Your Education Road Map

Politics K-12®

ESSA. Congress. State chiefs. School spending. Elections. Education Week reporters keep watch on education policy and politics in the nation’s capital and in the states. Read more from this blog.


Coronavirus Impact Puts Spotlight on States’, Districts’ ‘Rainy Day’ Funds

By Daarel Burnette II — March 20, 2020 3 min read
  • Save to favorites
  • Print

Since the Great Recession, school districts, legislatures, and teacher unions have been at war with each other over whether states and districts should spend or save.

There are critical teacher shortages in some areas, buildings are falling apart and unsafe for kids, and test scores aren’t what they should be, many argued. Let’s hurry up and raise teacher pay, take out bonds, and spend money on things that boost academic achievement.

But more fiscal conservatives, traumatized by the last recession, have argued in favor of squirreling away cash in case another recession hits. Don’t folks remember the rounds and rounds and rounds of layoffs districts suffered, they ask?

That recession, many analysts predict, may now loom with the rapid spread of the coronavirus and the expected hit to state revenues.

Already, states and districts across the country are reaching into their piggy banks to spend on a host of unexpected costs: makeshift child-care centers, distance learning programs, and sanitizing products.

Analysts say the districts that will feel the most financial pain for at least the next two school years will be the ones in states and districts that have very little money in their savings account. Others will be better cushioned.

After the last recession between 2007 and 2009, some state legislatures, including in Arizona, California, and Maryland, created laws that increased the amount of money state and their school districts must keep in their savings account.

Many, such as Arizona, went further and shoveled surplus dollars into their reserves.

“This is a success story for a lot of states,” said Josh Goodman, a senior officer for The Pew Charitable Trusts, who has analyzed the impact the coronavirus could have on state budgets. “The last recession showed them that they need to be saving more and they moved aggressively to increase their savings.”

For other states, including Illinois, Kansas,and New Jersey, analysts warn of tough days ahead.

On the district front, savings accounts have taken on political heat the last two years as teachers bristled at the millions of dollars superintendents had stashed away in preparation for the next recession.

Los Angeles teachers last year, angry that the district had stored more than $1.9 billion in its savings account, went on strike, demanding that the district use some of that money to provide them with a pay raise, smaller class sizes, and wraparound services for students.

Credit rating agencies typically advise districts to keep at least 15 percent of their revenue in savings, though that amount varies widely. Palmyra-Eagle in southeast Wisconsin, has carried forward from one fiscal year to the next as little as 7 percent of its savings, while Twin Lakes School district on the other side of Wisconsin has carried over as much as 55 percent.

All this week, politicians, advocates, school board members, teachers and superintendents have been either praising or demonizing savings accounts.

In Arizona, the epicenter of the nation’s #RedForEd movement, Republican Gov. Doug Ducey has more than doubled the state’s savings amount from $445 million in 2015 to $1 billion. This week, Ducey’s administration started dipping into that fund to wage a war against the coronavirus.

Republican state Rep. Mark Finchem, who once was opposed to keeping so much of the state’s budget in savings said to the Arizona Capitol Times, “I’m somewhat ambivalent at this point. The money is there, but I pray that we are cautious, very cautious and prudent about how we extend those resources for the greatest community.”

Follow us on Twitter @PoliticsK12. And follow the Politics K-12 reporters @EvieBlad @Daarel and @AndrewUjifusa.

Commenting has been disabled on effective Sept. 8. Please visit our FAQ section for more details. To get in touch with us visit our contact page, follow us on social media, or submit a Letter to the Editor.


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Teaching Webinar
6 Key Trends in Teaching and Learning
As we enter the third school year affected by the pandemic—and a return to the classroom for many—we come better prepared, but questions remain. How will the last year impact teaching and learning this school
Content provided by Instructure
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
School & District Management Webinar
Ensuring Continuity of Learning: How to Prepare for the Next Disruption
Across the country, K-12 schools and districts are, again, considering how to ensure effective continuity of learning in the face of emerging COVID variants, politicized debates, and more. Learn from Alexandria City Public Schools superintendent
Content provided by Class
Teaching Profession Live Online Discussion What Have We Learned From Teachers During the Pandemic?
University of California, Santa Cruz, researcher Lora Bartlett and her colleagues spent months studying how the pandemic affected classroom teachers. We will discuss the takeaways from her research not only for teachers, but also for

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Schools Get the Brunt of Latest COVID Wave in South Carolina
In the past few weeks, South Carolina has set records for COVID-19 hospitalizations and new cases have approached peak levels of last winter.
4 min read
Two Camden Elementary School students in masks listen as South Carolina Gov. Henry McMaster talks about steps the school is taking to fight COVID-19, Wednesday, Sept. 15, 2021, in Camden, S.C. McMaster has adamantly and repeatedly come out against requiring masks in schools even as the average number of daily COVID-19 cases in the state has risen since early June. (AP Photo/Jeffrey Collins)
Education More States Are Requiring Schools to Teach Native American History and Culture
Advocates say their efforts have gained some momentum with the nation’s reckoning over racial injustice since the killing of George Floyd.
3 min read
A dancer participates in an intertribal dance at Schemitzun on the Mashantucket Pequot Reservation in Mashantucket, Conn., Saturday, Aug. 28, 2021. Connecticut and a handful of other states have recently decided to mandate students be taught about Native American culture and history. (AP Photo/Jessica Hill)
Education Judge's Temporary Order Allows Iowa Schools to Mandate Masks
A federal judge ordered the state to immediately halt enforcement of a law that prevents school boards from ordering masks to be worn.
4 min read
Iowa Gov. Kim Reynolds speaks to reporters following a news conference, Thursday, Aug. 19, 2021, in West Des Moines, Iowa. Reynolds lashed out at President Joe Biden Thursday after he ordered his education secretary to explore possible legal action against states that have blocked school mask mandates and other public health measures meant to protect students against COVID-19. Reynolds, a Republican, has signed a bill into law that prohibits school officials from requiring masks, raising concerns as delta variant virus cases climb across the state and schools resume classes soon. (AP Photo/Charlie Neibergall)
Education Hurricane Ida Deals New Blow to Louisiana Schools Struggling to Reopen
The opening of the school year offered teachers a chance to fully assess the pandemic's effects, only to have students forced out again.
8 min read
Six-year-old Mary-Louise Lacobon sits on a fallen tree beside the remnants of her family's home destroyed by Hurricane Ida, in Dulac, La., on Sept. 4, 2021. Louisiana students, who were back in class after a year and a half of COVID-19 disruptions kept many of them at home, are now missing school again after Hurricane Ida. A quarter-million public school students statewide have no school to report to, though top educators are promising a return is, at most, weeks away, not months.
Six-year-old Mary-Louise Lacobon sits on a fallen tree beside the remnants of her family's home destroyed by Hurricane Ida, in Dulac, La., on Sept. 4, 2021.
John Locher/AP