Figure 1: 20 states report no details on how ESSER dollars are spent

Should we have expected better data? State agencies did get a collective $900 million for administering the money, which might have been used to generate information to help the system learn as it goes and improve on what it does. That said, much agency time has been spent responding to different surveys, requests, and proposals made by the Department, some for reports issued long after the information was useful.

Let us all issue a hearty thanks to those states that have shared the data they do have. We’ve assembled those data on the Edunomics Lab ESSER Expenditure Dashboard and used it as a backdrop to our investigations of hundreds of districts’ financials. Without it, we’d know even less than we do.

Investments in social-emotional learning are more popular than expanded learning time.

ESSER 3 requires that 20% must be used to address learning loss from the pandemic. While it appears that portion is being spent at a faster clip than highly flexible 80%, only a few states offer spending detail on those dollars. In Wisconsin and California, just 5% of ESSER 3 expenditures have gone to lengthening the school day or year, or adding time in summer. Two thirds of districts in these states chose none of those options, instead using their 20% for investments like professional development (notable since PD doesn’t directly touch students), technology, or curriculum.

In contrast, we see a higher number of districts investing in social-emotional learning (about half) even as the spending totals tend to be low (amounting to 6% of total ESSER expended so far in California).

Half of relief funds are paying for labor, setting the stage for a painful fiscal cliff.

In the 22 states that provide some detail on what was purchased, it’s clear that labor is the largest item (just under 50%). What we don’t know is how much of that is going to new hires versus pay raises versus stipends, although federal guidance did authorize districts to use these temporary funds to award permanent salary increases. If history is any guide, districts will struggle to rein in labor expenses as the clock runs out.

A sampling of district financials finds many are using large portions of ESSER to “backfill their budgets” – essentially covering recurring expenses rather than investing the dollars in anything new. Districts like Seattle used ESSER funds for “continuity of operations” (which meant paying for recurring budget items) thereby putting off annual efforts to rein in escalating costs or right-size operating budgets after years of enrollment declines. In these cases, ESSER is treated like any other revenue source (covering lots of labor expenses) rather than the one-time money it is.

ESSER fueled a large jump in vendor contracts, and with it a burden on districts to ensure these dollars deliver value.

In states that delineate spending on contracts, some 20-30% of ESSER is going out the district door for purchased services, curriculum, supplies, one-time-projects, technology upgrades, and more. If these numbers hold, ESSER will have brought $40-60 billion in new public money for vendors (nearly doubling the prior levels). The upside? Districts can add temporary capacity while avoiding recurring obligations, especially important when dealing with one-time funds.

But there are challenges – namely that contracts bring vulnerability to financial missteps. Making sure contracts deliver value for students requires writing smart contracts and ensuring rigorous approvals. With so many contracts coming at once often with newer vendors, we worry about poorly written agreements or sidestepped approval processes. For vendors, the boom and likely bust (when ESSER ends) will be destabilizing, and probably result in fewer players in the field. Either way, blame for any poorly spent funds will land on the leaders who approved these expenses.

Amidst mixed messages on what ESSER was for, districts are spending steadily on facilities.

Despite warnings from the feds against taking on new construction or extensive renovations, some 20% of ESSER 3 has been invested in facilities (and the percentages are rising as more projects get completed). Early on, headlines raised hackles about relief funds going to sports facilities. But more investments appear to be paying for HVAC systems and general facilities repair. Assuming districts scoped and timed their facilities projects right so costs don’t stretch after ESSER money runs out, such investments won’t worsen the fiscal cliff.

What facilities investments aren’t doing, however, is resolving gaps in learning which are at the heart of what most see as the purpose of relief funds. It’s likely that disconnect that’s fueled some of the scrutiny surrounding facilities.

We’re learning very little about what matters most: Are investments helping students?

It’s not just about where the ESSER money is going. Have summer school programs improved reading proficiency? Is the fleet of newly hired counselors delivering improvements in attendance or mental health? Did a heavy investment in more teacher planning time work to improve math scores?

Only a tiny fraction of districts and states are using data to chart the effects of ESSER investments on students. Notable exceptions include states like Tennessee, which asked districts to predict the effects of their investments and then publicly examined its test scores to explore whether investments are delivering. Connecticut launched a research collaborative to study whether ESSER investments are working, finding, for example, that a pandemic-era home visit program boosted attendance. We need more of this.

One final lesson stands out on the ESSER experiment: Each district makes its own choices.

While we’ve painted some big-picture trends here, different districts have gone in very different directions on spending. And the experiment’s not over yet. There is still much to watch about how districts adjust when ESSER is gone, and how students fare over the long haul. But perhaps most notably, the experiment is a reminder of the critical role district leaders play in how US education funds are spent and in determining how much value those funds bring to students.

Katherine Silberstein is Strategic Projects Lead at Edunomics Lab. Marguerite Roza is Director of Edunomics Lab and Research Professor at Georgetown University, where she leads the Certificate in Education Finance.

Updated April 6, 2023: Arizona and Oklahoma now have publicly available dashboards that report spending details. This piece has been revised to reflect that 20 states to date report no details on how ESSER dollars are spent.

Talking with school district leaders in early March, I asked how they were thinking about today’s record-high inflation and its impacts on their systems’ finances. Turns out, most weren’t thinking about it at all.

