threat: 4 Trump Administration Actions to Watch in the 2025–26 School Year,” Center for American Progress, August 27, 2025, https://www.americanprogress.org/article/public-education-under-threat-4-trump-administration-actions-to-watch-in-the-2025-26-school-year/; Roger Riddell, “Week in Review: AI, Federal Funding, and ESEA Waivers,” K–12 Dive, August 4, 2025, https://www.k12dive.com/news/week-in-review-aug-4-2025/756607/.[↩]
  24. Indira Dammu and Bonnie O’Keefe, Federal Policy on the Social Safety Net (Bellwether, July 2025), https://bellwether.org/publications/federal-policy-on-the-social-safety-net-early-action-for-states-in-response-to-recent-changes/?activeTab=3.[↩]
  25. Emily Gutierrez, “Changes to SNAP Could Reduce Student Access to Free School Meals,” Urban Institute, May 2025, https://www.urban.org/sites/default/files/2025-05/Changes_to_SNAP_Could_Reduce_Student_Access_to_Free_School_Meals.pdf.[↩]
  26. Dammu and O’Keefe, Federal Policy on the Social Safety Net.[↩]
  27. “The Children’s Health Insurance Program (CHIP),” HealthCare.gov, https://www.healthcare.gov/medicaid-chip/childrens-health-insurance-program/; Mia Ives-Rublee and Kim Musheno, “The Truth About the One Big Beautiful Bill Act’s Cuts to Medicaid and Medicare,” Center for American Progress, July 3, 2025,  https://www.americanprogress.org/article/the-truth-about-the-one-big-beautiful-bill-acts-cuts-to-medicaid-and-medicare/; Elizabeth Williams and Robin Rudowitz, “Medicaid and Children’s Health: 5 Issues to Watch Amid Recent Federal Changes,” KFF, October 15, 2025, https://www.kff.org/medicaid/medicaid-and-childrens-health-5-issues-to-watch-amid-recent-federal-changes/.[↩]
  28. Senate Committee on the Budget, “Estimated Budgetary Effects of an Amendment in the Nature of a Substitute to H.R. 1, the One Big Beautiful Bill Act, Relative to the Budget Enforcement Baseline for Consideration in the Senate,” Congressional Budget Office, June 27, 2025, https://www.cbo.gov/publication/61533.[↩]
  29. Analysis of Fiscal Survey of States (National Association of State Budget Officers, 2025).[↩]
  30. Ibid.[↩]
  31. Lucy Dadayan, Real State Tax Revenues Decline Amid Growing Fiscal Uncertainty: State Tax and Economic Review, 2024 Quarter 4 (Urban Institute, May 16, 2025), https://www.urban.org/research/publication/real-state-tax-revenues-decline-amid-growing-fiscal-uncertainty.[↩]
  32. Justin Theal and Alexandre Fall, “Most States’ Tax Revenue Falls Below Long-Term Trends Amid Federal Uncertainties,” Pew, June 16, 2025, https://www.pew.org/en/research-and-analysis/articles/2025/06/16/most-states-tax-revenue-falls-below-long-term-trends-amid-federal-uncertainties.[↩]
  33. Jared Walczak, “Can States Afford Their Recent Tax Cuts?,” blog post, Tax Foundation, March 28, 2024, https://taxfoundation.org/blog/state-tax-cuts-revenue; Michael Leachman and Erica Williams, “States Can Learn from Great Recession, Adopt Forward-Looking, Antiracist Policies,” Center on Budget and Policy Priorities, February 11, 2021, https://www.cbpp.org/sites/default/files/2-11-21sfp.pdf; Katherine Loughead, “State Tax Reform and Relief Trend Continues in 2023,” Tax Foundation, June 8, 2023, https://taxfoundation.org/research/all/state/state-tax-reform-relief-2023/.[↩]
  34. Loughead, “State Tax Reform and Relief Trend Continues in 2023”; Tharpe, Wesley. States’ Recent Tax-Cut Spree Creates Big Risks for Families and Communities. Washington, DC: Center on Budget and Policy Priorities, November 30, 2023. https://www.cbpp.org/research/state-budget-and-tax/states-recent-tax-cut-spree-creates-big-risks-for-families-and.; Hardy, Kevin. “New Tax Cuts Mostly Favor the Rich Across States This Year.” Stateline, April 29, 2025. https://stateline.org/2025/04/29/new-tax-cuts-mostly-favor-the-rich-across-states-this-year/.[↩]
  35. Walczak, “Can States Afford Their Recent Tax Cuts?”; “Automatic Tax Cuts Threaten State Budgets,” Off the Charts blog, Center on Budget and Policy Priorities, October 10, 2024, https://www.cbpp.org/blog/automatic-tax-cuts-threaten-state-budgets.[↩]
