Declining fertility rates in NYS raise questions for public schools |
On Board Online • January 15, 2024
By Paul Heiser
Senior Research Analyst
Women of childbearing age in New York State are having fewer children than they did 15 years ago, raising questions about the impact declining fertility rates will have on public schools.
Fertility rate refers to the number of births per 1,000 women between the ages of 15 and 44. In New York, there were 61.2 births per 1,000 women in 2008. By 2020, that number had fallen to 54.1 per 1,000 women - a decrease of 7.1 per 1,000 or nearly 12% from the 2008 level. Excluding New York City, the figures are down about 3 per 1,000 or 5% from the 2008 level.
Fertility rates declined by 56% for women ages 18-19 and 33% for women ages 20-24. They were down 29% for women ages 25-29 and 8% for women ages 30-34.
Any significant level of decline in fertility rates could signal financial trouble for school districts, according to John Sipple, a professor at Cornell University who studies how changing demographics impact schools. That's because many of a school district's expenses are fixed.
"One might assume that as enrollments fall, budget savings and reduced tax levy burdens will proportionately occur," Sipple told On Board. "In fact, they do not."
Instead, Sipple noted, per pupil costs tend to increase when enrollment falls as the same costs are spread across a smaller student population. In contrast to the economies of scale that an enterprise can enjoy by growing bigger, there are "diseconomies of scale in getting smaller," he said. Because enrollment declines are typically spread across all grades, "it would take multiple years of enrollment drops to be able to reduce staffing in any grade level," he said.
Sipple traces the pattern of declining fertility rates to the 2008 recession. "Whenever economic conditions become uncertain or stressful, people are less likely to have a child," he said. "The surprise to demographers was that the rate did not return to 'normal' after the recession. Then, with the onslaught of the pandemic, which produced similar uncertainties, the lower fertility rate seemed to get more normalized and locked in."
The role of housing costs
According to Sipple, the cost of housing is a key factor in the declining statewide fertility rate. This, he said, has led to a significant increase in the age at which people get married, have children and purchase a home.
The median sales price of homes in New York State is $375,000, according to the most recent available data from the New York State Association of REALTORS. The 30-year rate for fixed-rate mortgages averaged 6.95% as of Dec.14, 2023, according to Freddie Mac, up from 6.31% a year ago at the same time.
The proportion of income that people in their 20s and 30s must pay for mortgages and rent is now higher than in recent decades, Sipple noted. One result is that while the average age of homebuyers was roughly 29 in prior decades, the average homebuyer now is in her early 40s.
How lower fertility may affect the state's finances
Sipple pointed out that a smaller population means fewer taxpayers, both locally and statewide. Personal income taxes accounted for nearly half of all state tax revenues in 2022-23, according to the Office of the State Comptroller.
According to a recent analysis by The Pew Charitable Trusts, declining fertility rates may impact New York's financial condition in four key ways:
1. Lower sales taxes. In New York, sales taxes accounted for about one-fifth of the state's tax revenues in 2022-23, based on estimates by the state comptroller's office. Fewer people could result in lower revenues from the consumption of goods and services.
2. Lower labor force participation. Fewer children could eventually result in fewer workers paying income taxes. How much income taxes decline over the long term as a result will depend, in part, on how well employers are able to fill positions that are typically held by younger workers or vacated by retirees.
3. Reduced federal funding. Major federal programs such as Title I (the largest federal aid package for schools), the Children's Health Insurance Program and Head Start allocate funding based on formulas that incorporate population counts. Because these funds are distributed proportionately among states, states with greater declines in their birth rates could see greater funding reductions.
4. Possible downgrades in bond ratings. Rating agencies take states' demographics into account when establishing credit ratings and have cited slow population growth as a reason for downgrading some states' ratings. This affects the interest rates that governments pay when they issue bonds and other debt instruments.
The impact of migration patterns
The decline in fertility could be blunted if people with children or of child-bearing age were moving to New York in significant numbers. But trends are going in the opposite direction, according to an analysis of U.S. Census Bureau data and estimates by the Empire Center for Public Policy.
"Nearly 300,000 more people moved out of New York than moved in from other states during the previous 12 months," according to a December report by the Empire Center. Over two years, New York has lost a net 651,742 residents to other states - more than the combined populations of Buffalo, Rochester and Syracuse. Read the report at bit.ly/3TvfCy6 .
Ken Girardin, the research director for the Empire Center, said the imbalance in migration corresponds with a marked fall-off in immigration from other countries during the Trump era. He noted that even Texas and Florida - which are prominent immigrant destinations - also had fall-offs during this period. He said the net outmigration has left many areas in New York with older populations.
One small bright spot is that fertility rates in New York State have increased among women who are 35 or older. For instance, fertility increased 32% for women ages 40 to 44. But, nationally, only 3.6% of all births are to mothers over 40 years old.
New York is not alone in facing issues involving declining fertility.
"Declining fertility rates are the norm across all developed countries, and the U.S. and New York State are no exception," said Sipple. "The poster children for this are Japan and Italy where the aging of the population has created great challenges for the national economies."