How Would Cutting Federal Aid to Schools Affect Student Achievement?
There is indication that the current administration may dismantle the U.S. Department of Education (USED). It is still unclear what any such plan, if implemented, would entail. Although K-12 education policy is largely controlled by states, USED performs numerous very important roles in the education sphere. Arguably, the most important of these is the administration of federal funding for public schools, which constitutes roughly 10 percent of all K-12 revenue.
In this post, we simulate, for each school district, what could happen to student achievement if this federal aid were removed entirely. We also simulate the impact of a second, “block grant” scenario, described below.
Our results, in short, indicate that eliminating federal funding would cause irreparable harm to the overwhelming majority of students, regardless of poverty, race, or urbanicity.
Before we discuss those results, some very quick background: for the past eight years, as part of the School Finance Indicators Database project, we have published district-by-district estimates from our National Education Cost Model (NECM). The model uses 11 years of data on student/district characteristics, funding, and student outcomes to generate predictions of the spending that would be needed in each district to achieve national average test scores in reading and math.1
Normally, we use those cost model estimates to evaluate the adequacy and fairness of K-12 funding within and between states. The figure below (Figure 1) shows funding adequacy in the left graph and student testing outcomes on the right (Reardon et al. 2024). Clearly, districts with less adequate funding (red and orange shading) tend strongly to achieve lower testing outcomes (purple shading). This association, as well as the NECM’s district-by-district estimates, are very consistent with the larger body of recent evidence on the positive impact of spending on student achievement (Baker and Knight 2025). Money matters, and so federal aid matters.
It is also important to note that those same less adequately-funded, lower-scoring districts tend to rely more on federal aid as a share of their total funding. The highest-poverty districts in Mississippi, for example, receive, on average, about 20 percent of their funding from the federal government, compared with roughly 5 percent in Massachusetts’ highest-poverty districts.
But our cost model can also be used to approximate the impact on student outcomes of removing a given amount of funding. We explore the following questions:
- How much would spending per pupil likely drop as a result of changes to federal aid (but retaining direct aid for children residing on Indian lands or U.S. military bases)?
- How much would student outcomes in reading and math likely decline, on average, as a function of those spending changes?
- Which students and districts are affected most by these changes?
Each of these questions is evaluated under two scenarios, and we’ll describe them in more detail as we view their results. Our data are from 2019 (the 2018-19 school year), which predates the infusion of federal Covid relief that is now being phased out; that is, it represents funding during “normal times.”
Scenario 1 results: Elimination of federal aid
In this scenario, we evaluate the elimination of all federal aid used by local public school districts, except for aid provided directly for children on Indian lands and impact aid for public schools on U.S. military bases.2
The elimination of federal aid would reduce funding—and the adequacy of that funding—in the typical public school student’s district by just over $1,000 per pupil (see Table 1). Our model suggests that this reduction in aid would cause an average decrease in that student’s achievement of about 0.04 standard deviations (4 percent of 1 standard deviation). This is roughly equivalent to 28 “days of learning,” applying a simple, common linear conversion.3 Note that this loss could be incurred every single year until and unless the federal aid were either restored or replaced by state and local funding.
No less interesting are the differences in expected funding and learning lost across groups. The estimates in the table represent the impact for the typical student in each group. The largest losses would be among Black (-35 days), Hispanic (-33), and especially American Indian students (-46).4 This is because the districts serving larger shares of these students also tend to serve lower-income populations and more special education students. This means they get more federal aid—and would lose more if it’s eliminated. Even among white and Asian students, though, the losses are substantial (-23 and -24 days). Federal aid helps all students.
Similarly, students in city districts would, our results suggest, tend to lose the most learning, but the losses for suburban students are still quite large. Students attending the highest-poverty districts in their states (i.e., the 20 percent of districts with the highest Census child poverty rates) lose nearly three times more days of learning (-44) than their peers in the lowest-poverty districts. Yet even the latter students, who attend schools in their states’ most affluent districts, would still take a big hit (-16 days) were federal aid eliminated.
