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Education Funding

COVID-19 Aid Package Protects Funding for Students in Poverty, But Could Challenge Schools

By Andrew Ujifusa — March 18, 2021 8 min read
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The American Rescue Plan includes nearly $130 billion for elementary and secondary education, plus hundreds of billions more for state and local governments, to help address the fallout of the coronavirus pandemic. But a key piece of the package for K-12—known as “maintenance of equity"— is a direct result not just of COVID-19, but the aftermath of the Great Recession.

It’s designed, essentially, to prevent state or local funding cuts from falling disproportionately on students in poverty. There are similar protections in the law against outsized staffing cuts in schools serving large shares of those students. These restrictions on spending decisions apply to states as well as school districts.

Supporters of these requirements say they will help prevent a repeat of what happened roughly a dozen years ago, when states and districts left reeling by the collapsing economy slashed their education spending in ways that too often hurt disadvantaged students the most. And there’s some relevant history related to these issues that dates back to controversy during the Obama administration.

“It’s pretty common sense,” said Ary Amerikaner, a senior vice president at the Education Trust, a group led by former Secretary of Education John B. King Jr. (Amerikaner and others have lobbied Capitol Hill to include these provisions since last year.) “If you have to make cuts, you shouldn’t be making cuts in the places that have the greatest needs and where the coronavirus has impacted people the most.”

The maintenance of equity provisions aren’t an ironclad guarantee against funding cuts themselves, however, and not all schools with significant shares of students from low-income households will be shielded.

And given that many states might not be facing the dire economic outlook that many predicted a year ago, a large share of schools might avoid substantial funding cuts after all, unlike what happened during the Great Recession. That would be very welcome news in general for many education officials.

Where any significant cuts do occur, however, the equity mandates could make districts’ decisions about things like hiring and staffing more complex by putting constraints on their flexibility.

Although the policy is well-intentioned, Noelle Ellerson Ng, the associate executive director of AASA, the School Superintendents Association, said her group has “very serious concerns about the implementation.”

“In some ways it just misses the reality of local school district budgets,” Ellerson Ng said.

State and local funding decisions will be affected

States and schools that accept American Rescue Plan money have to abide by the maintenance of equity mandates, although these will have implications beyond the relief package.

The rescue plan says states cannot cut per-pupil funding to “highest poverty” districts for fiscal years 2022 and 2023 in a way that brings per-pupil funding below where it stood in fiscal 2019. This would shield the highest-poverty districts that together make up 20 percent of state enrollment. The level of student poverty would be determined using U.S. Census Bureau data (assuming that data is available) on economically disadvantaged students.

Here’s a chart showing what that means for states.

Maintenance Of Equity chart.

There’s a similar provision when it comes to “high need” districts. States count enrollment starting with the district with the highest share of economically disadvantaged students, then moving to lower-poverty districts. This count continues until 50 percent of the state’s students are represented. At that point, the state would be prohibited from cutting per-pupil funding to those districts counted as “high need” by an amount that exceeds any overall per-pupil funding cut the state makes for fiscal years 2022 and 2023.

Maintenance of equity also covers districts—and that’s where things could get even more complicated.

  • Districts can’t cut per-pupil funding from state and local sources to “high poverty” schools more than they cut per-pupil aid to all their schools.
  • Districts can’t cut full-time-equivalent staff per student at those schools more than they reduce staff per student district-wide.

The law defines “high poverty” schools for districts as those that are in the top 25 percent of schools with respect to the share of economically disadvantaged students they educate. The state can define “economically disadvantaged” by selecting a measure from several offered by the U.S. education secretary.

But there are a lot of districts that will be exempted from this requirement.

