HWL Insights

Special education staffing shortages remain one of the most pressing challenges for K-12 districts. With IDEA compliance being non-negotiable, districts are adopting innovative strategies to ensure students receive required services despite a shrinking talent pool.

School district Chief Financial Officers (CFOs) face mounting financial pressures in 2025. Escalating labor costs, staffing shortages, and the expiration of federal COVID relief funds are driving operating fund balances down—from 26% in 2024 to 24% this year, with further declines expected in 2026, according to Moody's Ratings. Staffing costs now exceed pre-pandemic levels, while districts struggle with teacher shortages, rising contracted service expenses, declining enrollment, and compliance risks tied to contingent labor.