  36. Fiscal Survey of States (National Association of State Budget Officers, 2025); Kevin Hardy, “States Face Hard Choices as Budgets Expected to Tighten,” Stateline, June 30, 2025, https://stateline.org/2025/06/30/states-face-hard-choices-as-budgets-expected-to-tighten/.[↩]
  37. Fiscal Survey of States (National Association of State Budget Officers, 2025); Hardy, “States Face Hard Choices as Budgets Expected to Tighten.”[↩]
  38. Jared Walczak and Janelle Fritts, “State Rainy Day Funds and the COVID-19 Crisis,” Tax Foundation, April 7, 2020, https://taxfoundation.org/research/all/state/state-rainy-day-funds-covid-19/; “What Are State Rainy Day Funds and How Do They Work?,” Tax Policy Center, https://taxpolicycenter.org/briefing-book/what-are-state-rainy-day-funds-and-how-do-they-work; Rainy Day Fund Structures (National Conference of State Legislatures, November 2018), https://documents.ncsl.org/wwwncsl/Fiscal/RDF_2018_Report.pdf.[↩]
  39. Allison H. Friedman-Krauss et al., The State of Preschool 2024 (NIEER, 2025), https://nieer.org/sites/default/files/2025-04/2024NIEERStateofPreschool-1.pdf.[↩]
  40. Allison H. Friedman-Krauss et al., “Executive Summary,” The State of Preschool 2024 (NIEER, 2025), https://nieer.org/yearbook/2024/executive-summary; Friedman-Krauss et al., The State of Preschool 2024.[↩]
  41. Ibid.[↩]
  42. Friedman-Krauss et al., The State of Preschool 2024.[↩]
  43. Ibid.[↩]
  44. Ibid.[↩]
  45. Kelsey Kunkle and Rachel Burns, SHEF: State Higher Education Finance FY 2024 (SHEEO, 2025), https://shef.sheeo.org/wp-content/uploads/2025/05/SHEEO_SHEF_FY24_Report.pdf.[↩]
  46. Natalie Schwartz, “GOP-Led House Panel Proposes 15% Cut to Education Department,” Higher Ed Dive, September 2, 2025, https://www.highereddive.com/news/gop-led-house-panel-proposes-15-cut-education-department/759059/; Christine Dickason, Marisa Mission, Mark Baxter, and Nick Lee, Federal Higher Education Policy: Early Actions for States in Response to Recent Changes (Bellwether, August 2025), https://bellwether.org/publications/federal-higher-education-policy/?activeTab=1.[↩]
  47. Kunkle and Burns, SHEF: State Higher Education Finance FY 2024.[↩]
  48. Marián Vargas and Kim Dancy, “College Affordability Still Out of Reach for Students with Lowest Incomes, Students of Color,” Institute for Higher Education Policy, August 16, 2023, https://www.ihep.org/college-affordability-still-out-of-reach-for-students-with-lowest-incomes-students-of-color; “Report: Public Colleges with the Lowest Shares of Students of Color Receive the Highest Levels of Funding,” The Feed, Georgetown University, December 13, 2024, https://feed.georgetown.edu/access-affordability/report-public-colleges-with-the-lowest-shares-of-students-of-color-receive-the-highest-levels-of-funding/.[↩]
  49. David Drane, Keith Sliwa, Joanna Biernacka-Lievestro, and Riley Judd, “An Increase in Pension Obligations Adds to States’ Unfunded Liabilities,” Pew, July 30, 2025, https://www.pew.org/en/research-and-analysis/articles/2025/07/30/an-increase-in-pension-obligations-adds-to-states-unfunded-liabilities; State of Pensions 2025 (Equable Institute, 2025), https://equable.org/wp-content/uploads/2025/07/Equable-Institute_State-of-Pensions-2025_Final.pdf.[↩]
  50. State of Pensions 2025 (Equable Institute, 2025).[↩]
  51. Drane, Sliwa, Biernacka-Lievestro, and Judd, “An Increase in Pension Obligations Adds to States’ Unfunded Liabilities.”[↩]
  52. Chad Aldeman, “Pension Costs Are Draining School Budgets. Here’s What States Can Do,” CRPE, August 2025, https://crpe.org/pension-costs-are-draining-school-budgets-heres-what-states-can-do/.[↩]
  53. Ibid.[↩]
  54. Anthony Randazzo and Max Marchitello, “At Least One-Third of School Districts Have Experienced Funding Cuts Due to Growing Pension Costs,” Equable Institute, 2025, https://equable.org/wp-content/uploads/2025/06/Equable-Institute_Issue-Brief_Hidden-Cuts-and-Pension-Funding-Formulas_Final.pdf.[↩]
