In Brief: How ‘Ghost Students’ Cost States Billions
Taxpayers are still funding school districts for students who have fled public schools.
A strange phenomenon has occurred since public schools across the country shut down during the COVID pandemic and then eventually reopened: They have failed to return to pre-pandemic enrollment levels but are collecting more taxpayer funding than before.
Why is this? Reason Foundation director of education reform Aaron Garth Smith and senior policy analyst Christian Barnard have dug into this issue and have some answers.
Since the start of the pandemic in 2020, public schools have been flush with cash despite losing 1.2 million students. Between 2020 and 2022, inflation-adjusted funding per student increased in 47 states. In addition to $190 billion in federal Covid aid, public schools have benefited from state policies that end up funding students they no longer serve.
And the problem is getting worse because public school enrollment numbers are projected to continue dropping.
Statewide enrollment in California’s public schools fell 5.1 percent from 2020 to 2022, losing 318,000 students. But public-school funding grew by $11.6 billion in real terms, about $7.5 billion from federal taxpayers and $4.1 billion from state and local sources. A new study published by Reason Foundation sheds light on why state dollars aren’t tracking with enrollment.
Our research found that in 2023, California’s public schools received state funding for 400,000 “ghost students” they no longer served. While states such as Texas, Indiana, and Arizona base K–12 dollars on current-year enrollment, California funds schools based on the greater of the current year’s enrollment, the prior year’s enrollment, or the average of the three most recent years’ daily attendance.
Due to California’s reliance on generalized enrollment estimates rather than specific total numbers, “Reason Foundation estimates California spent $4 billion on students no longer in schools in 2023 alone.”
Most of California’s public school districts received taxpayer money for ghost students, with San Diego Unified, San Francisco Unified, and Long Beach Unified netting tens of millions of extra dollars each. But the big winner was Los Angeles Unified School District (LAUSD), whose 50,000 ghost students garnered nearly $508 million from the state in 2023, or about $1,459 per student the district still has.
The impact of a growing number of families moving out of California since the pandemic has only made the problem worse.
But California isn’t the only state with this problem.
Fifteen other states have ghost-student policies similar to California’s, according to research published by EdChoice. Twenty-two states also have carve-outs that protect school districts from revenue losses.
Smith and Barnard conclude that this problem will only get worse if these policies remain in place.
