Budget & Finance

COVID Relief Funds Dry Up Next Year. Here’s How Districts Can Cope

By Mark Lieberman — January 19, 2023 4 min read
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Sept. 30, 2024 feels like a long time away for most people. But that date, the deadline for committing federal COVID relief dollars to specific expenses, is ringing in the ears of many school district administrators.

Budget planning for the next school year is underway in most states and districts. It will be the last school year with the fiscal boost from the Elementary and Secondary School Emergency Relief (ESSER) program. The final and largest batch of the three rounds of federal relief will expire just as the next school year begins in fall 2024. The second round of aid expires even sooner—just eight months from now.

Some districts spent ESSER dollars on one-time purchases: new technology tools, curriculum materials, or pandemic mitigation resources like masks and COVID tests. Others have focused on filling staffing gaps, extending the school year, and fast-tracking long-awaited construction projects.

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Either way, districts will have to prepare their approach for a world without ESSER dollars. That could mean laying off staff and cutting programs; asking voters to approve higher taxes and bigger bonds; or at the very least reworking budgets to ensure that essential services have a funding source.

New York City alone will have to find hundreds of millions of dollars from elsewhere to keep ESSER-funded programs like literacy screenings, mental health services, and expanded pre-K options, according to a report from the nonprofit Advocates for Children of New York.

Smaller districts could face even more dire scenarios. In South San Antonio, Texas, a school board president said ESSER’s expiration could cause the district to run out of money altogether within a year and a half, according to the TV news station KSAT.

Julie Williams-Muz, the director of financial operations for the Bay-Arenac school district in Bay City, Mich., spoke with Education Week to offer advice for districts on how to prepare for an ESSER-less future.

The key, she says, is to start now.

Help the community understand what you’re doing.

Some districts have already begun asking taxpayers to help fill the gaps left by ESSER dollars. The Wilmot Union High School district in Wisconsin and the Warren Township schools in Indiana are among the districts that have put referenda for tax increases on upcoming ballots, citing the rising cost of paying for education and the decline of federal and state aid.

Residents may be bewildered to learn that their district is eliminating a beloved program or asking for a substantially larger tax collection. But they’re not following the ins and outs of ESSER spending timelines or best practices for grant funding.

Williams-Muz recommends communicating clearly to community members that federal rules won’t allow ESSER-funded items to continue after next school year, and reminding them that the district has been planning for this eventuality since the funds arrived.

“They definitely want to be talking about that now to make sure they can either sustain it with possible savings that they could have had these last couple years, or what the plan is to let go of some of those programs,” Williams-Muz said.

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Keep detailed track of who’s on the payroll.

Putting someone out of work should always be a last resort when COVID relief funds dry up, Williams-Muz said. Instead, districts can take a bird’s eye-view of their employees to ensure that they know from which pot of funds each person’s salary comes and can create plans that minimize job losses.

A spreadsheet or internal document laying out staffing should ask questions like:

  • Is this person’s salary grant-funded?
  • If so, is the grant federal, state, local, or private? Is it a one-time grant or recurring?
  • Which positions can be eliminated through attrition?
  • Which staffing areas have the biggest holes?
  • Can staffing holes be filled by qualified employees in other parts of the district? Can ESSER-funded employees be shifted to other vacant positions?

Many school finance software programs have tools that can create spreadsheets like these. But Excel works just as well, Williams-Muz said.

Watch out for a deadline extension—but don’t assume one is coming.

Changing the spending deadlines for ESSER altogether would require agreement from both chambers of Congress—a prospect that appears increasingly unlikely. Federal officials like U.S. Secretary of Education Miguel Cardona have said they have little appetite for granting such flexibility, urging districts to spend ESSER funds as quickly as possible.

That doesn’t mean flexibility is off the table, though. The U.S. Department of Education has agreed to consider waivers for districts that need more time to spend down funds on contracts for ongoing construction projects. But the department hasn’t yet detailed the process for districts to apply for those waivers.

Don’t assume the ripple effects from COVID are over.

Districts need to start evaluating whether their efforts to help students recover academically and emotionally from the pandemic have been effective. If so, they should double down. If not, they need to take new approaches, not just hope the problem goes away on its own, Williams-Muz said.

That kind of intentional monitoring isn’t taking place everywhere. A watchdog report from Washington state legislators this month urged their state’s education department to track schools’ COVID spending in more detail. “Without monitoring districts’ progress or measuring spending outcomes, there is limited information available about whether districts are achieving their goals or if they are addressing racial disparities in education,” the report says.

The pandemic has had a profound effect on student achievement and mental health. There’s no reason to believe those problems will fade as federal funds to address them go away.

“The money is going away, and the learning loss is still here,” Williams-Muz said.

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