America is deep into a years-long baby bust—with the total fertility rate at below-replacement levels since 2010, and accelerating. Maybe there will be a rebound in births at some point, maybe not. But until that happens, impacts of a shrinking population will continue to reverberate widely for years to come. A new policy paper attempts to model the impacts of population decline on the provision of a variety of public services, with K–12 education as the primary exemplar.
Jeffrey Clemens, an economist at the University of California, San Diego, starts by illustrating how population increases have historically impacted per-capita expenditures by state and local governments, using Census data from 1979 to 2019 as provided by The Urban Institute. His best-fit line graph analysis shows that a 10 percent increase in a state’s population predicts a 2.2 percent smaller increase in its per-capita expenditure. That is, while total spending grows (services expanding to cover more people), per-capita spending grows more slowly than it would in a slow-growth cycle. Thus, per-resident expenditures by state and local governments increase more slowly when the population grows more quickly. This basic pattern held true for education, highway, health and hospital, and utility spending categories. Clemens suggests this is a class case of economies of scale, but we shouldn’t discount the possibility that public sector spending simply lags population in a fast-growing state, due to the amount of time needed to pass levies, collect tax revenue, and then disburse the proceeds.
Next, Clemens looks at education specifically—around 9,000 districts nationwide—over the same 40-year historical period. Best-fit line graphs for districts both gaining and losing enrollment over that period show patterns similar to the larger model. For expanding districts, a 10 percent increase in enrollment predicts a 1.1 percent rise in per-student expenditure. But for districts in decline, a 10 percent decrease in enrollment predicts a much larger 4.1 percent rise in per-student expenditure. This overall pattern, however, masks specific local variations. Clemens provides two contrasting examples: Cleveland Metropolitan School District (CMSD) and St. Louis City Schools, both of whose enrollment shrunk by half between 1999 and 2019, and both of whose test score performance was similarly poor prior to the pandemic (based on Stanford Education Data Archive data). While St. Louis’s per-student expenditures rose only modestly over that period, CMSD’s nearly doubled. More on all that shortly.
“Declines in population imply reductions in service need,” Clemens writes, “and hence reductions in required capacity.” He investigates three areas of service provision likely to determine how efficiently school districts are managing population decline. The first is building capacity. Returning to the sample of 9,000 districts from 1979 to 2019, he finds that those experiencing rising enrollment add buildings at a moderate and reasonable rate (specifically, a 10 percent increase in the number of students predicts a 6 percent increase in the number of schools). However, in shrinking districts, a 10 percent decline in the number of students predicts just a 3 percent decrease in the number of schools, a sure sign that remaining buildings are operating far under capacity with concomitant inefficiencies in transportation, utilities, and maintenance.
The second area is staffing. Clemens doesn’t fully spell out the difference in per-pupil staffing rates between expanding and contracting districts, only saying they are “substantially” higher in those that are losing students. He cites the usual culprits—collective bargaining agreements, tenure-like job protections, and service-level “guarantees” imposed by state or district policy—as causes of staffing “inertia”, but he analyzes none of them.
The third area is pension and retirement commitments for retirees. This is even more sparsely analyzed in the paper, except to say that other research indicates that existing, already-enormous financial commitments to public system retirees generally are underestimated by states to the tune of an additional $1 trillion. If true, continued population decline will even more quickly lead to too few younger workers paying in to an overburdened system supporting a growing sector of older beneficiaries.
It is not inevitable that shrinking districts must succumb to all of these inefficiency triggers, however. Clemens returns to the comparison of the Cleveland and St. Louis school districts in two of those spending categories. Both districts lost nearly 50 percent of their student population between 1999 and 2019. St. Louis reduced the number of buildings in operation from 115 to 74 (36 percent) over that period, while CMSD reduced from 124 to 104 schools (a decline of just 16 percent). As for staffing, both districts refrained from eliminating teacher positions as student enrollment declined—leading to a similarly-increasing teacher/student ratio over time. However, St. Louis did shrink its non-teaching staff ranks (instructional aides, administrators, and other support staff) more aggressively and more in tandem with enrollment declines than CMSD over that time. Clemens speculates that greater fiscal support from the state for Cleveland schools as compared to St. Louis’s primary (and growing) reliance on local tax funding could explain why St. Louis was more aggressive in right-sizing its operations, which tracks.
Clemens concludes that it is not until revenue declines brought on by a shrinking population become catastrophic that school districts will truly begin to reckon with the level of “retrenchment” needed in their service provision. Interestingly, he limits his data to 2019 because he feared “the unusual spending circumstances of the pandemic years” might skew his analysis. Specifically, using infusions of temporary funding to hire permanent staff or make other long-term spending commitments. But that pattern has served to accelerate the inevitable and push districts across the country to just the fiscal precipice they needed to see to force them into action. Cleveland Metropolitan School District—for only one apt example—is closing as many school buildings this year as it did in the entire two decades between 1999 and 2019, consolidating dozens more, and laying off hundreds of employees—including teachers. Covid-era funding boosts may have allowed district leaders to kick the downsizing can down the road a few years, but the need for retrenchment due to student enrollment loss has only gotten more urgent since 2019. Jeffrey Clemens concludes that doing so efficiently should be the priority unless and until the American baby bust abates.
SOURCE: Jeffrey Clemens, “Implications of Low Fertility and Declining Populations for the Operations of US State and Local Governments,” Aspen Economic Strategy Group Policy Paper Series (April 2026).
