Expert Financial Strategies for Public Schools and Colleges Facing Rising Costs and Enrollment Declines

With rapidly rising educational costs and public-school enrollment declines, administrators are seeking ways to continue effectively serving their communities while addressing increased school operating costs.

Multiple trends are contributing to financial pressures in the education sector.

Public school enrollment declines reduce funding.

Since 2019, enrollment in public school districts significantly declined — and the trend continues. Federal estimates project a drop in public-school enrollment from about 51 million students in 2019 to 47 million in 2031.1

Southeastern states are no exception. For example, 2025-2026 K-12 enrollment dropped to 714,358 in Alabama, the lowest it’s been in 40 years.2 Several large Georgia school districts, anticipating fewer students over the next years, are closing or repurposing schools.3 Enrollment in Florida’s public schools shrank by about 70,000 students in 2025.4

What’s causing public school enrollment declines? Decreasing birth rates and increasing school choices are among the factors. In addition, COVID-related Elementary and Secondary School Emergency Relief (ESSER) stimulus funds are expiring and new federal funding is unlikely.5 “With the states funding school districts per pupil, having fewer students simply means getting fewer funds,” Synovus Senior Relationship Manager, Government Solutions, Carlton Fleming says.

The same issues are facing higher education as a so-called “enrollment cliff” looms, indicating a significant college enrollment decline. The number of high school graduates will decline by nearly half a million students by 2041.6 Further, a recent survey shows that only one in four U.S. adults consider a college degree to be “very or extremely important to getting a well-paying job.7

School operational costs continue to rise.

Though the U.S. is seeing public school enrollment declines, costs aren’t following suit as K-12 facilities are aging and need renovation, and newly built schools are a priority. Rising construction, transportation and utility costs will impact such projects.

Teacher salaries are increasing, albeit barely above the inflation rate. In addition, pension and healthcare costs are mounting along with demands for modern technology and student services.

Colleges and universities are facing the same challenges with rising operating costs. The Higher Education Price Index (HEPI) increased 3.4% in fiscal 2024, outpacing the Consumer Price Index (CPI) as it has for the last four decades.8

And while average college tuition doubled over the last 30 years9, students and families can only support so much outlay. “All these factors make funding that much more difficult,” says Fleming.

Competition for enrollment is intense.

Families have more choices than ever when it comes to educating children, including public schools, private schools, home schooling and online education. The ensuing competition is an “innovation arms race” of sorts. To meet demand, institutions are offering more compelling — and expensive — programs and extracurricular activities.

Colleges and universities may have it even harder since entering students want not only a top-notch education, but also modern dormitories and gyms, as well as creative cafeteria cuisine. These big-ticket items require strong financial planning, especially at colleges with declining enrollment.

Cash optimization and liquidity management are key to managing financial stress.

Given the current financial environment, budgeting for public schools and other educational institutions must optimize financial resources. “Whether that’s pursuing the highest investment yields, new automation or innovative products and services, educational institutions must be savvy about making their cash work harder,” says Fleming. “Everyone is looking for a financial edge.”

Fleming recommends evaluating fiscal management strategies and decisions to improve operational efficiency and reduce financial risk.

• Fine-tune deposits.
  Rather than keeping cash in a low-interest bearing checking account, consider an investment sweep. “This type of account transfers your cash overnight into safe government products that offer a bit more yield,” Fleming explains. “Sweeps keep your money working around the clock.”
  
  
• Calibrate investments and reserves.
  In addition to sweeps, public investment pools, money markets and laddered CDs can be helpful in maximizing returns while preserving liquidity.
  
  
• Integrate payables.
  Centralizing payables in multiple forms from different departments reduces administrative costs, frees up personnel and enables control and accurate reporting from one hub. In addition, digital payments reduce the number of paper checks, minimizes manual processes and deters fraud.
  
  “Another option to consider is putting expenses on a card,” says Fleming. “For example, card programs may offer rebates for application as statement credits or direct deposits, increasing available cash. You’ll also be able to better manage employee expenses and reimbursements,” he says.
  
  
• Accelerate receivables.
  Giving parents and others payment options speeds cash flow. Even a simple solution like lockbox services makes it easy to capture mailed payments in one place. “Efficiently collecting tuition, fees and donations helps improve liquidity for colleges and universities,” says Fleming.
  
  
• Simplify student and parent payments.
  Online school payment systems for tuition or fees, and contemporary point-of-sale solutions in bookstores, cafeterias and laundry facilities are necessary. Students, parents and faculty want seamless payments via online, mobile and contactless methods. “Not only do these services improve cash flow, but they also help mitigate fraud,” Fleming notes.
  
  
• Reduce foreign exchange exposure.
  Enhanced foreign exchange transactions and multicurrency accounts can not only make it easy to send and receive payments but also provide hedging solutions that reduce costs and risk due to currency fluctuation. This helps colleges and universities with global campuses and study-abroad programs save money.
  
  
• Broaden loan and credit solutions.
  Lines of credit, construction loans and other financing with favorable rates and terms are available. But there are additional solutions to consider. For example, banks can offer municipalities a tax anticipation note (TAN) as a short-term bridge to fund a project before incurring ad valorem taxes. For private schools, colleges and universities conducting capital campaigns, loans can be based on when and how donors will fulfill their pledge commitments.

Educational institutions should be proactive and flexible in overseeing limited resources. When public schools, colleges and universities regularly review management strategies, embrace innovative financial solutions and efficiently leverage technology, they’ll strengthen fiscal health and support missions to educate future generations.

A business process review enhances efficiency and cash flow.

One of the best ways to avoid public school budget concerns and uncover opportunities for improvement is with a comprehensive business process review. “A business process review is a deep dive into how an organization currently operates financially to identify what it might do differently to maximize efficiency and cash flow. This includes a fresh look at payables and receivables, investment strategies and automation. Finance directors are often pleased with the findings,” says Fleming.

Thoughtful financial stewardship is not just about maintaining stability — it’s about positioning institutions to thrive in an evolving educational landscape. Sound financial advice can reveal options as well as opportunities. “A trusted advisor can offer valuable insights based on experience with other institutions,” Fleming says. “Don’t hesitate to explore new ways of doing things. This is the time for creative solutions.”

Synovus has the expertise and experience to help public schools address critical funding challenges, potential public school budget deficits and other financial concerns. Call your Relationship Manager or contact Synovus Government Banking Solutions for more information on succession planning.

Carlton Fleming is Senior Relationship Manager, Government Solutions, at Synovus Bank. He is a former professional baseball player who now works in educational finance and enjoys creating growth opportunities for athletes.