On the one hand, that inattention was fair. At 90 percent of the budget, districts’ biggest expense is labor, which is frozen in place for the duration of the labor agreement. Any immediate inflationary impacts, like those of rising fuel costs, were impacting only a tiny portion of the budget (transportation costs amount to well under 5 percent of a district’s expenses). Some leaders noted that prices were rising for utilities, food service, and construction projects, but those things typically make up only a small slice of the pie.

Besides, districts are flush with federal relief funds right now.

Then I asked about upcoming labor negotiations and what they expected the ask would be from teachers and staff, given the skyrocketing inflation rate. That’s when I got their attention.

For most districts, the much larger inflationary wallop will come as districts adjust their salaries. Schooling is a notoriously labor-intensive industry. But still, most districts tend not to think about salaries until the current labor contract ends and the negotiating starts. And since teacher attrition is lower than attrition in other industries and tends to happen between school years, the effects of inflation only emerge as contract talks begin.

That time is imminent. Scanning the 44 larger districts that are members of the Edunomics Lab’s district finance network, which meets regularly about finance strategy, we found that more than half have contracts expiring this spring or are operating under an already-expired contract.

In the coming few weeks, teachers and other employees will be calling for sizable raises. They see that they are paying more for things like food, gas, and travel, and they want a raise so inflation doesn’t erode their purchasing power. And they see that other industries are moving quickly to hike salaries for their employees.

For some districts, it’s already happening. Minneapolis teachers went on strike amidst a demand for a near-20-percent raise. Teachers in Proviso, Illinois, walked out over demands for a 12.75-percent hike. Salary pressure is looking even more intense for lower-wage district employees, like aides, custodians, and food-service workers.

Federal relief funds are further complicating labor markets. It’s not just existing employees creating the salary pressure. In fact, the push to raise pay comes while many districts are deep into a hiring spree brought on by the mammoth infusion of temporary federal relief funds. With a use-it-or-lose-it spending deadline of September 2024, districts know they need to move quickly to spend down these funds, and many still have spots they haven’t filled.

With so many districts attempting to hire from a tight labor pool, the long list of unfilled positions is adding even more pressure to boost pay. Unemployment rates among college graduates are now at 2 percent, and for many districts, the only way to fill the federally funded open positions is to hire out from under the district next door with—wait for it—higher salaries.

This is where things will get tricky down the road. The compensation districts agree to in these inflationary times will tend to become permanent. A 5-percent raise gets enshrined in every cell on the traditional step-and-lane pay scale. It becomes the new baseline against which any future raises are awarded. This means that districts must accept the newer and higher cost structure going forward.

But how will a district with limited funds make ends meet when costs rise? Districts can’t pass off higher costs to the customer, as grocery stores do, or move quickly to lay off labor when the economy shrinks, as organizations in other industries do, because layoffs in education are politically difficult and enormously disruptive for students and staff alike.

Therein lies the problem: Locking in permanent pay increases now may exacerbate the financial ticking time bomb for districts.

Right now, districts are spending over $3 billion in federal relief funds per month, but that ends in 30 months. This fiscal cliff will financially destabilize any district unable to meet its ongoing commitments without relief funds. That includes any district using federal funds to pay for permanent raises or newly hired staff, or to backfill budget gaps (which is happening right now in Minneapolis, Seattle, and Houston). Making matters worse, some districts are facing dwindling student enrollment. Since enrollment tends to drive state aid, fewer students mean less funding.

With most state budgets flush with cash, district leaders may be optimistic that the finances will work out in the end. But those surpluses are the product of a booming economy, and economists are now warning that efforts to address high inflation will bring a corresponding slowing of economic growth. That slowing will affect state revenues, and ultimately districts, making it unlikely that new state money will blunt a district’s fall off the fiscal cliff.

What can districts do? District leaders aren’t powerless. They have options to balance the long-term cost structure while addressing the most pressing labor needs. They can start by acknowledging the raises already built into the steps and columns in the pay scale. These automatic features tend to bring an annual raise for each year of experience and additional increments for any graduate credits earned (generally amounting to 3 percent or more).

They can consider one-time, flat dollar raises instead of across-the-board percentage-based raises that disproportionately benefit the most senior staff. A 7-percent raise on a senior teacher’s $100,000 salary brings $7,000 in new pay. For a junior teacher making $50,000, the same 7-percent raise delivers only $3,500. Districts could propose, say, a $4,200 bonus; that represents 7 precent on an average salary of $60,000. Notably, employees perceive raises expressed in dollars as larger than the same raise communicated in percentage terms.

Districts can recognize that we’re not in a business-as-usual labor moment and, as such, target higher pay for staff in higher demand. In the wake of the pandemic and labor shortages, there seems to be a softening of traditional resistance to targeted pay. District leaders could contemplate floating bonuses to help hire staff in areas where they’ve had trouble filling positions and to hold on to staff in areas where they’ve had trouble with retention.

While they have money, districts can trade pay raises for corresponding cost reductions elsewhere in the budget to mitigate the net effects. These reductions could include adjustments to health, vision, dental, and retirement benefits, since most employees prefer pay over comparable spending on benefits. (While health-care costs have risen at a slower rate than other parts of the economy in the last year, forecasters expect those costs may rise soon.)

They can also make some pay increments non-pensionable—as the state of North Carolina did for stipends it awarded to all teachers this fall—otherwise a raise ultimately drives up pension obligations. Or they can ask for concessions on other costly items in the contract, like class size constraints, or requirements that each school have a specific complement of staff.