In the table's bottom rows, we classify each district as either Republican or Democrat, based on the Congressional district that occupies most of its territory. On average, school districts represented by Democrats suffer roughly the same learning loss as those represented by Republicans (-30 and –26, respectively).5
In Figure 2, we present days of learning lost for the typical student in each state. As would be expected from their higher rates of poverty, most of the states that would suffer the largest learning losses (toward the top of the graph) are southern states. New York is a notable exception due to the sheer size of New York City, which serves a huge share of the state’s students.
These states would lose the equivalent of 30 to 40 days of learning. That is, if school spending drops by the amounts predicted, states such as Louisiana and West Virginia would continue losing the equivalent of nearly 40 days of learning (as measured by student outcomes in reading and math) each year. We actually think that our estimates of these states' losses may be conservative, given the research suggesting that spending changes, positive or negative, matter more where such spending is already low (Jackson and Mackevicius 2024). In any case, these are severe decreases in states where student achievement in math and reading is presently far from where it should be. Again, though, even in the states toward the bottom of the graph, which are the best-case scenarios, students could lose around 20 days of learning.
Finally, we present a district-level map of the learning losses (in standard deviations) in Figure 3. Orange and red shading in the map represent larger losses, blue and green more moderate losses. Note, of course, that many of the geographically large districts in the map serve relatively small shares of students, and vice-versa.
The larger losses are more prevalent in the south and parts of the southwest, but there are districts in every single state with such losses, and they also tend to be areas where current achievement levels are lowest. Moreover, even where the losses are relatively moderate (blue and green shading) they are often still substantial in absolute terms. Again, federal aid helps everyone, so removal of that funding means no one goes unharmed.
Scenario 2 results: Unregulated block grants to states
Under this scenario, we assume that each state gets the same amount of total federal aid that it received pre-Covid (in 2019), with those total statewide amounts still based largely on need (e.g., poverty), but with no strings attached and no guidance on how that aid should be distributed across schools or districts—i.e., unregulated “block grants.” We further assume that states choose to allocate that pot of money evenly across all districts and children—each district receives the same amount per pupil—rather than targeting the aid by child poverty concentrations or other need factors, as is currently the case. This will, of course, lead to federal aid increases for school districts serving lower poverty populations, at the expense of those serving higher poverty populations.
You may have noticed that this scenario reflects a glaring contradiction: the total amount states receive is still based on need (e.g., higher-poverty states get more per pupil), but states have the option of distributing that aid to districts without any attention to poverty/need (which, for simplicity, we assume they do). Federal policy can't have it both ways. If states are allowed (and willing) to ignore the spirit and purpose of federal programs such as Title I when distributing those funds to districts and schools, then the amount of total federal aid they get should likewise be allocated on a flat, per-pupil basis, with the savings going to states willing to target the aid the way Congress intended. That said, we hope some states would do a much better job of targeting than the flat distribution in our worst-case scenario simulation, but the purpose of programs like Title I is not to leave that up to chance.
The primary impact of this scenario (Table 2) is widening achievement gaps. Since total funding does not decrease, the average impact across all students roughly nets out to zero (+1 day). The effects instead occur between student and district groups. For instance, the block grants would widen outcome gaps between students in city (+6 days) and suburban districts (-6), and especially those between students in states' highest- and lowest-poverty districts (+12 and -15 days, respectively). This would, in other words, exacerbate (already very large) district poverty-based achievement gaps—e.g., the gap between students in the lowest- and highest-poverty districts would increase 27 days, since the former students see gains of 12 days and the latter a loss of 15 days.
Similarly, racial/ethnic achievement gaps would grow under the block grant scenario. The typical white and Asian students would see moderate gains (+5 and +6 days of learning, respectively), whereas their Black and Hispanic peers would see moderate losses (-6 and -3 days). The average American Indian student would once again experience an enormous loss (-19 days). Bear in mind, though, that all of these are just averages. For example, many millions of white students from lower- and middle-income families would suffer learning losses.
Conclusion
Virtually every public school district in the nation receives federal K-12 aid, ranging from a few hundred dollars per pupil to a few thousand. Some states and districts get more than others because most federal aid, like state revenue, is targeted by need.
The negative effects of eliminating that aid on achievement would be unevenly distributed, borne disproportionately by certain states and by districts in all states serving lower-income populations. But no student would be left unharmed.
Endnotes