  55. Juliet Squire, Kelly Robson Foster, Lynne Graziano, and Andy Jacob, Public Money, Private Choice: The Components and Critiques of Education Savings Accounts (Bellwether, 2025),  https://bellwether.org/publications/public-money-private-choice/; Mark Lieberman, Libby Stanford, and Victoria A. Ifatusin, “Which States Have Private School Choice?,” Education Week, January 31, 2024, https://www.edweek.org/policy-politics/which-states-have-private-school-choice/2024/01; The ABCs of School Choice (EdChoice, 2025), https://www.edchoice.org/wp-content/uploads/2025/01/2025-ABCs-of-School-Choice.pdf.[↩]
  56. “2025–2026 School Choice Trends,” Navigate School Choice, https://myschoolchoice.com/trends.[↩]
  57. Marguerite Roza, Maggie Cicco, and Annie Connolly-Sporing, “A Financial Analysis of Public Funds Invested Via ESAs, Vouchers and Tax Scholarships,” presentation, Edunomics Lab at Georgetown University, November 19, 2024, https://georgetown.app.box.com/s/munsu0wctepcs8xf7vwvkjxxrrz72w8h.[↩]
  58. Douglas N. Harris and Gabriel Olivier, “The Effects of Universal School Vouchers on Private School Tuition and Enrollment: A National Analysis,” REACH, September 11, 2025, https://reachcentered.org/publications/the-effects-of-universal-school-vouchers-on-private-school-tuition-and-enrollment-a-national-analysis.[↩]
  59. Ariz. H.B. 2853 (2022), https://www.azleg.gov/legtext/55leg/2R/fiscal/HB2853.DOCX.pdf.[↩]
  60. Governor Katie Hobbs Submits Budget Updates Due to Ballooning ESA Entitlement Spending,” news release, Office of the (Ariz.) Governor, March 5, 2025, https://azgovernor.gov/office-arizona-governor/news/2025/03/governor-katie-hobbs-submits-budget-updates-due-ballooning-esa.[↩]
  61. “Executive Summary,” 2024 State Expenditure Report (NASBO, 2024), https://higherlogicdownload.s3.amazonaws.com/NASBO/9d2d2db1-c943-4f1b-b750-0fca152d64c2/UploadedImages/SER%20Archive/2024_SER/Executive_Summary-2024_State_Expenditure.pdf; “Balancing State Medicaid Budgets,” NCSL, updated June 23, 2025, https://www.ncsl.org/health/balancing-state-medicaid-budgets#:~:text=Medicaid%20is%20a%20public%20health%20coverage%20program,The%20federal%20and%20state%20share%20of%20funding.[↩]
  62. Theal and Judd, “The Share of State Budgets Spent on Medicaid Posts Largest Annual Increase in 20 Years.”[↩]
  63. “Most State Dollars Go Toward Education and Health Care,” in “Where Do Our State Tax Dollars Go?,” Center on Budget and Policy Priorities, updated July 25, 2018, https://www.cbpp.org/research/state-budget-and-tax/where-do-our-state-tax-dollars-go#:~:text=States%20are%20one%20of%20the,primary%20funder%20of%20public%20schools.[↩]
  64. The State of the Nation’s Housing (Joint Center for Housing Studies of Harvard University, 2025),  https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2025.pdf.[↩]
  65. Samantha Fu, Rebecca Dedert, and Kathryn Reynolds, “Using ARPA Funds to Address Affordable Housing Needs,” Urban Institute, corrected August 2023, https://www.urban.org/sites/default/files/2023-08/Using%20ARPA%20Funds%20to%20Address%20Affordable%20Housing%20Needs.pdf; The State of the Nation’s Housing (Joint Center for Housing Studies of Harvard University, 2025).[↩]
  66. What We Don’t Know About State Spending on Natural Disasters Could Cost Us (Pew Charitable Trusts, June 2018), https://www.pew.org/-/media/assets/2018/06/statespendingnaturaldisasters_v4.pdf; Biennial Report 2024 (NEMA, 2024), https://nemaweb.org/wp-content/uploads/2024/05/BR2024-proof-3_5.10.2024.pdf.[↩]
  67. Amanda Watford, “States Debate Prison Spending as Needs Grow But Budgets Tighten,” Stateline, February 13, 2025, https://stateline.org/2025/02/13/states-debate-prison-spending-as-needs-grow-but-budgets-tighten/.[↩]
  68. National Center for Education Statistics, “Fast Facts: Long-Term Trends in Reading and Mathematics Achievement,” Institute of Education Sciences, https://nces.ed.gov/fastfacts/display.asp?id=38; “Explore NAEP Long-Term Trends in Reading and Mathematics,” The Nation’s Report Card, https://www.nationsreportcard.gov/ltt/?age=9; https://www.nationsreportcard.gov/ltt/?age=13.[↩]
