Districts are halfway to their spending deadline for federal emergency aid sent their way to help schools and students get through — and recover from — the havoc wreaked by the pandemic. And, despite claims that districts are sitting on large sums of unspent aid, administrators and education finance experts say the story is much more nuanced, and they worry that the focus on currently unspent money could hinder long-term efforts to improve student outcomes.
"There seems to be this national rhetoric that we are not spending these dollars," said Barry Gardner, assistant superintendent for finance & operations for Wayne Township Metropolitan School District in Indianapolis. "And yet, are people really taking the time to go in and sit down with someone like myself or our school district and really dig in and ask the questions?"
Since COVID-19 first closed school buildings in March 2020, the federal government has released three pots of federal aid funding with three separate obligation deadlines on spending, the last of which is Sept. 30, 2024. Funds must be liquidated — or spent — within 120 calendar days after each deadline.
"And it needs to be spent with urgency, which is not quite the same thing as with trackable speed," said Zahava Stadler, special assistant for state funding and policy with The Education Trust. "It needs to be spent with urgency and on effective things and with transparency to the community and to affected students and families."
Pace vs. quality of spending
According to a McKinsey & Company analysis released late last week, districts have spent an estimated $45 billion of the total $190 billion available. The research company projected nearly $20 billion in ESSER funds may not be obligated by the September 2024 deadline.
However, the metric by which districts are being judged for dispensing funds is inaccurate, said education finance experts.
"I think people are anxious to point to some kind of barometer of 'how seriously are school districts taking learning recovery?' or 'how urgently are they working to counteract the impact of the pandemic?'" said Jess Gartner, CEO and founder of Allovue, an education finance technology company. "And I would argue that 'checks cut' is a bad proxy — because it is very often the last step of a long process of planning and strategy to put a resource in place."
It's a matter of misplaced focus, agreed Stadler. "Concern, I think, shouldn't be with how fast districts are spending, but with how well they're spending the money they have, which, depending on the plan and the initiative, could be happening at different paces," she said.
Quality of spending can be gauged by whether districts use funds in ways that address unfinished learning and advance equity, all while engaging the community, said Stadler.
Funds remain for variety of reasons
Regardless of the debate over quality versus quantity in spending, Gartner says districts are still "on pace" in her eyes. States had spent almost 90% of ESSER I funds and a third of ESSER II funds by the end of February 2022, prior to the ESSER I deadline, according to the National Conference of State Legislatures.
"Of course, school districts are prioritizing spending I and II first, because they expire first," Gartner said. "If I gave you three gift cards and said one of them expires this week, one of them expires next month, and the other one expires next year, which one are you going to spend first?"
While funding varies among districts, funds remain for a handful of common reasons, according to education finance experts: staffing supply shortages, administrative and logistical delays in reporting spent dollars, and strategic financial planning to sustain programs until 2024.
Wayne Township, for example, could not fill all of its 96 staff openings that were budgeted for. Such shortages require districts to pivot on a dime and change course with their spending, Gardner said.
"We were asked to put a budget together for $54 million that we did not expect to have, with a two-year plan, knowing it would go away," he said. "And we had about two months to do so. "
Funds spent on repeated and sustained programs — like teacher payroll, software licenses and other contracts — are woven into a district's budget but don't reflect as spent until much later.
And the district's process to document expenses alone can take anywhere between two and three weeks before they're submitted to the state. If states are late to reimburse ESSER dollars, dashboards take even longer to accurately reflect money spent, Gardner said.
Communicating with the public
Allovue's Gartner, meanwhile, worries that suggestions districts are either sitting on or unwisely spending ESSER money are harmful "in an existential way to public education institutions" that could "have very far reaching consequences on a generational basis."
"Because the same people that are reading those headlines are making decisions about whether or not to send their children to public school, whether or not to vote on a bond referendum about funding for that school, whether or not to pass legislation that maintains or increases baseline levels of funding for school districts," Gartner said.
These decisions can have lasting impacts, she added. "The more districts are stripped for resources, the harder it is for them to make a case that they are spending dollars well, or that they are effective at instruction. And so it becomes this sort of vicious spiral."
Gartner and other finance experts agreed districts should take a proactive approach to communicate to families and lawmakers how ESSER dollars are being spent now and how they are budgeting the money for the future.
"The district role here," Stadler said, "is in part to be proactive in its family and community engagement, not wait for complaints, but to say, 'We are making these plans and using these funds in partnership with our families and communities."
Money the district received should be put in context of its regular budget so communities have realistic expectations for how it's being spent, Gartner said
"Something like $50 million might sound like just a huge sum of money on its own," Gartner said. "But if your regular operating budget is $500 million, all of a sudden that $50 million doesn't seem like quite a big number."
It could be especially harmful if information on large sums of money reaches lawmakers — who make pivotal decisions around school funding — without context, Gartner said.
However, Wayne Township's Gardner said it's been a challenge to engage local legislative and elected officials in his efforts to share and contextualize how his district is spending money.
"It's just whether they're willing to listen and to see if they have the ability to extend this funding, moving forward," Gardner said.
ESSER spending outlook
There are other ways for districts to be held accountable by their communities and lawmakers for how they are spending their dollars rather than tracking dollar amounts spent — or, in this case, not yet spent.
"I think the reason we have focused on the pace of spending is because it's so much easier to track and report — at least, apparently easier — even if there are nuances that may be getting lost," Stadler said, "than it is to track and report the effectiveness of the spending in real time, because it does take time for initiatives to pay definite dividends when it comes to the student experience and academics."
However, Stadler said she's hopeful districts are "headed in promising directions" with how they're spending their ESSER money.
"There are enough bright spots to give me tremendous hope that we are going to see some really impressive results in a lot of places," she said. "This is a real object lesson in what districts can do when we give them the resources to really support their students."