All financial decisions involve tradeoffs. Yes, inflation amps up the spending pressure on districts. But it’s up to districts to balance today’s inflation headlines with an eyes-wide-open approach to what lies ahead.

Otherwise, the financial disruption coming in a year or two will leave students in the lurch.

Marguerite Roza is research professor at Georgetown University and director of Edunomics Lab.

This is a scenario we all know well: Responding to a crisis, the federal government quickly doles out sizable sums of relief dollars for schools with confusing rules about how education leaders can use it.

Here’s the part that’s maybe not so familiar: The federal government then discredits, prosecutes and imprisons an education leader for what amounts to a procedural error in spending the money, an error that (by the way) yields the leader no personal gain.

This is not a made-up scenario. It happened to Julia Keleher.

It’s a scenario that could have a chilling effect on district and state education leaders across the nation who are right now tasked with moving quickly to deploy federal relief funds.

Today’s crisis is the Covid-19 pandemic, and the $190 billion in federal pandemic relief money sent to states and districts is the closest thing to a blank check we’ve seen. Clearly there’s no playbook for this moment, and successive waves of U.S. Department of Education guidance have left many leaders unclear about how they’re allowed to spend the money.

Flash back to 2017, and the crisis was Puerto Rico, decimated from Hurricane Maria and facing a deepening financial predicament. With many of its historically low-performing schools in disrepair, and massive enrollment declines as families fled the island, the education system was in bad shape. The federal government sent nearly $500 million to rebuild schools and revamp the education system. Puerto Rico’s then-Secretary of Education, Julia Keleher, signed contracts to tackle the most immediate challenges quickly, including repairing buildings and working to resume and improve learning for the island’s remaining students as quickly as possible.

She wound up sentenced to six months in federal prison, accepting a plea agreement in 2021. The U.S. government charged her with conspiracy for violating a prohibition on subcontracts. She signed off on having a subcontractor to do less than $50,000 worth of analysis of school-level damage post hurricane—work the federal government required and whose quality was never in question. The government also took issue with $12,000 in closing incentives on an apartment Keleher bought–incentives that were offered to anyone who purchased a unit in that building. In the end, there appears to be no legitimate claim that Keleher took or personally benefited from public money. I wrote a letter of support for Keleher to her sentencing judge, attesting to her tireless and dogged dedication to Puerto Rico’s students, having provided informal advice on a volunteer basis on school finance issues during her two-year tenure.

Compare that scenario to another eyebrow-raising decision a leader made with federal pandemic relief dollars. In 2020, former Los Angeles Unified Superintendent Austin Beutner signed a $49 million contract with a three-month old startup headed by a former business partner to do COVID-19 testing for students. He bypassed the district’s tedious procurement process and signed it himself using emergency powers.

Jail time? No. He’s lauded for tapping his business connections and moving fast to get things done. No federal inquiry has been initiated.

Why the wildly different reactions to these decisions on how to spend federal relief funds?

One plausible explanation is that it was never about Keleher’s infractions. To quote one columnist: “Keleher became a lightning rod of public criticism for the changes” she made in the system.

Keleher made enemies aplenty in her tenure on an island with a reputation for corruption, angering the teachers’ union and others as she closed hundreds of excess schools as students fled to the U.S. mainland. She also ushered in sweeping (and controversial) reforms to boost abysmal student outcomes, including breaking up the central education bureaucracy and introducing charter schools. As an outsider, she was dubbed a “colonizer.” She resigned in April 2019, citing toxic politics.

Federal prosecutors seemed to take their cues from those angry about Keleher’s changes, and jumped in with a legal fishing expedition. She was indicted three months later. In the months following, prosecutors smeared her name in the media with press releases of baseless charges only to then drop the original charges after the media circus died down. During this whole time she’s under a gag order, unable to even publicly dispute the claims made against her. She accepted the plea deal to move on with her life.

Readers might be wondering if there’s something I’m missing. At first, I wondered too. When federal prosecutors go after someone, many of us often assume it’s for good reason.

But what if it isn’t? Others have taken issue with the federal government’s conduct in her case, including some in outlets like Forbes and the Miami Herald. I’ve reached out directly to the federal prosecutors José Capó-Iriarte and Alexander Alum to hear their reasoning first hand, but have never received a response.

This reality has implications far beyond Keleher, to any leader making tough decisions that could anger some segment of the system. Lots of districts are seeing enrollments drop in the wake of today’s pandemic crisis. That means as federal funds dry up, many may find themselves grappling with some of the same issues that surfaced in Puerto Rico’s post-hurricane turmoil. Some will face the prospect of closing schools and laying off staff to right-size the system for a new, smaller population. These decisions will be painful and unpopular.

I’ve said it before: Leaders can be especially vulnerable to accusations of financial missteps where board members, teachers’ unions or others in the community are at odds with those leaders. When tensions are high, any potential misstep can get magnified. And the pandemic does not inoculate leaders from charges of financial blunders. Big money draws big scrutiny. So, leaders need to be aggressively transparent, especially with contracts.

Still, Keleher’s case stands out as troubling. It leaves me wondering: What does it tell leaders who make the tough trade-offs, especially in a crisis? Does shifting public sentiment mean federal officials will come knocking at the door? Is the best move one that keeps the loudest voices happy at any cost? This case would seem to offer the nation’s education leaders a sobering answer, to say the least.