  69. Ivy Morgan, “NAEP 2024 Results Tell Us That It’s Time for Action,” blog post, EdTrust, January 30, 2025, https://edtrust.org/blog/naep-2024-results-tell-us-that-its-time-for-action/; Sequoia Carrillo, “A New Nation’s Report Card Shows Drops in Science, Math and Reading Scores,” NPR, September 9, 2025, https://www.npr.org/2025/09/09/nx-s1-5526918/nations-report-card-scores-reading-math-science-education-cuts; “Reading and Mathematics Scores for 9-Year-Olds Decline During Pandemic,” info sheet, NAEP, 2022, https://www.nationsreportcard.gov/highlights/ltt/2022/supporting_files/ltt-2022-age9-infographic.pdf; “Home,” The Nation’s Report Card, https://www.nationsreportcard.gov/.[↩]
  70. Morgan, “NAEP 2024 Results Tell Us That It’s Time for Action.”[↩]
  71. Kalyn Belsha and Erica Meltzer, “NAEP Scores Show Disheartening Trends for the Lowest-Performing Students,” Chalkbeat, January 29, 2025, https://www.chalkbeat.org/2025/01/29/naep-reading-scores-decline-and-struggling-students-fall-behind/#:~:text=In%20some%20cases%20that%20divide,by%20improvement%20among%20top%20performers.[↩]
  72. Jaalil Hart and Kathleen E. Arney, “What the 2024 NAEP Results Reveal about Education in the United States,” The Hunt Institute, January 29, 2025, https://hunt-institute.org/resources/2025/01/naep-results-2024-education-national-report-card-reading-math/; “NAEP Report Card: Reading: Performance by Student Group,” The Nation’s Report Card, 2024, https://www.nationsreportcard.gov/reports/reading/2024/g4_8/performance-by-student-group/?grade=8; Linda Darling-Hammond, Jonathan Kaplan, and Michael A. DiNapoli Jr., “How Education Funding Matters: Lessons from NAEP, the Pandemic, and Recovery Efforts,” blog post, Learning Policy Institute, February 26, 2025, https://learningpolicyinstitute.org/blog/how-education-funding-matters-lessons-naep-pandemic-and-recovery-efforts; Chad Aldeman, “Student Achievement Is Down Overall—But Kids at the Bottom Are Sinking Faster,” The 74, September 16, 2025, https://www.the74million.org/article/student-achievement-is-down-overall-but-kids-at-the-bottom-are-sinking-faster/.[↩]
  73. Krista Kaput, Carrie Hahnel, and Biko McMillan, How Student Enrollment Declines Are Affecting Education Budgets, Explained in 10 Figures (Bellwether, September 2024), https://bellwether.org/publications/how-student-enrollment-declines-are-affecting-education-budgets/?activeTab=3; Dylan Council, Sofoklis Goulas, and Faidra Monachou, Declining Public School Enrollment (Brookings, August 2025), https://www.brookings.edu/wp-content/uploads/2025/08/20250827_ES_Goulas_LearningLossFINAL.pdf; National Center for Education Statistics, Table 203.10, Institute of Education Sciences, 2024,  https://nces.ed.gov/programs/digest/d24/tables/dt24_203.10.asp.[↩]
  74. Matthew Joseph, “Why and Where Student Enrollment Is Declining,” in “Enrollment Decline: The Biggest Threat to Public Schools That No One Wants to Tackle,” blog post, ExcelinEd, June 25, 2025, https://excelined.org/2025/06/25/enrollment-decline-the-biggest-threat-to-public-schools-that-no-one-wants-to-tackle/#:~:text=Why%20and%20Where%20Student%20,public%20school%20students%20by%202031; National Center for Education Statistics, “NCES Data Show Public School Enrollment Held Steady Overall from Fall 2022 to Fall 2023,” news release, Institute of Education Sciences, December 5, 2024,  https://nces.ed.gov/whatsnew/press_releases/12_5_2024.asp; Kaput, Hahnel, and McMillan, How Student Enrollment Declines Are Affecting Education Budgets, Explained in 10 Figures.[↩]
  75. Kaput, Hahnel, and McMillan, How Student Enrollment Declines Are Affecting Education Budgets, Explained in 10 Figures.[↩]
