Reason Foundation says school aid should follow today’s students. Albany should rethink guarantees that pay for students who have left

By Walter Pryce

This is an opinion column. It reflects the views of the writer.

This column discusses a Nov. 11 commentary by the Reason Foundation, “States and public school funding systems must adapt to declining student enrollment.” Views attributed to Reason are the organization’s own.

Buffalo’s public schools learned this fall that they have 708 fewer students than a year ago. As the Chronicle reported Friday, K-12 enrollment now stands at 27,307, down from 31,203 in 2017-18, according to state data cited by The Buffalo News. The district’s finance chief expects state aid to follow those students. “That will result in a decrease in Foundation Aid next year,” Chief Financial Officer James Barnes told the board.

That is how school funding should work, argues a new commentary from the libertarian Reason Foundation. The harder question for New York is what happens in the many districts where it doesn’t.

What Reason argues

In the Nov. 11 piece, Aaron Garth Smith, a managing director at Reason, writes that public schools nationally have lost 1.4 million students since 2020 and are projected to lose another 2.7 million by 2031-32, citing federal education data. State school finance systems, he writes, “must be modernized.”

His central recommendation is that states fund districts for the students enrolled in the current year, counted across the whole school year. Hold-harmless rules that pay districts for a higher count from earlier years create what Reason calls “ghost” students, those “who are no longer enrolled, but for whom districts still collect funding.” Paying for them, Smith argues, “diverts dollars from school districts with stable or growing student populations and diminishes the incentive for declining-enrollment districts to adjust budgets or respond to students’ needs.”

Reason puts a price on the practice elsewhere: an estimated $197 million in extra spending in Missouri in 2022, and about $4 billion in California in 2023.

To his credit, Smith takes on the best objection directly. “It’s true that some school district costs are difficult to adjust in the short term,” he writes, noting that a district that loses 25 students scattered across grades can’t cut a teacher mid-year. His answer is forecasting, reserves and trimming non-instructional costs rather than permanent guarantees.

New York’s version of the problem

Reason’s commentary focuses on other states, but New York has its own form of the policy it criticizes. Under Foundation Aid, the state’s main school aid formula, “save harmless” is, in the words of the New York State School Boards Association, “a statutory guarantee of level funding, even when the funding formula calculates an amount less than the previous year.” The 2026-27 state budget also guarantees every district a Foundation Aid increase of at least 2%.

According to an analysis of state aid data by the New York State Council of School Superintendents, 78% of districts are due to receive that 2% minimum in 2026-27, up from 56% a year earlier and 36% in 2023-24. The superintendents’ group was blunt about why: “Losing enrollment is the primary cause for districts falling on to save-harmless and becoming dependent on minimum increases.”

Put simply, most New York districts are now paid on a guarantee rather than on what the formula says they need. The state’s own study noticed. The Rockefeller Institute of Government’s 2024 Foundation Aid report, required by the 2024 state budget, found that “337 districts rely on the guarantee of save harmless aid payments rather than calculations of the formula.” It recommended setting “an enrollment-loss threshold at which school districts would face reductions in save harmless allocations,” along with rolling averages and multi-year phase-ins to keep aid predictable, according to the school boards association’s summary.

Where Reason goes too far

Reason’s preferred model, current-year counts with little cushion, would be a hard landing for a district like Buffalo. State aid makes up 87% of the district’s $1.12 billion budget, The News reported, and the district already projects a $90 million to $100 million gap for 2027-28 if the board doesn’t act on its plan to close six schools. A sudden cut in aid on top of that would hurt students who are still in those classrooms.

That is why the Rockefeller approach, a defined, gradual phase-down tied to sustained enrollment loss, is the better fit for New York than either Reason’s purist model or the current habit of renewing guarantees in most budgets.

Buffalo’s leaders already accept the premise. Interim Superintendent Ebony Prophet-Bullock has pointed to a falling birth rate and young people who leave the state. “It’s a population pattern that we have to really contend with,” she said. Mr. Barnes has said the district has “too many schools, thus too many classrooms within each school.” A district making painful choices to match its size to its enrollment should not be competing for state dollars with districts the guarantee protects from making the same choices. The Chronicle has argued that cost data belongs in Buffalo’s closure debate; the same logic applies in Albany.

What Albany should do

Gov. Kathy Hochul should use her next executive budget to stop treating the guaranteed minimum increase as automatic, and to phase save-harmless aid down for districts with sustained enrollment losses over several years, as the Rockefeller Institute recommended.

The Legislature’s education committees should put the money saved back into the formula itself, so that aid tracks the students districts actually serve, including high-need students in cities like Buffalo.

Western New York’s state legislators should say publicly where they stand before the budget talks begin, and ask the state Education Department to publish which districts in the region rely on save-harmless and by how much.

What you can do

Ask your state senator and Assembly member one question before the 2027 budget: Should school aid follow the students in class today, and if so, how fast? In Buffalo, the Board of Education meets Wednesday, Nov. 18, at 5:30 p.m. at West Hertel Academy. Its closure decision and Albany’s aid formula are two halves of the same problem, and both deserve an answer this winter.