Recently I shared Keleher’s case with a room full of superintendents as part of a training on using Elementary and Secondary School Emergency Relief, or ESSER, funds. The room was silent. Incredulity was written on their faces. I could see them pondering whether they regretted accepting these roles and the responsibility to steward the federal relief dollars.

District leaders I know are working absurdly long hours right now. Much of it is the nature of a crisis, but some is also to understand the federal rules, file required spending plans, submit proper reimbursements, meet reporting deadlines, and comply with financial record-keeping.

Whether intended or not, the legacy of the Keleher case may be to make leaders even more bureaucratic and risk-averse than they already are. That should be unsettling to all of us. Especially in a crisis, we desperately need leaders whose focus is squarely on meeting the needs of kids.

Marguerite Roza is research professor at Georgetown University and director of Edunomics Lab.

When Congress passed the American Rescue Plan in March 2021, we were happy to see that it included new language requiring districts to protect high-poverty schools from disproportionate budget cuts. In the last recession, state revenue declines hit districts hard, forcing hiring freezes and seniority-based layoffs that often hurt the poorest schools most.

Thankfully, state revenues are quite healthy, with many states announcing higher-than-anticipated increases in funding for schools. Like many others who follow school finance closely, we assumed the new “maintenance of equity,” or MoEquity, provision would only be relevant in the small handful of places with revenues declining.

But then, this summer the U.S. Department of Education released its guidance on the MoEquity provision, asserting that the provision applies even if revenues are growing. As written, it would have forced thousands of districts to rewrite their budgets just as they were trying to reopen schools. After hurried and intensive behind-the-scenes conversations and a lightning- fast-by-government-standards response, the department released a new Dear Colleague letter which gives districts more flexibility on how to implement the MoEquity rule and permits districts with rising revenues to file for a one-year delay.

While districts will appreciate the added flexibility and the timeline extension, the more expansive interpretation could still have unintended consequences, and there may be better mechanisms to drive equity than the formulas dictated in the guidance.

How the MoEquity Provision Works

The law states that:

As a condition of receiving funds under section 2001, a local educational agency shall not, in fiscal year 2022 or 2023—

(A) reduce per-pupil funding (from combined State and local funding) for any high poverty school served by such local educational agency by an amount that exceeds

(i) the total reduction in local educational agency funding (from combined State and local funding) for all schools served by the local educational agency in such fiscal year (if any); divided by

(ii) the number of children enrolled in all schools served by the local educational agency in such fiscal year

A similar rule governs staffing levels. Many people, your authors included, read this language as only applying to districts that were reducing their spending.

The U.S. Department of Education interpreted it differently. The department said that districts with flat or growing revenues had zero reductions and that, thus, no high-poverty school could see a reduction greater than zero in either spending or staffing ratios. The law exempts small districts under 1,000 students, but that still leaves about 7,000 districts potentially on the hook.

The law includes a specific definition of “high-poverty schools,” for this provision only. Every district must rank each of their schools in terms of poverty. The district’s highest-poverty 25 percent of schools are protected “high-poverty” schools for purposes of MoEquity. Every district—regardless of whether all of its students are low-income, or whether the district has only a few pockets of poverty—must rank their schools in this manner to create a list of protected schools.

Each of the protected schools must meet a spending and a staffing test. They cannot experience a decline in per-pupil spending or staff per pupil over the next two school years, as compared to the 2020-21 school year. Figure 1 shows the formulas behind each of the tests. The tests are administered for each of the protected high-poverty schools individually.

Figure 1: Districts must pass MoEquity fiscal and staffing tests

These formulas may appear reasonable at first blush. But their reliance on student enrollments, the comparison with the prior year’s allocations, and the focus on individual schools could ultimately force districts into some costly, inefficient, and potentially inequitable decisions.

Timeline Problems Pose a Challenge for Equity

The first challenge for the MoEquity provision—and really any federal rule attempting to govern district-level spending decisions in real time—is that most districts simply don’t have school-by-school budgets. That means they don’t always look at the school by school consequences of their budgeting decisions.

It wasn’t until the 2015 Every Student Succeeds Act that states began collecting school-by-school expenditure totals, but that took time, and the most current data at this point are from 2018-19. While our team at the Edunomics Lab recommends more districts put that type of data to use, we are not aware of many district budget offices that are actually equipped to do it in real time yet.

So instead of actual expenditures, the MoEquity rules will rely on estimates and projections. To set a baseline, districts can use prior enrollment data, an average of enrollment over multiple years of time, or estimate enrollment data for the coming year. When looking forward, districts can meet the tests by using average teacher salaries and projected staffing levels, rather than actual expenditures.

These flexibilities will help ease the implementation challenges, but they’ll undermine the underlying goals of the MoEquity provision. Using average teacher salaries, for instance, can hide large pay discrepancies across schools. And districts could put forward ambitious hiring plans on paper, only to be thwarted by hiring challenges. The guidance explicitly exempts districts with “unpredictable changes in student enrollment or personnel assignments.” Once a district determines it passes the tests based on its estimates, it does not have to re-examine its results.

Creative financial officers will be able to figure out how to pass the MoEquity tests by finding an enrollment metric that fits their purposes. But in an ideal world, we’d want districts to track actual results, not just certify their intentions. In other words, the MoEquity guidance may provide the appearance of equity without actually ensuring it.

