How Temporary ‘Hold Harmless’ Policies Could Save Schools and Districts

Time to sound the alarm: Millions of students are no longer listed on the rolls of their K-12 public schools, and there is no information as to where they’ve gone or if they’ll return. With efforts to return to in-person learning underway, schools and districts are grappling with the challenges of instruction and supporting students who are falling through the cracks amid an enduring pandemic.

Some families are opting to homeschool or transfer their children to private schools. Some students are facing barriers like limited broadband or electronic devices that impede students’ ability to attend class. Other students are facing housing instability, or even pressure to forgo school for work and family obligations. These large-scale pandemic-induced enrollment declines threaten school and district budgets, especially in school districts that serve large numbers of students experiencing poverty or financial difficulties, and above all, student well-being and outcomes.

Because education funding is primarily based off of student headcounts, changes in enrollment or attendance affect how much state aid a district receives and ultimately how much money goes to schools for critical resources. Districts that serve large numbers of students of color, students from low-income backgrounds and students with additional learning needs have long been denied fair and equitable school funding. Now, with estimates that 1 in 4 students with disabilities, English learners, students in foster care, migrant students, and homeless students is not attending class, declining enrollment is putting these same high-need districts at a disproportionate risk of steep funding cuts at a time when districts and schools are already under extraordinary constraints. States must act now to ensure that districts, particularly school districts with large numbers of underserved students, do not lose funds due to enrollment shocks, as students will need more resource-intensive support to reconnect with their schools.

States should consider pandemic-specific, temporary “hold harmless” policies that limit year-to-year funding reductions or guarantee a certain level of funding even if a district’s student population has declined. In normal times, these policies can slow urgently needed shifts toward more equity in school funding; but in the current crisis, we need urgent investment and policy action to protect high-need districts. Hold harmless policies can take a number of different forms. For example, Delaware provided $9 million in one-time funding to districts and charters experiencing enrollment reductions to prevent educator and staff layoffs. North Carolina recently passed legislation to maintain funding based on last year’s attendance projections not current attendance levels, which in most cases means districts get at least as much funding as they did last year. Temporary hold harmless policies could be a lifeline for schools and districts, if they are carefully structured. Advocates and state leaders should consider the following:

1. Provide funding for districts losing students, but account for expanding districts too. Hold harmless policies that calculate school funding based on pre-pandemic enrollment or attendance can provide a buffer for districts experiencing enrollment declines, but they may unintentionally disadvantage districts that were experiencing steady enrollment increases pre- or during the pandemic. Without a provision for growing enrollment, some schools might be denied additional funds they would have received absent a hold harmless policy, as experienced by a few growing charters districts in California. State leaders should offer districts the option to use their projected enrollment or their actual enrollment for the school year, whichever is higher.
2. Hold harmless funding for students with additional needs. The number of children living in poverty has grown since the start of the pandemic, and districts’ methods for identifying student need may not have caught up. Complications around English-proficiency testing this year will also impact — and possibly underestimate — English learner student counts. Early reports show that these students face the most barriers to enrollment and attendance right now. States should commit to holding compensatory funds harmless and allocate to districts at least the same amount generated prior to the pandemic for students from low-income backgrounds, English learners, and students with special needs.
3. Hold harmless policies should expire. Legacy hold harmless provisions can undermine school funding equity by locking states into the practice of allocating dollars based on old policy, not current student need. Hold harmless policies that exist past their utility, in this case addressing enrollment shifts, can end up benefiting districts with fewer students and needs at the expense of higher need districts in the long run. Hold harmless polies should be phased out over time so that money goes back to following students, and states can free up funds as they spend down federal aid.

Even in less turbulent times, states need to count students in a way that ensures the most equitable funding system. A starting point is to ensure the collection of accurate and necessary information on where students are. A single snapshot is not enough. Student counts should be taken and reported consistently throughout the school year. And school funding should be based on the number of students districts are expected to serve — e.g., enrollment data, not the number of students who are in class each day. Relying on the fluctuations of daily attendance not only penalizes high-poverty districts that struggle with absenteeism, it undercounts the number of students districts and schools have a responsibility to reach.

Holding districts harmless during pandemic-induced attendance and enrollment fluctuations and recording accurate student counts are necessary to maintain funding equity. State funding policy should not penalize high-need districts for unanticipated declines in enrollment caused by the pandemic, just as they face extra costs to implement health and safety measures, provide necessary technology for student learning, and address unfinished instruction. These districts will need more funding, not less, than in a pre-pandemic year to fully meet the needs of their school community.