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Budget & Finance From Our Research Center

School Leaders Say Stimulus Cash Will Go a Long Way—But Deep Funding Challenges Remain

By Mark Lieberman — June 01, 2021 8 min read
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Three rounds of federal stimulus relief and an unexpected windfall in state budgets helped many school districts avoid the dire fate they predicted when the COVID-19 pandemic began hammering them last March.

But an EdWeek Research Center survey of school and district leaders finds worries about costly instructional hurdles that lie ahead, concerns about federal dollars that will run out in a few years, and uncertainty as a result of deep financial challenges that remain in many places.

In the national survey conducted last month, most school and district administrators said federal relief funding was at least somewhat adequate for covering pandemic-related expenses and making up for shortfalls in state and local funding.

But more than half of survey respondents said it’s at least somewhat likely their schools will lose overall funding over the next 10 years due to declining enrollment; 22 percent said it’s very likely.

That phenomenon will hit differently from district to district, and will depend on unpredictable factors like population growth and migration, and the expansion of charter, private, and homeschool options.

“This is not a solution,” Wayne Tilley, business official and treasurer for the Unadilla Valley district in upstate New York, said of the district’s federal stimulus, which totaled $4.4 million, or roughly $5,366 per student, since March 2020. “It is a great help for the historic times we have just gone through. But it is not a solution for a sustainable school five or 10 years from now. It’d be foolish to think it was.”

QC SF Recession Readiness B

Many districts are now beginning to look beyond the short-term questions of how to reopen school buildings and keep instruction going while COVID-19 community spread is high. The survey found that addressing students’ learning and mental health needs, preparing teachers for more flexible instructional approaches, and ensuring buildings are safe and secure are among the most urgent fiscal priorities.

“We need to take a look at, what should education look like for kids when we get back to the pre-pandemic normal?” said Don Kennedy, chief financial and administrative officer for the Charleston, S.C. school district.

Some schools in Kennedy’s school district have been underperforming for the last five years and need more new resources than others, he said. “Do we want to build back to the exact place we were then? Some of our programs, we would say no.”

Districts are getting creative to avoid running out of money

For many districts, the federal relief represents a significant boost in the money that’s typically available to them. Their current budget planning reflects that reality—47 percent of administrators who responded to the survey said their district’s per-pupil spending next school year will exceed this year’s spending. Another 35 percent said their spending will remain the same from this year to next.

QC SF Enrollment Funding B

The survey also found that 42 percent of school and district leaders said their districts increased their spending between the 2019-20 school year—when the pandemic first disrupted schooling—and the one that’s now wrapping up, and 30 percent spent the same both years.

The Staunton school district in Virginia, for example, which has an annual budget of $38 million, got $600,000 from the March 2020 CARES Act, $2.8 million from the December 2020 stimulus, and $6.2 million from the American Rescue Plan this year.

The district has 2,500 students, all of whom are eligible for free and reduced-price meals. Brad Wegner, the district’s budget director, is looking to prioritize one-time purchases with the federal relief money, like school buses, vehicles for transporting students with disabilities, and building upgrades.

These moves are long overdue, said Wegner. But they aren’t going to be easy to finance, even with a fatter wallet than usual.

“These [federal stimulus] funds have to be spent by 2024, and given the surge in costs of building supplies, as well as demand for contractor services, it’s going to be a problematic issue for us,” Wegner said.

He’s investigating whether the district can use the federal money for preliminary work, like engineering studies and site evaluations—and then later find other funding sources for the actual construction.

The Unadilla Valley district in New York plans to use the federal money to replace some air-handling units, upgrade computers, expand professional development opportunities for teachers, and purchase a five-year reading intervention program. “For us normally that would be, ‘We can’t do that, we don’t have a way to fund that,’” Tilley said.

Another focus for schools in the coming months will be helping students transition out of the pandemic, both academically and emotionally. In many places, that means expanding summer school and adding counselors, social workers, and mental health programs.

QC SF Stimulus Spending

Many districts are tempted to hire new workers and pay their current ones better. Asked to pick three areas that most need additional funding, 42 percent of survey respondents chose teacher and certified employee salaries—more than any other survey option.