The Outliers Problem

The MoEquity rule protects individual schools, and the protected schools cannot be considered as a group. It doesn’t matter why a school might have received extra dollars or staffing in the prior year, the funding levels must stay, even if the funding comes at the expense of other schools or if the rationale for the extra funding is no longer relevant (such as when a student with disabilities no longer needs a dedicated aide). The federal guidance invites requests for exemptions but cautions that very few will be granted.

In the real world, these outlier cases are quite common. They vary by location, but they’re usually tied to where a school’s enrollment happens to be unusually low or some spending anomaly has pushed up the per-pupil figures outside of a normal range. If a school received $25,000 per pupil in prior years, MoEquity will require that for each additional student at the school, the district must allocate another $25,000, regardless of the needs of the new student.

More Equitable Districts May Be More Likely To Fail

Because the MoEquity rule compares districts with their own prior spending, it will hold more equitable districts to a higher standard than less equitable ones. In our forthcoming study of 40 large districts, we found Denver to be the most “progressive” in that it spent nearly $1,500 more in state and local funds on its low-income student as compared to its non-low-income students. Some districts were regressive, meaning they spent less on their low-income students than their non-low-income students. A progressive district like Denver will be required to clear a much higher hurdle (involving more dollars) to pass the MoEquity tests than more regressive districts will.

The Remedies Could Be Counterproductive

Perhaps most concerning, the MoEquity provision could work to supersede districts’ other efforts to send more resources to low-income students. To pass the tests, districts might have to override their weighted student formulas or targeted allocation formulas — many of which are used to direct more dollars to schools with higher concentrations of English learners, foster or homeless students, students with disabilities, and students living in poverty. That runs counter to the goals behind the MoEquity provision, and there are better options that could more reliably ensure districts are allocating their dollars toward students who need them the most.

What Should the Department of Education do instead?

On average, the federal government provides about 8 percent of school district budgets. It’s understandably tempting but practically complicated to use that leverage to steer how districts spend the other 92 percent of their budgets. The recent rounds of federal relief funds provide a large infusion of money, but that’s temporary. The feds should not abandon the notion of pressing states and districts to more equitably distribute resources, but Washington will need to carefully think through any financial test to understand how it will play out across districts and schools to ensure it isn’t unleashing more harm than good.

In the long run, Congress could consider several alternatives to the MoEquity rules. They could start by calling for more transparency about how districts allocate their money by requiring any district receiving federal dollars to compare how much money they provide to their highest-poverty schools compared to all their other schools. Such a requirement could be a natural next step from the recent ESSA requirement to publicly report school-by-school expenditures. This transparency requirement would have the added benefit of getting more districts to examine and weigh these figures when preparing their next year’s budgets — possibly breaking them out on a school-by-school basis, which would facilitate an easier examination of district spending decisions in closer to real time.

Federal lawmakers are always going to struggle to come up with rules that apply to every district and every school. Instead of the MoEquity’s focus on individual schools, Congress should instead consider a district’s high-poverty schools as a collective group, rather than each school individually. That would avoid the outliers problem. Districts that were found to be regressive could work with their state education agency to devise a plan to address it over a short but reasonable period of time.

Above all else, any federal test should focus on dollars, not staffing levels or other line-item allocations. We warn federal lawmakers against prescribing how districts spend their money or how many people they employ in their schools. The combination of spending and staffing tests used under MoEquity will hamstring districts and potentially force them into staffing and hiring decisions that they won’t be able to afford when the federal money runs out in a few short years.

Without changes, the MoEquity guidance could cause an unnecessary upheaval in American public schools. It could lead to a widespread re-shuffling of spending and staff, with no guarantee that it would lead to more equitable resource allocations within districts. To the Department of Education’s credit, its latest Dear Colleague letter said it was, “eager to learn from the experiences and perspectives” of states, school districts, and other stakeholders, and that it, “plans to use the comments it receives to inform future guidance and potential rulemaking.” So they’re open to feedback on the MoEquity rules now and how those are playing out on the ground.

As districts start planning for their next budget season starting in November, we think the U.S. Department of Education would be wise to consider making its one-year moratorium permanent and to interpret the law as focusing exclusively on the places that are making real reductions to spending and staffing. The specifics of the MoEquity rules make more sense when applied to districts that are cutting their budgets, rather than all districts nationwide. That would provide more time and space to focus on the places truly at risk of making harmful and inequitable spending cuts.

Marguerite Roza is research professor at Georgetown University and director of Edunomics Lab. Chad Aldeman is policy director at Edunomics Lab.

For decades, schools have added new staff at the expense of other potential investments. Now, with billions of federal relief dollars on the way, school district leaders should invest in targeted approaches to address the Covid-19 slide and maximize student learning opportunities.

Over the past year, Congress has invested nearly $200 billion to support K–12 education. School district leaders now face tough decisions about how to maximize those investments. Will they hire more teachers, pay existing teachers more to lengthen the school year or something else?

If history repeats itself, most of that money will go toward adding more staff. The question is whether hiring more staff now would be the best way to help students recover from a year’s worth of pandemic schooling.

We think not.

For starters, this is one-time money. Once the funds are spent, district leaders would most likely have to lay off the thousands of employees they hired.

We’ve also tried hiring more staff before. In fact, adding staff is the main “big bet” we’ve pursued in public education over the last 50 years. Whenever spending increased, so did school staffing. Nationally, public schools spend about $14,000 per pupil. After accounting for inflation, that’s more than double what they spent in 1970.

