Schools stare down fiscal cliff as federal pandemic aid runs out

School districts across the country received the largest infusion of federal cash ever to pull themselves out of the throes of the pandemic. But now that money is set to expire and districts are slashing jobs, increasing class sizes and cutting programs to keep their schools afloat.

Congress designed the aid — roughly $190 billion altogether — as a one-time distribution of cash primarily to tackle pandemic crises like learning loss, chronic absenteeism and worsening mental health. That’s more than one fifth of total U.S. K-12 education spending in 2022. Now, the last $122 billion runs out at the end of September.

The funding boost has helped schools make progress in addressing the Covid fallout by adding high-intensity tutoring and after school activities, key programs districts are struggling to fund just as students return to school.

“When you look at the tally sheet, you’ve got a billion less dollars then you’re going to have a billion less services,” said Alabama State Superintendent Eric Mackey, who lauded the pandemic dollars for giving states the chance to test programs that officials wouldn’t have otherwise been able to afford.

High-poverty schools and urban districts, which generally received larger amounts of relief money, will feel the harshest effects of the disappearing dollars, forcing them to shrink staff and slash programs to balance their budgets. And districts that spent their one-time relief dollars on ongoing expenses like pay raises, more staff and new programs — even though they knew these funds were going to disappear — are now having to cut back. In some states, like Massachusetts and Washington , school districts have added thousands of workers they can no longer afford.

“A lot of districts thought that once money comes from the federal government, it comes forever — like we just get it year after year after year,” said Marguerite Roza, director of Georgetown University’s Edunomics Lab, which has tracked how school districts used the federal pandemic aid. “Districts are going to have to be more adaptive in this situation.”

Tough budget calls

A growing body of research reveals a correlation between the federal Covid-19 aid, known as the Elementary and Secondary School Emergency Relief fund, and improved test scores. One study shows high-poverty districts that received larger ESSER allocations per student had larger gains in math and reading scores in 2023 compared to similar districts that got fewer dollars. And preliminary research from the University of Chicago’s Education Lab found that the use of pandemic aid on high-intensity tutoring during the school day resulted in bumps in math and reading scores in Chicago Public Schools and schools in Fulton County, Georgia.

“It does signal to us that keeping high-dosage tutoring, at the expense of other kinds of efforts even, seems really important if we care about student learning,” Monica Bhatt, senior research director at the University of Chicago Education Lab, said.

The financial challenges facing Saddle Mountain Unified School District, a growing rural district of around 3,300 students about 50 miles outside of Phoenix, Arizona, underscores the difficult choices districts are facing. Saddle Mountain used its federal pandemic aid to buy new Chromebooks and give teachers one-time bonuses. But it was the decision to hire a new psychologist, a counselor and a psychology intern with the one-time federal dollars that’s exacerbating existing staffing problems in the district this fall.

Superintendent Michael Winters said the additional hires were necessary in order to have a counselor at all five of the district's schools, a staffing demand for the 20 percent of students across the district that require special education services.

The district folded the cost of the new mental health professionals into its maintenance and operations budget with the end of the federal aid. But to keep on the added staff — an annual expense of around $200,000 — the district will not give out raises to cover the cost. That lack of raises is contributing to an exodus of teachers, according to Winters.

One teacher quit a week before the new school year started on Aug. 1, securing a job in a neighboring district that paid more. That fifth-grade science class is now being taught by a paraprofessional who stepped up but needs additional training from the district. And by the end of the first day of school, another three teachers threatened to quit, Winters said.

That highlights a larger challenge with the federal pandemic aid: Schools were told to address academic recovery and the lingering effects of the pandemic — long-term problems that aren’t going to be fixed with a one-time check.

“What we really need to do is either give people raises to attract and retain people in the profession or hire additional staff. If that funding is not what you call ongoing funding, you really can’t do much with it,” Winters said.

But despite that sentiment, the district knowingly used money with an expiration date for the added mental health professionals.

“The workload without those people, from the people we did have, was just unbearable — you just couldn’t physically do it,” Winters said.

State lawmakers and district leaders across the nation are having to make decisions like the ones Saddle Mountain is making, reshaping what classrooms look like for the upcoming academic year.

In Alabama, state lawmakers are picking up the tab for statewide summer reading and math camps that were funded using $18 million in pandemic aid. But they’re eliminating other programs. Chilton County Schools, which serves roughly 8,000 children, for example, discontinued its free after-school program funded with Covid-19 money for the new year. That’s because it would have cost 30 percent of the district’s entire budget to maintain — money it can’t spend without slashing essential programs.

“It gave us one-time money to do some of the innovative new things that states have been talking about doing,” Mackey, Alabama’s education chief, said of the federal funding. “There’s never money to actually run experiments and to try something new and different.”

Minneapolis leaders had to close a $110 million funding gap for the upcoming school year with the last $90 million in pandemic money spent during the previous school year. The district is scaling back the number of associate teachers, who provide extra help to students with math and literacy issues. In addition, vacant positions will remain unfilled and the district’s magnet schools — specialized schools for subjects like art and STEM — are getting reduced funds.

The White House has been making the case for a new $8 billion grant program to keep some academic recovery efforts going, a plan unlikely to get approval on Capitol Hill. States are facing their own financial problems with other buckets of federal pandemic cash drying up and budget surpluses turning to deficits.

President Joe Biden’s education chief recently repeated a message Education Department officials have been telling governors, state education leaders and district heads for some time: Difficult financial choices are coming even as academic recovery is ongoing.

“Right now states and districts are having to make some very tough decisions,” Education Secretary Miguel Cardona said at a May gathering at the White House complex on chronic absenteeism. “They're tired of unfunded mandates and demand from others to do yet another thing in education without more resources or support.”

Cardona told a group of reporters in February he doesn’t use the word cliff when describing the end of the federal pandemic aid. “We’re passing the baton back to states and we want them to match the president’s urgency on education funding,” he said.