  76. National Center for Education Statistics, Table 204.20, Institute of Education Sciences, 2023; National Center for Education Statistics, Table 204.30, Institute of Education Sciences, 2023, https://nces.ed.gov/programs/digest/d23/tables/dt23_204.30.asp; National Center for Education Statistics, “English Learners in Public Schools,” in Condition of Education (U.S. Department of Education, Institute of Education Sciences, 2024), https://nces.ed.gov/programs/coe/indicator/cgf/english-learners-in-public-schools#:~:text=Another%20Subgroup%20Characteristic-,The%20percentage%20of%20public%20school%20students%20in%20the%20United%20States,10.1%20percent%20in%20both%20years); Dammu and O’Keefe, “How Do School Finance Systems Support English Learners?”[↩]
  77. Chad Aldeman, “Interactive: Data from 9,500 Districts Finds Even More Staff and Fewer Students,” The 74, February 20, 2025, https://www.the74million.org/article/interactive-data-from-9500-districts-finds-even-more-staff-and-fewer-students/; National Center for Education Statistics, “Public School Expenditures,” in Condition of Education (U.S. Department of Education, Institute of Education Sciences, 2024), https://nces.ed.gov/programs/coe/indicator/cmb/public-school-expenditure.[↩]
  78. Aldeman, “Interactive: Data from 9,500 Districts Finds Even More Staff and Fewer Students”; Anna Merod, “Majority of States See Decrease in Student-Teacher Ratios Post-COVID,” K–12 Dive, November 4, 2024, https://www.k12dive.com/news/student-teacher-ratios-states-covid-staffed-up/731651/.[↩]
  79. Samuel Comai, Susan Kemper Patrick, and Tiffany S. Tan, “2025 Update: Latest National Scan Shows Teacher Shortages Persist,” blog post, Learning Policy Institute, July 15, 2025, https://learningpolicyinstitute.org/blog/2025-update-latest-national-scan-shows-teacher-shortages-persist.[↩]
  80. National Center for Education Statistics, “Most U.S. Public Elementary and Secondary Schools Faced Hiring Challenges for the Start of the 2024–25 Academic Year,” news release, Institute of Education Sciences, October 17, 2024, https://nces.ed.gov/whatsnew/press_releases/10_17_2024.asp; National Center for Education Statistics, “School Pulse Panel: Surveying High-Priority, Education-Related Topics,” Institute of Education Sciences, https://nces.ed.gov/surveys/spp/.[↩]
  81. Tim Walker, “The State of Teacher Pay,” NEA Today, April 29, 2025, https://www.nea.org/nea-today/all-news-articles/state-teacher-pay.[↩]
  82. Ibid.[↩]
  83. “2024 Update: What’s the Cost of Teacher Turnover?,” Learning Policy Institute, September 17, 2024, https://learningpolicyinstitute.org/product/2024-whats-cost-teacher-turnover; Soheyla Taie, Laurie Lewis, and Julia Merlin, Teacher Attrition and Mobility (National Center for Education Statistics at the Institute of Education Sciences, December 2023), https://nces.ed.gov/pubs2024/2024039M.pdf.[↩]
  84. Marguerite Roza, “Inflation Will Put Districts in a Pickle,” Education Next, updated April 20, 2022, https://www.educationnext.org/inflation-will-put-districts-in-pickle-adding-pressure-salary-negotiations-teachers-staff/#:~:text=While%20they%20have%20money%2C%20districts,and%20director%20of%20Edunomics%20Lab; Jake Bryant, Wayne Redmond, Emma Dorn, and Neil Shelat, “From Surplus to Scarcity: K–12 Districts Brace for Leaner Years,” McKinsey & Company, September 25, 2025, https://www.mckinsey.com/industries/education/our-insights/from-surplus-to-scarcity-k-12-districts-brace-for-leaner-years#/.[↩]
  85. Bureau of Labor Statistics, “Consumer Prices Up 2.9 Percent from August 2024 to August 2025,” The Economics Daily, U.S. Department of Labor, September 17, 2025, https://www.bls.gov/opub/ted/2025/consumer-prices-up-2-9-percent-from-august-2024-to-august-2025.htm; Bureau of Labor Statistics, “Consumer Price Index,” U.S. Department of Labor, https://www.bls.gov/cpi/#:~:text=to%20August%202025-,The%20Consumer%20Price%20Index%20for%20All%20Urban%20Consumers%20(CPI%2DU,read%20more%20%C2%BB.[↩]
  86. Bureau of Labor Statistics, “Consumer Price Index Summary,” U.S. Department of Labor, October 24, 2025, https://www.bls.gov/news.release/cpi.nr0.htm.[↩]