  • Districts that enroll fewer than 1,000 students are exempt from this requirement. In the 2017-18 school year, at least 6,270 districts had fewer than 1,000 students, according to federal data. That’s nearly half the school districts in the United States.
  • Local education agencies that operate just one school would be exempt; that would cover some charter school operators.
  • A district that serves all students within each grade span with a single school would also be exempt.
  • Finally, a district could seek an exemption from the U.S. secretary of education, if it can demonstrate “an exceptional or uncontrollable circumstance” like a huge drop in its financial resources.
If you have to make cuts, you shouldn’t be making cuts that in the places that have the greatest needs and where the coronavirus has impacted people the most

States cannot get waivers from these maintenance of equity requirements. States can apply to the U.S. secretary of education for a waiver from the requirement that they maintain overall K-12 funding for fiscal 2022 and 2023 at levels proportional to the average K-12 funding of fiscal 2017, 2018, and 2019. Without a waiver, a state could still make cuts, but not disproportionate cuts relative to a few years ago.

Just how fair all that is to districts and states is a matter for debate. District leaders might see states’ ability to apply for maintenance of effort waivers as unfair, for example. And even under the American Rescue Plan, states could still cut K-12 education funding and essentially use the relief package’s K-12 aid to make up some or all the difference. This is what New York state did last year with previous COVID-19 aid, for example, and the move triggered backlash.

There were no maintenance of equity provisions in the first two COVID-19 relief bills for schools.

Some district leaders could face tough choices

Amerikaner said that the maintenance of equity provision for district staffing also upholds racial as well as funding equity. Data from the Great Recession, she said, indicates that students of color were much more likely to have their teachers laid off than their white peers. And educators of color tend to be at greater risk of losing their jobs when layoffs occur, she added.

Amerikaner said she doesn’t necessarily see this set of requirements becoming part of federal education law writ large. But she does see it as a blueprint of sorts for emergency situations.

“We now have a first draft that includes a common-sense statement that districts and schools serving high concentrations of students in poverty are not allowed to disproportionately shoulder the pain. That feels like absolutely the right approach for the federal government,” she said.

But what challenges could this present for districts? Many staffing and other decisions about spending, for better or for worse, are made in central offices and represent broader priorities beyond school-to-school differences in funding. For example, a district’s decision to hire more counselors to help struggling students catch up academically and in other ways, and compensate by laying off other staff, would have to be squared with the equity requirements.

The maintenance of equity requirement could also conflict with local collective bargaining agreements in some districts that dictate how teacher transfers between schools work. Districts would have to navigate that complicated scenario, or seek relief from the U.S. secretary of education.

A related scenario: If a high-poverty school sees a large departure of veteran teachers and a district replaces them with less-experienced teachers, then a district might be in compliance with the provision about full-time staffing. But it might run afoul of the mandate for not cutting district per-pupil spending disproportionately for that school, since veteran teachers generally earn higher salaries. Staff turnover rates tend to be higher in under-resourced schools, research indicates.

The extent to which new or inexperienced teachers are assigned to high-poverty schools has been a well-studied and much-discussed topic for years. It’s been the subject of at least one notable pilot program. If the American Rescue Plan leads to fewer inexperienced teachers being assigned to under-resourced schools, many in the education community would welcome it, even if the shift doesn’t become a huge one.

Ellerson Ng said that, ultimately, the provisions put too much emphasis on financial outputs instead of progress and results.

Also worth noting: This debate about equitable spending within districts is not new. It was at the center of disputes about a proposed rule from the Obama administration under the Every Student Succeeds Act. That rule dealt with how districts spent their money, and to what extent they had to spend state and local money equally at Title I schools (those with large shares of economically disadvantaged students) and non-Title I schools. Learn more about that dispute here. Amerikaner worked on equitable-funding issues at the Education Department when that rule was developed and discussed in 2016.

That dispute was about spending under the main federal K-12 law, which is different than a debate about how spending cuts affect disadvantaged students during the fallout from a pandemic.

Maintenance of equity chart via Education Week and Ivy Morgan, the Education Trust

A version of this article appeared in the March 24, 2021 edition of Education Week as COVID-19 Aid Focuses on Students in Poverty

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