Budget & Finance

Why It’s So Hard for Schools to Spend All That COVID Relief Money

By Mark Lieberman — April 08, 2022 | Updated: April 11, 2022 8 min read
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Updated: This story has been updated to include comments from the U.S. Department of Education and the Maine Department of Education.

Schools during the pandemic got more federal funding than ever before. At the same time, schools are worried and stressed about money.

Though these statements seem to contradict each other, both are true.

Recent headlines, from CNN and ProPublica to local and regional outlets, have blared that schools are “sitting on” and “wasting” billions of dollars in federal pandemic relief funds. School finance experts are fretting that districts aren’t acting fast enough to invest in addressing students’ lost learning time. Lawmakers in several states have withheld education funding because schools are “awash” in federal cash.

Indeed, the federal government pumped nearly $200 billion in relief aid, known as Elementary and Secondary School Emergency Relief (ESSER) funds, to K-12 schools in 2020 and 2021. Separately, the Federal Emergency Management Agency is offering to reimburse districts for the cost of masks, personal protective equipment, and other COVID mitigation equipment and staff. State education departments, and state and local governments, got federal relief funds that can also be spent on K-12 schools.

But accusations that schools aren’t spending their newfound riches fast enough ignore the many hurdles that stand in their way. Some states have been stingy with transmitting relief funds to districts in a timely fashion. Requirements for expenses that qualify for the funds are complex. Filling out paperwork to get reimbursed can be onerous for understaffed district offices. Reimbursements in some states have been arriving at a snail’s pace.

Once districts have set plans to spend funds, many positions have been difficult to fill. The pandemic and a turbulent economy have exacerbated longstanding shortages of qualified education workers, particularly in rural areas. The short-term nature of the grants means districts can’t guarantee prospective employees that they’ll have a job past 2024. And some states, like Wisconsin, have cut state aid for K-12 schools, arguing that federal funds should make up the difference despite soaring inflation.

Some districts are trying to lay out smart investments between now and the funding deadline in two and a half years, rather than draining their entire allocations right away.

“If schools went out and quickly spent on vendors or resources that are very expensive right now because of the pandemic and the shortage of materials, they would be accused of spending too much money on things that weren’t needed,” said Erik Edoff, superintendent of the L’Anse-Creuse schools in Michigan.

These complications are slowing down schools’ high-stakes efforts to support students academically and emotionally after a public health crisis that is now two years old and not over yet.

Spending restrictions trip districts up

A district’s federal relief allocation was determined by the proportion of federal Title I funds it receives annually to serve high-need students. While some districts got as much as $20,000 per student in federal relief aid, a smattering of districts, including Edoff’s, got less than $1,000 per student from the three congressional emergency aid packages combined.

In Michigan, state lawmakers proposed a solution to federal officials for the districts that got little: directing some of the relief aid for the state’s education department to a “COVID equalization fund” that ensures every school district gets at least $1,093 per student.

But the federal government repeatedly balked at that request, Edoff said, until representatives from the Michigan K-12 Alliance, an advocacy organization, asked U.S. Secretary of Education Miguel Cardona and other top department officials about it in person last fall.

When the federal government finally approved the equalization fund, it attached a series of new regulations that districts would have to follow in order to spend it. Those requirements include ensuring that the funds only serve students who qualify for Title I aid, and documenting the impact of expenses teacher by teacher, rather than school by school.

The regulations are “more extensive than for any funding I’ve ever seen,” Edoff said.

A spokesperson for the U.S. Department of Education said the agency “has not placed any restrictions on Michigan’s ARP funds other than the statutory and regulatory requirements placed upon all states as required by this legislation.”

When the equalization fund was announced, Edoff had hoped to “blanket” all of the district’s students with new curriculum materials around math intervention. Now, “we may have to be more targeted,” he said.