  87. “Member Fact Sheet on Tariffs for Municipal Leaders,” National League of Cities, May 19, 2025,  https://www.sog.unc.edu/sites/default/files/How%20Tariffs%20Could%20Impact%20Local%20Government%20Budgets%20-%20National%20League%20of%20Cities.pdf.[↩]
  88. Mandy Spears, “How Inflation Affects Tennessee’s State & Local Governments,” The Sycamore Institute, August 15, 2022, https://sycamoretn.org/how-inflation-affects-tennessees-state-local-governments/; Linea Koehler and Bonnie O’Keefe, “How Do States Fund School Facilities?,” Splitting the Bill #12, Bellwether, October 2023, https://bellwether.org/wp-content/uploads/2023/10/SplittingtheBill_12_Bellwether_October2023.pdf.[↩]
  89. Office of Research and Education Accountability, An Overview of K–12 Capital Infrastructure and Investment in Tennessee and Other States (Tenn. Comptroller of the Treasury, November 2024), https://comptroller.tn.gov/content/dam/cot/orea/advanced-search/2024/K12Capital.pdf.[↩]
  90. Ibid.[↩]
  91. “The State of Our Schools: America’s PK–12 Facilities,” sponsorship prospectus, 21st Century School Fund, 2024, https://21csf.org/uploads/pub/TheState%20of%20our%20Schools-FINAL2024_JAN.pdf.[↩]
  92. Eric Syverson and Andrea Jimenez, “State Tax Actions: 2024,” NCSL, updated November 12, 2024, https://www.ncsl.org/fiscal/state-tax-actions-2024; Jared Walczak, “Confronting the New Property Tax Revolt,” Tax Foundation, November 2024, https://taxfoundation.org/wp-content/uploads/2024/11/FF852.pdf.[↩]
  93. Syverson and Jimenez, “State Tax Actions: 2024”; Walczak, “Confronting the New Property Tax Revolt.”[↩]
  94. Christine Dickason, Paul Beach, Carrie Hahnel, and Andy Jacob, Systems Under Strain: Warning Signs Pointing Toward a Rise in School Closures (Bellwether, August 2025), https://bellwether.org/publications/systems-under-strain/?activeTab=1; Noli Brazil and Jennifer Candipan, “The Neighborhood Ethnoracial and Socioeconomic Context of Public Elementary School Closures in U.S. Metropolitan Areas,” Social Science Research 103 (2022),  https://www.sciencedirect.com/science/article/pii/S0049089X21001320; Noli Brazil, “School Closures Disproportionately Affect Disadvantaged Communities,” Center for Poverty and Inequality Research at University of California – Davis, https://poverty.ucdavis.edu/post/school-closures-disproportionately-affect-disadvantaged-communities; Evie Blad and Ileana Najarro, “Race Is a Big Factor in School Closures: What You Need to Know,” Education Week, November 28, 2023, https://www.edweek.org/leadership/race-is-a-big-factor-in-school-closures-what-you-need-to-know/2023/11; Libby Stanford, “The Harm of School Closures Can Last a Lifetime, New Research Shows,” Education Week, June 18, 2024, https://www.edweek.org/leadership/the-harm-of-school-closures-can-last-a-lifetime-new-research-shows/2024/06.[↩]
  95. Kaput and O’Keefe, Fortifying Funding: How States Can Strengthen Education Finance Systems for the Future.[↩]
  96. Shayne Kavanagh, A Risk-Based Analysis of General Fund Reserve Requirements (Government Finance Officers Association, January 2013), https://www.gfoa.org/materials/a-risk-based-analysis-of-general-fund-reserve-requirements.[↩]
  97. Budgeting Handbook: Fund Balance,” New York State Education Department, https://www.p12.nysed.gov/mgtserv/budgeting/handbook/balance.html; Penn. Gen. Ass. 1949 Act 14, https://www.legis.state.pa.us/cfdocs/legis/LI/uconsCheck.cfm?act=14&chpt=6&sctn=88&sessInd=0&smthLwInd=0&subsctn=0&txtType=HTM&yr=1949; Julien Lafortune, Radhika Mehlotra, and Jennifer Paluch, Funding California Schools When Budgets Fall Short (Public Policy Institute of California, October 2020), https://www.ppic.org/wp-content/uploads/funding-california-schools-when-budgets-fall-short-october-2020.pdf; “Talking Points on the Reserve Cap,” California School Boards Association,  https://www.csba.org/Advocacy/LegislativeAdvocacy/~/media/CSBA/Files/Advocacy/LegislativeAdvocacy/ReserveCap/201510_ReserveCapTalkingPoints.ashx.[↩]
