As NYC’s school enrollment falls, the cost of ‘hold harmless’ grows

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New York City is spending nearly $290 million next year to prevent budget cuts at schools that have lost or are projected to lose enrollment, according to new Education Department data.

It’s more than double what the city spent prior to the beginning of the 2025-26 school year on the policy known as “hold harmless.”

The sum reflects the increasing cost of continuing the policy that began during the COVID pandemic to provide financial stability to schools losing enrollment. Six years later, those enrollment losses show no signs of abating, and the cost of propping up budgets at shrinking schools has grown dramatically.

For this coming school year, 723 schools got some amount of hold harmless money. Fifty-five of those schools got over $1 million.

The total amount that the Education Department has spent on the policy since 2020 is nearly $1.9 billion.

Schools get their budgets in the spring for the coming academic year based on their projected enrollment. Then in the middle of the school year, money is either added or taken away from that initial allocation based on the number of students who actually showed up. But for most of the past six years, the city has been keeping initial budgets steady when schools’ projected student numbers drop and has not been clawing back money in the middle of the year for schools missing the mark with their student rosters.

Efforts to pare back the hold harmless policy have generated significant political opposition, as former Mayor Eric Adams found out when he proposed phasing out the support in 2022. But the longer officials keep the policy in place, the more expensive it becomes. It also further pulls the Education Department away from its original method of funding schools based primarily on enrollment numbers and student needs. That ongoing expense is particularly consequential as the city faces a yawning budget deficit.

“This is a snowball rolling down the hill, and it’s just getting bigger,” said Ana Champeny, the lead researcher for the Citizens Budget Commission, a nonpartisan fiscal watchdog. “Continuing this misguided policy is just not the right choice for the city, and it’s not the right choice for fiscal stability.”

Schools have come to rely on the money, and it has proved indispensable for many shrinking schools. Stopping the practice would also likely complicate the city’s efforts to comply with the state’s class size law, since it would force staff layoffs and increase class sizes at many schools

“That funding is incredibly important for us to reduce the adult-to-kid ratio,” said Kiri Soares, the principal of Urban Assembly Institute of Math and Science for Young Women in downtown Brooklyn. It also has helped close the learning gaps that emerged during the pandemic.

Her school is slated to receive about $374,000 as a result of being held harmless for next year. The school’s enrollment has shrunk to 350 this year from nearly 500 in 2020.

Who’s getting hold harmless money and how much?

The city’s student population dropped by about 22,000 from the 2024-25 school year to the 2025-26 school year. Final enrollment projections for next school year predict another drop of more than 20,000 students, according to a Chalkbeat analysis of the data. (The enrollment projections don’t include students in prekindergarten programs, or District 75 schools for students with complex disabilities.)

As a result, the cost of the hold harmless policy has been rising. The money ensures that schools’ initial budgets for the coming school year are at least as high as their initial budgets for the current school year. Even schools that aren’t projected to lose enrollment next year might be getting hold harmless money. That’s because they lost students previously, and the city is using roster figures from a few years back for the calculation. (Schools whose projected enrollment went up, leading to higher budgets, still get to keep those gains, which tallied about $250 million.)

For some schools, hold harmless money has become a significant portion of their overall budget. I.S. 339 in the Bronx, which has shrunk from 315 students in 2020 to 150 this year, is slated to get nearly $2.5 million in hold harmless money next year. That accounts for roughly a third of the school’s overall budget of $7.8 million.

That’s why principals say that if the city does phase out the hold harmless spending, they should do it gradually.

“You can’t just pull what’s been given to us for half a decade from out from under us because it will completely destabilize schools,” said Soares.

But other principals have mixed feelings about the policy, noting that it inflates the per-pupil budget at shrinking schools higher than schools whose rosters are growing.

“It’s really demoralizing to work and work and work to retain enrollment and effectively to have your students be penalized by having less average money per pupil,” said one Manhattan principal who spoke on the condition of anonymity.

“It doesn’t make any sense that we’re still being funded as if we’re in a pandemic,” the principal continued. “Enrollment is declining, and this is the situation we’re going to be in for the next 10 years.”

Michael Elsen-Rooney is a reporter for Chalkbeat New York, covering NYC public schools. Contact Michael at melsen-rooney@chalkbeat.org