State Budget Shortfalls are Coming - Are the Stimulus Funds Enough?

Susan Gentz works on education policy, funding, and implementation strategies with districts across the nation to promote student-centered learning. She is the founder of BSG Strategies and Vice-President of K20Connect. Twitter: @shoing

Every state is facing the realization that budgets are going to take a big hit in FY2021. Although pandemic-related budget impacts across states are often portrayed as similar to one another, there are many variables that differ in each state and will affect the extent of budget impacts. For example, Alaska estimates an $815 million decline in general funds as a total of 81 percent of Alaska’s revenue is from taxes levied on the oil industry. New York projects a FY 2021 $13.3 billion shortfall, or 14% decline in revenue from January estimates, in part due to tourism impacts. States’ main economic drivers vary, and we could go through state-by-state and identify how each state’s backbone for revenue has been hit. (The National Conference of State Legislatures is keeping an up-to-date list on state-by-state estimated budget shortfalls here.)

What does this mean for education budgets?

Every state does things a little differently, but on average federal funding only accounts for approximately 8% of education budgets. The rest of the funds come from state and local monies. Education funding is always a major item in the state budget and often the single biggest item. On the high end of budgets is Vermont, with 90% of its state budget going to education, and on the low end is South Dakota with almost a third of its state budget funding education. The other states fall somewhere in between. With this much funding coming from the state level, education funding to districts will be hit hard in the next year and beyond.

Although state and local education agencies are still largely working through what this means for their budgets, (and many have extended dates for when a budget needs to be approved by the board) there are several districts who have already estimated how large their shortfalls will be. Loudoun County, VA is estimating a $73m shortfall for schools, Spokane Public Schools (WA) is estimating an $8m deficit (and discussing the declaration of a financial emergency which would invoke a hiring freeze and suspension of workload provisions.) Clark County School District (NV) is estimating a 14% budget shortfall and there will inevitably be many more districts that are facing shortfalls of this magnitude or more.

What has Congress Done to Fill the Gap?

It’s clear that the already appropriated stimulus funds will not fill the gap for these large shortfalls- but many are holding out hope that these are just preliminary funds and actions. Here’s a quick rundown of K-12 education specific funds and waivers available through the federal government so far. (Congress & United States Department of Education.)

Funding:

● $13.5B for K-12 Education the Elementary and Secondary School emergency Relief Fund (ESSER) This formula grant from the CARES Act to be used for:

○ SEAs and LEAs with emergency relief funds to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the Nation.

○ The restrictions on these funds are few and the application is intended to be a streamlined process for districts to address their most challenging needs as quickly as possible.

● $3B for Governor’s Emergency Education Relief Fund (GEER Fund). Every Governor has received funds from the USDE to spend on the following:

○ Providing emergency support through grants to the LEAs that the state educational agency (SEA) deems to have been most significantly impacted by COVID-19 to support the ability of such LEAs to continue to provide educational services to public and non-public school students and to support the on-going functionality of the LEA

○ Providing support to any other IHE, LEA, or education-related entity within the State that the Governor deems essential for carrying out emergency educational services to students

● $180M for the Rethink K-12 School Models & Continue to Learn Microgrants

Waivers

The USDE worked with districts across the country to identify waivers that would be most helpful with the implementation of distance learning quickly. The waivers are not in the CARES Act, but are another way the federal government is working to allow districts flexibility to get teachers teaching and students learning.

● Section 1127(b) of Title I, Part A of the ESEA to waive the 15% carryover limitation for Title I, Part A funds; (This is huge for supplementing funds for the coming year.)

● Section 421(b) of the General Education Provisions Act (GEPA) to extend the period of availability of prior fiscal year funds, for Title I, Parts A-D, Title II, Title III, Part A, Title IV, Parts A-B, and Title V, Part B programs, and the McKinney-Vento Homeless Children and Youth program;

● Section 4106(d) of Title IV, Part A of the ESEA to waive a needs assessment to justify the use of funds;

● Section 4106(e)(2)(C), (D), and (E) of Title IV, Part A of the ESEA to waive content-specific spending requirements;

● Section 4109(b) of Title IV, Part A of the ESEA to waive spending restrictions on technology infrastructure; and

● Section 8101(42) of the ESEA to waive the definition of "professional development," which might otherwise limit the ability to quickly train school leaders and teachers on topics like effective distance learning techniques.

What’s Next?

Congress acted quickly to get the first round of funds passed so states and districts could start accessing these funds to address immediate needs. Already, after the passage of phase 1, each step has taken a little longer as House and Senate members have their own interests in mind and more negotiations need to take place for the passage of another funding package. Advocates are hard at work to attain more funds after what they call “a down payment” for the crisis was made with the first round of education funding.

In fact, 62 superintendents signed on to a letter urging Congress for additional funding.. There has been speculation and advocacy for a “phase 4” of stimulus funds. This letter from district leaders specifically advocates for:

● $175 billion in Educational Stabilization Funds distributed via the Title I formula

● $13 billion for IDEA

● $12 billion in additional Title I program funding, and

● $2 billion for E-Rate.

It’s important to note that just because these numbers are suggested to Congress, it certainly does not guarantee success and additional funding. There has, however, been consensus that connecting homes with appropriate infrastructure and connectivity is of the highest importance from the Senate, House and White House.

The budget shortfalls will create many challenges for education leaders in the coming months and likely even years. What is to be seen is how districts will keep digital opportunities going in the fall once students are allowed back on campus. Although districts will return to brick-and-mortar schools, there seems to be a consensus that, at a minimum, blended learning will be the new model. It is critical that the funds districts are receiving now be used to create a strong foundation to build on in the coming months, knowing full well that resources will be limited moving forward.