  98. Erin Heys, James Hawkins, Tom Lindman, and Daniel Tan, “Thrown Off Balance: Analysis of California Unified School Districts At-Risk of Financial Insolvency During the Great Recession and Its Aftermath,” working paper, Berkeley Institute for Young Americans, April 2023, https://youngamericans.berkeley.edu/wp-content/uploads/2023/04/CA_AtRisk_districts_paper_final.pdf; Lafortune, Radhika Mehlotra, and Jennifer Paluch, Funding California Schools When Budgets Fall Short; Shayne C. Kavanagh, Vincent Reitano, and Peter A. Jones, Rethinking Budgeting: Should We Rethink Reserves? (Government Finance Officers Association, 2023), https://gfoa-craftcms.files.svdcdn.com/production/general/Rethinking-ReservesR2.pdf?dm=1759231581; Naaz Modan, “Moody’s Weighs School District Budget Resilience as ESSER Ends,” K–12 Dive, July 24, 2024, https://www.k12dive.com/news/moodys-report-state-funding-less-generous-esser-ends-staffing-increases/722321/; Shayne Kavanagh and Kate Yang, “Safeguarding School Funding Amid State Budget Shifts Series, Session Three: District Reserves—Rules & Readiness,” presented to EdFund, August 2025.[↩]
  99. Rute Pinho, “OLR Backgrounder: Connecticut’s Volatility Cap and Budget Reserve Fund,” Connecticut Office of Legislative Research, January 12, 2024, https://www.cga.ct.gov/2024/rpt/pdf/2024-R-0019.pdf?t=1706158800193.[↩]
  100. Jonathan Kaplan and Erik Saucedo, “What Is Proposition 98 and How Does the State Budget Shortfall Affect It?,” California Budget and Policy Center, February 2024, https://calbudgetcenter.org/resources/what-is-proposition-98-and-how-does-the-state-budget-shortfall-affect-it/; “Proposition 98 Guarantee and K–12 Spending Plan,” California Legislative Analyst’s Office, February 13, 2025,  https://www.lao.ca.gov/Publications/Report/4963.[↩]
  101. “Missouri School Funding Formula,” Missouri Department of Elementary and Secondary Education, https://dese.mo.gov/media/pdf/missouri-school-funding-formula; “MO Funding Formula,” Aligned/Bellwether, Missouri Department of Elementary and Secondary Education, https://dese.mo.gov/media/pdf/mo-funding-formula-alignedbellwether.[↩]
  102. Indira Dammu, Bonnie O’Keefe, and Jennifer O’Neal Schiess, Balancing Act: How States Can Address Local Wealth Inequity in Education Finance (Bellwether, 2022), https://bellwether.org/publications/balancing-act/.[↩]
  103. Aaron Garth Smith, “California’s Local Control Funding Formula Provides a Model for K–12 School Finance Reform,” Reason Foundation, May 4, 2020, https://reason.org/commentary/californias-local-control-funding-formula-provides-a-model-for-k-12-school-finance-reform/.[↩]
  104. Mac Taylor, “Updated: An Overview of the Local Control Funding Formula,” California Legislative Analyst’s Office, December 2013, https://edpolicy.stanford.edu/sites/default/files/events/materials/lao-lcf-overview-local-control-funding-formula.pdf.[↩]
  105. Evidence Counts: Evaluating State Tax Incentives for Jobs and Growth (Pew Center on the States, April 2012),  https://www.ilga.gov/documents/house/committees/98Documents/RevenueAndFinance/SupplementalData/Evaluating%20State%20Tax%20Incentives%20_%20Pew%20Center.pdf; Josh Goodman and Jeff Chapman, “State Tax Incentive Evaluation Ratings,” Pew, May 3, 2017, https://www.pew.org/en/research-and-analysis/articles/2017/05/03/state-tax-incentive-evaluation-ratings?; “State Tax Incentive Evaluations Database,” NCSL, updated June 3, 2025, https://www.ncsl.org/fiscal/state-tax-incentive-evaluations-database.[↩]
  106. “State Tax Expenditures and Incentives,” NCSL, updated July 8, 2025, https://www.ncsl.org/fiscal/state-tax-expenditures-and-incentives.[↩]
  107. Ibid.[↩]
  108. “Tax Expenditures,” GAO, https://www.gao.gov/tax-expenditures.[↩]
  109. Lucy Dadayan, “Keep Eyes Wide Open on the State Income Tax Revenue Rollercoaster,” Tax Policy Center, December 16, 2024, https://taxpolicycenter.org/taxvox/personal-income-tax-revenue-trends-reveal-need-flexibility; Wesley Tharpe, “States’ Recent Tax-Cut Spree Creates Big Risks for Families and Communities,” Center on Budget and Policy Priorities, November 30, 2023, https://www.cbpp.org/research/state-budget-and-tax/states-recent-tax-cut-spree-creates-big-risks-for-families-and.[↩]