The vast majority of that money has gone to hiring more staff. Schools today employ many more teachers per student than they did in prior eras, across all grade levels and subjects, including art, music and foreign languages.

But in recent years, most staffing increases came from non-teaching roles. Schools have employed more counselors and specialists, like reading coaches; instructional aides to work with English learners and students with disabilities; and vice principals and administrators to oversee new regulatory and technological tasks. Numerically speaking, public schools have gone from employing one staff member for every 14 students in 1970 to one for every 8 students today.

While some of the spending investments to increase school staff have brought positive benefits for students, it has come at the expense of investing in other critical areas. For example, the new money didn’t buy more instructional time for students. Instead, school calendars look the same as they did in 1970, with the average student attending school 179 days a year for 6 hours a day.

Higher spending has also not led to higher teacher pay. Adjusted for inflation, the average teacher salary is lower than it was in 1990, and barely higher than in 1970. Had we bet on raising salaries, today we’d have a higher-paid workforce—and possibly a more diverse group of teachers.

Another area starved for investment is in different delivery methods, like new technologies or new approaches to use and assign staff within schools. Those strategies might have helped with disruptions like Covid-19, but we didn’t pursue those ideas at scale with increased investment.

Unfortunately, old habits are hard to break. The teachers’ union in New York City is pressuring the district to use the bulk of its stimulus funds to hire 11,500 more full-time staff members. Other places are considering similar plans, and many districts—especially those that operated remotely for the bulk of the year—have yet to announce their plans.

So how can schools invest their money differently this time? The very thing so many students missed this year was time in schools with teachers and peers. Depending on the grade level and school, many students received only half to two-thirds of a normal year’s worth of school, equivalent to missing 60 to 100 days. Recovering that lost time seems like it would be an obvious choice for many districts. Some city and state leaders are looking to allocate funds to help students make up that loss. San Antonio, for instance, is planning to extend the school year by 30 days for the next four years.

Relatedly, because the pandemic had very different effects on students, different interventions are needed to help those students who suffered steep setbacks. Targeted approaches like individual or small-group tutoring could provide the additional time and support to help struggling students get back on track. School districts in Kansas are considering paying teachers more money to teach summer programs. Rhode Island and New Hampshire are working with Khan Academy, the online learning site, to launch a tutoring platform. And Idaho gave a portion of its earlier stimulus funds directly to low- and moderate-income families to purchase educational materials, devices and services.

These examples represent different visions for improving student outcomes, and there may be more than one best option. But that’s the point. As the next budget season approaches, will district leaders find themselves using the go-to strategy of the last five decades, or will they meet the moment with new and different ideas for what students need now?

Marguerite Roza is research professor at Georgetown University and director of Edunomics Lab. Chad Aldeman is policy director at Edunomics Lab. Originally published at Route Fifty.

District leaders are under pressure to wisely—and quickly—spend an unprecedented pot of federal education relief aid to support students and their learning. Leaders are weighing top-down, systemwide summer programs, high-dose tutoring and more. But there’s another obvious and thoughtful option to consider: giving some of those dollars directly to schools to decide how best to spend on behalf of their students.

Why would leaders consider this move as a piece of their spending puzzle? Well, it delivers in all the ways that matter: it’s intentionally equitable, transparent, and designed to foster community engagement regarding customizing the use of the funds.

Here’s what that could look like: on average, districts got some $2,400 per pupil. A district could choose to allocate a portion of those funds directly to schools like this:

$600 per student

+$400 per economically disadvantaged student

+$400 per English learner

Each school would then have a flexible sum that could be deployed in ways that meet the specific needs of their students.

A few districts, like Atlanta, Chicago and Denver, have already embraced the option to dole out a portion of their federal relief funds to schools. But so far, they’re a conspicuous minority. In this last pandemic year, we’ve seen firsthand the district habit to default to making one-size-fits-all centralized spending decisions on behalf of schools. It’s a habit worth reconsidering.

Rather than crafting a spending plan filled with new district-run programs, new system-wide staffing allocations, and across-the-board changes to schedules and planning time, districts could give a portion of the one-time funds to schools to use in ways that work best for their students, parents, and staff.

Allocating a portion of the funds in this way ensures that the dollars are deployed equitably across schools. And that’s important, because equity may not be guaranteed with some district-run programs. Take for instance a plan to add a counselor to every middle school, regardless of school size and student needs. Such a plan could unintentionally drive more dollars per pupil to smaller schools or even more affluent schools. Or where districts use a “peanut butter” strategy to reduce all class sizes by two, they may find they did little to target resources to the students with the greatest needs.

Sending dollars to schools in per-pupil increments helps with transparency, too. These per-student investments are easily recognizable: no fuzzy math required. Any principal, parent or community member can easily see and understand where the federal aid is going when it’s distributed via student count and types. And that transparency matters. In a recent national survey, 91% of parents said it was very important for schools in their state to be transparent with the public about how the new federal dollars are spent.

This approach can also enable more meaningful public engagement. Districts are required to seek community input on their plans to spend these federal funds. Pushing some aid directly to schools could tap authentic input at the place where that community is already engaged. We know the district central office isn’t the part of the system where families are most connected; that connection is with their schools. Moving a portion of the relief funds to schools could provide more opportunities for families to speak up on how these dollars help their students.

