Georgia schools are being forced to make hard financial choices

Metro Atlanta school systems are dealing with a storm of funding problems as they try to set their budgets for the 2025-2026 school year.

Federal cuts, health insurance cost increases, efforts to reduce property tax revenue and the threat of a recession all loom over Georgia districts. As a result, they’re finding places to trim, dipping into their reserves and preparing for more difficult decisions.

District leaders have spent the last few weeks sounding the alarm.

In Fulton County, where leaders closed two elementary schools this year in an effort to cut costs, Superintendent Mike Looney warned the district will be facing “perhaps the most difficult financial challenges that this district has had in a long time.”

“Without mincing words, we’re on a collision course to insolvency,” he said in May.

Credit: arvin.temkar@ajc.com

Credit: arvin.temkar@ajc.com

ExploreFamilies say tough goodbyes to two Fulton elementary schools set to close

In Atlanta Public Schools, which initially faced a $100 million budget deficit, Chief Financial Officer Lisa Bracken said the school system is trying not to pull money from its savings — but that comes with its own challenges. This year, APS is cutting a total of 135 central office positions.

In Cobb County, Superintendent Chris Ragsdale said recently that while the budget is “not doom and gloom,” the state’s second-largest school district faced a “tougher-than-usual budget season.” Cobb announced its lowest teacher raises in years and is reassigning employees to vacant jobs rather than hiring new teachers.

Gwinnett County, the state’s largest school system, has an overall budget of $3.4 billion. Leaders there have talked about challenges such as higher benefit costs.

Ashley Young, a senior education analyst at the Georgia Budget and Policy Institute, said the financial challenges spell trouble for the state’s most marginalized students.

“We’re going to look up in 10 years from now and say, ‘What happened?’” Young said. “Policy happened.”

Federal uncertainty

On average, federal funding accounts for about 12% of school district revenue in Georgia, Young said. It’s an important piece of funding that largely supports marginalized students, including those who are low-income, English language learners and students with disabilities.

“The impact could and will be felt even though it is the smallest amount proportionate to state and local revenue sources,” Young said.

At this point, the cuts are uncertain. A recent budget document from the Trump administration suggests that Title I funding — which supports low-income students — would remain untouched. But another $6.5 billion for smaller programs could be at risk.

Credit: Ben Gray for the Atlanta Journal-Constitution

DeKalb County, the state’s third-largest school system, receives roughly $200 million in federal funding every year, said Chief Financial Officer Byron Schueneman in May. That’s about 10% of the entire budget.

The district must be “extremely conservative on our fund balance in order to better position ourself in the favor of drastic changes to federal programs,” Schueneman said.

ExploreLow-income Georgia students could pay the price of Trump’s ‘big beautiful bill’

State funding is up, but so are health care costs

State funding is critical for school districts to help pay the bills. It accounts for about 40% of school system revenue in Georgia. School funding in Georgia has trended upward year after year, but so have expenditures.

School systems are shouldering an increase in the cost of health benefits for employees and the teacher retirement system. Typically the largest employers in a county, metro Atlanta school systems employ tens of thousands of people.

The share of benefits in Gwinnett County increased by $60 million. In DeKalb County, it increased by $35.5 million. In Cobb County, it’s more than $33 million. In APS, it’s more than $26 million.

Credit: Jenni Girtman

According to the Education Data Initiative, Georgia ranks 36th in the nation for per-pupil spending in 2025, meaning its spending on K-12 education is among the lowest in the U.S.

“So when we overlay these changes that are happening in Washington with what we’re dealing with here in Georgia, this is only going to continue to set back these funding issues that we’re already seeing,” Young said.

Another looming challenge is enrollment. In Fulton, for example, enrollment has declined 7% in the past five years. Because state funding is tied to student enrollment, Looney has said Fulton receives less money from the state than it used to. Many educators are expecting enrollment drops throughout Georgia amid a national decline in birth rates.

Property tax shifts

Almost half of Georgia school system revenue comes from local property taxes. Lawmakers recently attempted to give homeowners a tax break by capping how much more school systems can get from tax revenue each year. Rather than it depending on the growth of the tax digest, the revenue increase would be capped at the rate of inflation, around 2%.

Most school systems around the state have chosen to opt out of the cap, as allowed by law, Young said. But school systems like DeKalb and Gwinnett are opting to lower their millage rates slightly in a show of goodwill to taxpayers.

Other districts are facing lower-than-usual growth in property taxes. In Cobb County, the digest is projected to grow by 2% this year, compared to 7.5% last year and 15% the previous year, Ragsdale said. The 2% growth isn’t enough to cover annual raises for the district’s workforce.

ExploreMetro Atlanta school systems opting out of property tax break for homeowners

COVID cliff, special ed, looming recession?

School systems have pointed to a list of other factors to account for this year’s belt-tightening and their concerns about future costs.

Pandemic-era federal aid ended in September, meaning that any positions or programs funded by the multiyear windfall will have to be folded into their regular budgets.

Federal funding for special education services has not kept pace with the need, meaning states and local districts must fill in the gaps. This year, DeKalb expects to pay close to another $10 million on hiring more special education teachers.

And with talk of an upcoming recession and tariff-induced price hikes, school systems are trying to prepare like other businesses.