But there’s a catch: When the federal money runs out, it might be hard to keep newly hired employees on the payroll.

Districts may have to get creative. In Staunton, rather than calling substitute teachers on an as-needed basis through the district’s third-party provider, the district will contract with two or three substitutes who will work in the school all year round.

“That gives us flexibility where those substitutes can act as a substitute or maybe become an instructional assistant and backstop our teachers,” Wegner said.

Our superintendent’s probably aged 10 years this year trying to balance what he thought was going to be a financial cliff and taking care of people in the community.

Despite the flood of federal cash, tension over funding remains

The amount of money districts are getting from the federal government, the extent to which it will be transformative, and the flexibility they’ll have to spend it varies considerably from state to state, and from district to district.

Sixty-one percent of administrators who answered the EdWeek Research Center survey said persuading elected officials to sufficiently fund schools is a major challenge. In states like Texas, Wisconsin, and Wyoming, districts are anxious about rumblings that state legislators will cut investments in K-12 schools and then ask districts to use federal dollars to make up the shortfall.

For the rural Lincoln County school district in Wyoming, that move would be devastating, said Amanda McAdams, assistant superintendent and director of elementary instruction. The district lost 200 of its 3,000 students to home schooling during the pandemic. She’s confident at least 100 will return, but many will require significant tutoring and instructional efforts to catch them up academically with their peers.

The district doesn’t generate much local revenue, which means it’s particularly vulnerable to the volatility of state revenue sources. Earlier in the pandemic, the district already had to lay off science specialists and a high school math teacher, and cut hours for art, music, and physical education teachers.

“Our superintendent’s probably aged 10 years this year trying to balance what he thought was going to be a financial cliff and taking care of people in the community,” McAdams said.

Losing the federal funds would mean “status quo for the district, and that will limit us from creative or cool ideas to implement,” she said.

See Also

Drawing of money dropping into a jar.

Other districts are experiencing envy when comparing their federal dollars to that of their neighbors’.

To focus funding support on students who are socioeconomically vulnerable, all three sets of stimulus funds went to schools based on the proportion of federal Title I aid they typically receive. But some administrators wish the funds were distributed on a per-pupil basis. Many expenses during the pandemic, they argue, were equally necessary for all students, regardless of their background or family situation.

QC SF Pandemic Expenses

Slightly more than one-quarter of survey respondents said federal relief funds were somewhat or completely inadequate for overcoming state and local budget shortfalls during the pandemic, and 19 percent said the federal relief was somewhat or completely inadequate for covering additional COVID-19-related expenses.

“I understand the need to take care of low-income areas of our state and country,” said Justin Downes, superintendent of the Milbank district in South Dakota. “I just think those scales are quite heavily skewed, with districts much smaller than mine receiving twice as much aid.”

Thanks to the stresses of the pandemic, the future is uncertain

Even though the stimulus is the largest single federal investment in K-12 education in the history of the United States, it can’t singlehandedly erase the myriad flaws and intricacies of the nation’s labyrinthine school finance systems.

As many districts face enrollment declines in the years to come, the amount of money they’ll get from state and local governments could decline precipitously.

“We are looking at potentially being down by about 30 kids [next year]. Multiply that by $6,000 per kid, all of a sudden we’ve got a lot less budget,” Downes said. “We try to provide extracurriculars, and elective courses, but that’s really ultimately what ends up getting hurt.”

Another potential chunk of federal money is on the horizon, with President Joe Biden proposing $50 million in grants and $50 million in bonds for K-12 schools to invest in their building infrastructure. The investment is long overdue, advocates argue, but the proposal has yet to pass Congress.

District leaders say they’re keeping an eye on the possibility of additional funding, but their attitude about the proposal reflects a key lesson from the pandemic: Don’t count on what you don’t yet have.

“We can’t sit back and assume that, after neglecting our buildings, somebody’s going to come flying in with money just as we need it,” said Roger Dickson, interim director of business services for the Shorewood district in Wisconsin. “We need to manage the overall budget, so we are taking care of our facilities as well as the instructional needs.”

A version of this article appeared in the June 02, 2021 edition of Education Week as Survey Finds Fiscal Jitters Remain for School Leaders


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