Since schools—not district central offices—are the places where learning happens, principals are often more attuned to what their students (and families) need. Empowering school leaders with spending choices could result in more nuanced—and ultimately more effective—approaches to accelerating student learning. So, a school filled with English learners could focus on deeper investments in language support; a school with significant community trauma could hire a social worker.

And, principals know the strengths and weaknesses of their staff. Principals know what interventions and tradeoffs the school community will get behind and which ones could fall flat.

Some districts may be uncomfortable with the idea of having different schools make different choices with their federal funds. And yes—rather than uniformity, districts would have to accept varied approaches across their schools. But that’s part of the point. If there’s any hope that this massive infusion of flexible funds will spark some innovation, that’s more likely to happen at the building level where individuals don’t carry the responsibility of serving the entire system, and needn’t factor in the larger politics of each choice made. Principals are well positioned to spark potential innovations, leveraging neighborhood-specific community partners in new ways or offering existing staff added pay to take on extra duties to support students and families.

The pandemic has roiled pretty much everything in education. That includes student enrollment, which in turn determines the funding and/or staffing a school gets. Here again, we’re seeing some districts manage the effects of enrollment flux by central fiat, using a portion of the federal aid to buffer schools from the losses (financial or staffing) that would otherwise come with decreased enrollment. But this is an area where schools can thread the needle themselves. Letting schools choose whether to apply their per-student allocations to mitigate losses means they own the decisions about redirecting their staff, adjusting programs, and making tradeoffs that both meet the needs of their students and account for longer-term enrollment shifts in the building.

This recommendation may make some district leaders uncomfortable. Why turn over their responsibilities to the principals they supervise? Is that even allowable? (Yes!)

We get it. Central offices are tasked with making decisions. And they’re supposed to submit plans for how this money gets spent. But that doesn’t prohibit them from submitting a plan that simply spells out how they will apportion those dollars across schools. Passing some federal education relief dollars directly to schools represents a real opportunity to let our school leaders lead.

Marguerite Roza is research professor at Georgetown University and director of Edunomics Lab. Jessica Swanson is a senior research fellow at Edunomics Lab and former deputy chief of finance, Office of Resource Strategy, at D.C. Public Schools.

District leaders may be celebrating the $122 billion in stimulus relief Congress approved for K-12 schools last month. But with more money comes more pressure for local leaders to spend those dollars in ways that do the most good for students while avoiding budget pitfalls.

There are few limitations on the funds. The law stipulates that 20 percent of the money be used to “address learning loss” among students through the use of “evidence-based interventions.” Congressional appropriators listed summer programs, extended school days, or afterschool programs as optional uses of money, but, as a practical matter, districts could justify almost anything from tutoring to improving building-ventilation or even adding more staff. Honestly, we’re challenged to find something that districts couldn’t spend their money on.

However, the aid is temporary. Leaders who commit to things they won’t be able to afford once the money runs out are setting themselves up to fall off a funding cliff in a few years.

So, how can district leaders make good spending choices? Now is a great time to employ the classic “would you rather” test to help explore spending tradeoffs and think through the cost and value of competing investments with finite dollars at hand. Crafting a range of spending options that all carry the same price tag can help leaders grapple with which option has the potential to do the most good for students, while acknowledging the tradeoffs associated with each choice.

The latest round of stimulus works out to an average of $2,450 per student, although the amounts vary widely by state and school district. Consider the following spending options for a district aiming to spend a portion of its money to alleviate unfinished student learning. Each option would cost about the same $1,000 per pupil. For that amount, a district could:

A. Reduce class sizes by two students for a year
B. Extend a school year by four weeks for all students
C. Provide one-third of students with a year’s intensive tutoring
D. Offer 4-week learning camps for all K-5 students this summer and next
E. Give principals the money to decide what makes the most sense in their school

These are back-of-the-envelope estimates, and districts should run their own numbers. But there are clear tradeoffs across and within each option.

The class size reductions in option A would reduce each teacher’s workload a bit, but they would not add any more instructional time for students who may have only received a partial education this year. To make it work, districts would need to hire new, full-time teachers, which could get tricky when the money runs out.

Option B would add instructional time for students, but like option A, it’s a one-size-fits-all approach, meaning the dollars wouldn’t be targeted specifically to the kids who need the most support.

The tutoring in option C could be used to target aid directly to the students who needed it the most. Success will hinge on whether schools can launch a large-scale, effective tutoring program outside of their normal classroom schedules, as well as whether the students who need it agree to participate.

Context matters too. For instance, the learning camps in option D may work better in communities where there’s more appetite for summer programs, but take-up rates would depend on community preferences and the availability of competing options.

Shifting the decisions to principals, as would be the case with option E, allows school leaders to customize supports based on the needs of their own mix of students. While that might spur some innovative responses, it would mean less consistency from school to school.

Another important step in the “would you rather” test is to consider what use of the funds would bring the most value to the family. From a family’s perspective, does their child need tutoring or a summer camp? Or would they prefer to spend the $1,000 on something else entirely?

Every district will need to decide which tradeoffs make sense based on their own community. But whatever option(s) a district picks (from this list or one they draft themselves), the imperative for all district leaders is the same: Focusing on doing the most for students with the money.

Education spending always involves choices. Smart choices require understanding the value of each dollar, and “would you rather” questions help leaders to reflect on their assumptions about how a program or service is best structured, what outcomes will be achieved, the benefit to the student, and at what cost.