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Paperwork piles up while funds sit idle

Staffers in the business office at the Des Moines school district in Iowa have also been swimming in paperwork of late. The 31,000-student district has submitted seven requests to get reimbursed by FEMA for COVID-related expenses like masks, plastic shields, and expanded nursing staff.

The level of detail FEMA staffers expected from the district was extraordinary, said Shashank Aurora, the district’s chief financial officer.

For instance, when detailing the district’s purchase of masks, one of Aurora’s staffers had to spell out how many masks went to each of the district’s six dozen school buildings. That meant consulting the district’s procurement and warehousing departments, and contacting individual school buildings.

FEMA has fulfilled six of the district’s requests, totaling more than half a million dollars. One more, for roughly $60,000, remains.

Aurora decided to cover some small expenses with ESSER funds rather than having again to go through the FEMA process.

He also tried to work proactively with emergency management officials to understand what was eligible for reimbursement before submitting requests. He’s heard from other school business officials, in smaller districts with smaller business offices, who submitted applications with lots of items and simply hoped for the best.

“Everyone was pulling their hair,” Aurora said. “People who took the shotgun approach, they had some major disappointments.”

Problems with FEMA’s program for schools abound. According to Ray Hart, executive director of the Council for the Great City Schools, the federal government has told districts that some expenses they previously covered with pandemic relief funds are now eligible for FEMA reimbursement. But with FEMA taking more than a year to fulfill requests, districts might not get their FEMA application approved in time to allocate those pandemic relief dollars to something else before they expire in September 2024.

State and federal emergency management officials aren’t always on the same page about what’s eligible under the COVID reimbursement program, Hart said. The guidance for reimbursement has changed at least twice since the start of the pandemic, and some state emergency management agencies have been slow to catch up to the latest guidance.

Some districts anticipated the chaos and ignored the FEMA offering altogether. Lois Standring, assistant superintendent of business and operations for the Novato district in California, worked with FEMA on recovery from wildfires when she previously worked in the Sonoma County schools. The district encountered all manner of logistical issues navigating the agency’s wildfire recovery policies.

“When the opportunity to work through FEMA for COVID reimbursement came through, I ran the other way,” she said.

Getting expenses reimbursed is no picnic

Congress passed the American Rescue Plan, which included the third and largest allocation of COVID-19 relief funding for schools, last March. But districts in Florida and Missouri waited nearly a year for their states to grant them access to their entire allocations. And districts in Arizona and Michigan endured months of legislative wrangling over whether to use federal relief funds to penalize schools that stayed in remote learning mode to mitigate the spread of COVID-19.

Even after states approve districts’ plans for ESSER investments, the work isn’t over. Districts in many states have to send purchase invoices to states before they can get reimbursed for ESSER-funded initiatives.

In Maine, some districts have had to take out loans to ensure they can keep paying their employees because the state has taken months to reimburse money the district spent on ESSER-eligible items, said Eileen King, executive director of the Maine School Superintendents Association.

“Superintendents are very eager to spend the funds, they’ve applied for the funds, they have excellent projects to spend them on,” King said. “The issue really is the flow of the funds.”

The process for requesting those reimbursements is full of thorns, said Katie Gourley, business manager for the Bucksport schools in Maine. Districts can only have one open request for reimbursement in the state’s online portal at a time. Each set of ESSER funds has a separate form that must be filled out.

As a result, Gourley’s district is months behind on even requesting reimbursements, which have each taken a month or more to arrive.

The Maine education department is hiring new staff and examining other avenues for making the reimbursement process more efficient, an agency spokesperson said.

Jim Boothby, the Bucksport district’s superintendent, echoed many district leaders’ concerns that the public and some policymakers expects more from them than they can deliver under the current constraints.

“If people don’t understand that these moneys are allowed to be spent until 2024, they don’t understand the mechanism of reimbursement, and they’re just looking at dollars spent to date, I don’t think that’s a fair assessment of the value of the money that’s been shared and the impact that it’s having,” Boothby said.

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