Budget & Finance

Schools Got Tons of Federal COVID Money. Why Some Are Laying Off Anyway

By Mark Lieberman — March 30, 2022 7 min read
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Much of the public conversation about schools in recent months has emphasized the cascade of federal cash—just shy of $200 billion—they’ve received in three rounds to help navigate the pandemic and recover from it.

Those funds don’t expire until September 2024. Yet some districts, both large and small, are now announcing cuts and layoffs for the upcoming school year. These decisions are often confusing for communities, and they’re prompting tough questions from unions and parents.

It’s easy to see why. National officials in recent months have repeatedly urged districts to tackle crucial priorities, from staffing shortages to HVAC deterioration to transportation woes, with federal relief funds.

“The American Rescue Plan gave schools money to hire teachers and help students make up for lost learning. I urge every parent to make sure your school does just that,” President Joe Biden said during his State of the Union address on March 1. “They have the money.”

But the realities of school district finance clash with the notion that schools are in a uniformly strong financial position.

Many districts are reluctant to apply federal relief dollars to recurring costs, only to roll back those initiatives or dismiss those hired employees once the money is spent or the deadline passes. Some low-wealth districts had such significant financial burdens prior to the pandemic that a temporary infusion of cash can’t turn the tide. And a small percentage of the nation’s 13,000 public school districts received little to no federal COVID-relief funds.

The federal relief packages have fueled billions of dollars in investments in upgraded facilities, learning acceleration programs, technology tools, and mental health resources, among other priorities. But those gains haven’t erased serious structural challenges. Here’s a noncomprehensive list of several that districts are facing right now.

Some districts are already running low on federal relief money

A handful of districts got upward of $20,000 per student from the three federal relief packages combined. Hundreds of of districts got more than $5,000 per student in relief funds, and others got virtually nothing. The majority fell somewhere in between.

Those are very large gaps, which means some districts will be able to do far more with that aid than others.

Some districts have already used up their dose of federal relief funds on personal protective equipment and online learning resources. The Tamalpais Union High School district in Marin County, Calif., for instance, is cutting three staff-assistant positions that it financed with federal relief dollars, which are set to run out this school year.

Some states are cutting K-12 aid and asking districts to use federal funds to make up the difference

In Louisiana, education policymakers cited the influx of federal funds this month as they implemented a K-12 budget that freezes the state’s base-funding formula for students. (It does include a pay raise between $750 and $1,500 for teachers and some school staff.)

GOP lawmakers in Wisconsin last year shaved 90 percent of the Democratic governor’s proposed K-12 budget and told school superintendents to use federal funds to pay for costs that the state would normally cover.

In Minneapolis, more than 3,000 educators went on strike for nearly three weeks to agitate for higher wages and better working conditions. The strike ended late last month with a new contract, but getting funding for it might be an uphill climb. Republican state lawmakers in Minnesota dismissed the idea of more funding for K-12 schools beyond the state’s recently approved 2.5 percent increase.

“I heard some people come up to me and say in private, there’s so much money, they’ll be burning it in the parking lots,” Roger Chamberlain, the Republican lawmakers who chairs the state senate’s education committee, told Fox 9 in St. Paul.

Similar sentiments about schools not needing additional money arose last year when federal lawmakers quietly cut $100 billion in funding for urgently needed school facility improvements from the Build Back Better spending package that has yet to pass.

All these decisions come as the inflation rate is approaching 8 percent, unexpected pandemic costs continue to pile up, and a tight labor market has put pressure on employers to raise wages and expand benefits.

A massive spike in inflation is driving up labor and goods costs

The cost of goods in America has spiked in recent months, prompted by a wide range of factors including supply-chain disruptions, pent-up demand for material goods, and economic fallout from the war in Ukraine. For districts with fixed budgets, unexpected increases necessitate cuts elsewhere.

The Juneau district in Alaska has seen property, liability, and workers’ compensation liability insurance costs skyrocket from $500,000 two years ago to nearly three times that this coming year, said Bridget Weiss, the district’s superintendent. The cost of supplies like paper and crayons have also tripled or quadrupled in recent years, she testified before the state senate in January.

“I’m not getting any increase in funding, so the only way to do that is to find places to cut or find funds that I can stretch and shift around,” she told Education Week.

As enrollment declines, money dries up

America’s K-12 population is shrinking. The number of births in the United States has decreased every year but one since 2008. The pace of decline has quickened during the pandemic, according to a report from the U.S. Census Bureau.

Public schools in many states receive funding based on the number of students they enroll. But losing students doesn’t necessarily mean fewer expenses such as for electricity and Wi-Fi for buildings, fuel for buses, and health insurance and benefits for teachers.

Some states gave schools a reprieve from enrollment-based cuts in 2020 and 2021. But that grace period is coming to an end in places like California and New Jersey. Several district leaders who spoke with Education Week said a trend of declining enrollment that started before the pandemic is the biggest factor leading them to make cuts this year.

The federal government continues to fall short of its promises

Schools are legally required under the Individuals with Disabilities Education Act to offer robust services to students with disabilities. That law mandates the federal government contribute 40 percent of districts’ special education costs.

Congress has missed that mark every year since the requirement became law in 1975. In fact, it hasn’t even come close.

But schools are still required to pay for those services, often at the expense of other urgent priorities. The Faribault district in Minnesota has $5 million in debt from inadequately funded special education spending in recent years.

“If we need a quiet room, or we need padding, or we need to hire two more paraprofessionals to help with that classroom to help those kids learn, we have to provide that to that child,” said Todd Sesker, the district’s superintendent. Sometimes, the district has to construct a new classroom or pay tuition for a student to attend a different school, depending on their needs.

A similar saga has played out with federal funding for programs that serve English-language learners. Many districts have recently seen an increase of students who need language services, which can be costly. Faribault has seen an increase in English language learners in recent years; they now make up 25 percent of its enrollment, and the fund for necessary services for those students is currently $1.5 million in debt.

The rural district, with more than 50 percent students of color, received $11 million in federal relief funds. It already spent half those this year on facilities enhancements as well as new temporary elementary teachers and mental health professionals who will be laid off when the money runs out.

As a result, Sesker and his colleagues devised a plan this year to cut $1 million from its roughly $60 million budget, including laying off 10 of the district’s teachers and several support staff.

That reduction plan still leaves a $900,000 deficit. If it persists in future years, the state will take over the district’s finances.

“We’d have to do things like go to the local taxpayers and ask them to increase the amount of money we receive from them,” Sesker said. “There’s really not any way to do it except that or make Draconian reductions.”

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