School District Enrollment Projections and Budget Forecasting

Abstract

School districts use enrollment projections to inform budgetary forecasts and strategic planning. In practice, enrollment projections should consider demographic and socio-economic factors, which can then be used to generate forecasts for personnel salary and benefits and other expenditures. Revenue forecasts should be conducted for different streams of local, state, and federal revenues and then considered in relation to expenditure forecasts when formulating the budget. Despite the typical approach to projections and forecasts that school districts use during the budget process, there is a limited but growing literature evaluating their effectiveness. This chapter reviews the limited literature on enrollment projections and budgetary forecasts in school districts and then descriptively analyzes forecast error with a panel of Kentucky school districts from 2001 to 2013. Results show that forecast error varies over the business cycle, with revenue underestimations increasing in magnitude during the Great Recession. Given these results and a discussion of limitations in the literature, the chapter concludes that additional research on school district projection and forecast methods is necessary.