  110. Elizabeth McNichol, “Strategies to Address the State Tax Volatility Problem,” Center on Budget and Policy Priorities, April 18, 2013, https://www.cbpp.org/research/strategies-to-address-the-state-tax-volatility-problem#:~:text=States%20should%20rely%20on%20a,in%20times%20of%20normal%20growth.[↩]
  111. Hunter Blair and Josh Bivens, “Progressive Revenue Options,” Economic Policy Institute, March 2, 2020, https://www.epi.org/publication/progressive-revenue-options/; Emily Eisner and Nathan Gusdorf, “Tax Policy Brief: Revenue Impact of Higher State Taxes on Capital Gains,” Fiscal Policy Institute, February 6, 2023, https://fiscalpolicy.org/wp-content/uploads/2023/02/FPI-Estimating-the-Revenue-from-a-Capital-Gains-Tax.pdf.[↩]
  112. Dammu, O’Keefe, and O’Neal Schiess, Balancing Act: How States Can Address Local Wealth Inequity in Education Finance; Alex Spurrier, Bonnie O’Keefe, and Jennifer O’Neal Schiess, “How Do Local Taxes Affect School Finance Equity?,” Splitting the Bill #6, Bellwether, updated October 2023, https://bellwether.org/wp-content/uploads/2023/10/SplittingtheBill_6_Bellwether_October2023.pdf.[↩]
  113. Daphne A. Kenyon, Adam H. Langley, and Bethany P. Paquin, “Property Tax Relief: The Case for Circuit Breakers,” Lincoln Institute of Land Policy, April 1, 2010, https://www.lincolninst.edu/publications/articles/property-tax-relief/; John E. Anderson, “Income-Based Property Tax Relief,” Lincoln Institute of Land Policy, July 2013, https://www.lincolninst.edu/publications/working-papers/income-based-property-tax-relief/; John H. Bowman, Daphne A. Kenyon, Adam Langley, and Bethany P. Paquin, Property Tax Circuit Breakers: Fair and Cost-Effective Relief for Taxpayers (Lincoln Institute of Land Policy, 2009), https://www.lincolninst.edu/app/uploads/legacy-files/pubfiles/property-tax-circuit-breakers-full_0.pdf.[↩]
  114. See citations in Jared Walczak, “Confronting the New Property Tax Revolt,” Tax Foundation, November 5, 2024, https://taxfoundation.org/research/all/state/property-tax-relief-reform-options/#_ftn31; Kenyon, Langley, and Paquin, “Property Tax Relief: The Case for Circuit Breakers”; Anderson, “Income-Based Property Tax Relief”; Kenyon, Langley, and Paquin, Property Tax Circuit Breakers: Fair and Cost-Effective Relief for Taxpayers.[↩]
  115. “Tax Expenditure Report,” Oregon Department of Revenue, https://www.oregon.gov/dor/gov-research/pages/tax_expenditure_report.aspx.[↩]
  116. “Business Tax Tip #29: Sales of Digital Products and Digital Codes,” Maryland Comptroller, https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/legal-publications/tips/business/bustip29.pdf; Taxation of Digital Products (NCSL, June 2025), https://documents.ncsl.org/wwwncsl/Fiscal/NCSL%20SALT%20-%20Brief%20-%20Taxation%20of%20Digital%20Goods.pdf.[↩]
  117. “Business Tax Tip #29: Sales of Digital Products and Digital Codes,” Maryland Comptroller; Taxation of Digital Products (NCSL, June 2025); “Maryland Narrows Definition of Taxable Digital Goods for Sales Tax,” RSM, July 25, 2022, https://rsmus.com/insights/services/business-tax/maryland-narrows-definition-of-taxable-digital-goods-for-sales-t.html.[↩]
  118. “Maine Tax on Incomes Exceeding $200,000 for Public Education, Question 2 (2016),” Ballotpedia,  https://ballotpedia.org/Maine_Tax_on_Incomes_Exceeding_$200,000_for_Public_Education,_Question_2_(2016; “MECEP Report: Proposed Funding Initiative Will Rollback Recent Income Tax Cuts for Wealthy Mainers to Provide More Than $150 Million Annually for Student Learning,” Maine Center for Economic Policy, September 19, 2016, https://www.mecep.org/news/mecep-report-proposed-funding-initiative-will-rollback-recent-income-tax-cuts-for-wealthy-mainers-to-provide-more-than-150-million-annually-for-student-learning/.[↩]
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