“Would you rather” choices also help build community engagement and trust. Parents, teachers, and other stakeholders can be invited to weigh their preferences among different cost-equivalent scenarios.

It’s no accident that all the spending options presented above are cost-equivalent investments over a limited period of time. That’s because districts can get into trouble when they obligate themselves to recurring spending that has no end date.

Given the time-limited nature of the federal funds, we caution districts against using the funds to hire a slew of new employees in the same ways as they did pre-pandemic. When the money runs out, no district wants to be considering furloughs or layoffs a few years from now. And there are other, more financially sustainable options for adding labor, such as contracting or paying stipends to current staff who agree to take on more work.

One thing’s for sure: District leaders should prepare to be judged for how they spend their federal relief money. Big one-time sums draw big scrutiny. Those who take time now to weigh a range of cost-equivalent options may avoid decisions that come back to haunt them long after the pandemic abates.

Marguerite Roza is research professor at Georgetown University and director of Edunomics Lab, where Chad Aldeman is policy director.

As state lawmakers reconvene this fall to reckon with gaping pandemic-induced budget holes, many will have to cut K-12 school funding. That leaves state leaders with the critical decision of how to cut, with many experts warning against any option that burdens high-need districts with an undue share of the pain. One way that states can heed that warning is by finally ridding themselves of legacy “hold-harmless” provisions that undermine states’ own school funding equity goals.

Many state legislatures have overhauled their funding formulas in recent decades with the goal of distributing state and local dollars more equitably across districts, and funneling more to districts with higher student needs. But to lessen the blow to districts that stood to lose money—and to garner the needed votes to pass a new formula—lawmakers effectively added escape clauses, holding some districts harmless from the fiscal impacts of the new formula.

What’s so wrong with this? While hold-harmless (or “grandfather”) provisions can take several forms, the net result is often the same. Scarce dollars get sent to some districts at the expense of others. In many cases those benefitting are wealthier, whiter districts and not the districts with the highest needs. Today, when state revenues are collapsing, an extra state dollar sent to a district via a hold-harmless clause means a deeper cut to another district—likely in the very districts that arguably need the most state aid.

Pennsylvania is the poster child for how hold-harmless provisions can subvert the state’s own school funding equity principles. The state’s 2016 formula was designed to remedy prior funding inequities, but since the Commonwealth still guarantees each district at least the same level of funding it got in 2015, only a portion of the state’s funds flow through the new formula. That means over 100 districts receive more than double the state formula allotment, and conversely, the 100 poorest districts are shorted $533 million (while serving a disproportionate share of the state’s Black and Latinx students).

Typically, these hold-harmless compromises struck to enable passage of new, more equitable funding formulas stay on the books for decades. While the term “hold harmless” sounds benevolent, policies like Illinois’ 2017 formula (with its accompanying hold-harmless provision) can work to perpetuate inequity across socioeconomic and racial lines when state funds are scarce.

The provisions can take different forms. States like Florida have what’s been dubbed “phantom student funding,” meaning the state continues to allocate funds to districts for students no longer enrolled. That reduces the pot of available dollars for the very real students who are enrolled elsewhere. Similarly, Massachusetts ensures that each district receives at least as much state aid as the prior year —even if the district now serves fewer students and/or those students have fewer needs. The biggest beneficiaries of this hold-harmless policy across the state? Non-low-income students and white students.

Another grandfathering clause involves exemptions to state-wide local revenue caps. These caps tend to limit how much (or at what rate) local revenues can be raised for schools. Those districts exempted from the cap (per the grandfathering clause) are permitted to levy local taxes at higher rates than allowed by others. While these provisions do not redirect state dollars away from needy districts, they do serve to erode fairness in state funding formulas—especially when it’s the wealthier districts that benefit. A clause in Michigan’s 1994 overhauled formula still permits the state’s wealthiest districts to raise non-formula local revenues, perpetuating stark resource inequities between demographically similar neighboring districts. In Washington, negative reactions in some districts to the state’s 2017 funding formula prompted the legislature to then reverse its newly imposed cap on local levies, reintroducing the very inequities the law was designed to address.

Why tackle these provisions now? In many cases, doing away with hold-harmless provisions could free up money that can prevent the need for deeper cuts elsewhere. And in other cases, the clause simply means inequities will widen as the pool of state dollars shrinks (and hold-harmless districts continue to tap into local money). States that move to rid themselves of hold-harmless policies can demonstrate good-faith effort toward “maintenance of equity,” where high-poverty districts are shielded from the devastating, disproportionate cuts they suffered in the last recession.

In some states the pandemic is prompting new hold-harmless policies to protect from enrollment loss (like California has done, and as proposed in North Carolina). To those tempted to follow suit, recall that these provisions can be very tough to reverse down the road. A warning for those determined to go this route: Consider including an expiration date. No one wants to have to wait for the next crisis to reverse inequitable policies put in place during the one we’re grappling with now.

While taking away money is never popular, the current economic crisis likely gives states more political cover to address these problematic provisions. And districts losing their hold-harmless protections, in turn, may find more latitude to make the undoubtedly disruptive budget changes needed to offset their losses. None of this is to say it will be politically easy. Cutting never is.

Dr. Marguerite Roza is director of the Edunomics Lab and a research professor at Georgetown University’s McCourt School of Public Policy, where she leads the Certificate in Education Finance program. Hannah Jarmolowski is a research fellow at the Edunomics Lab at Georgetown University.