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What Coronavirus and the CARES Act Mean for School Budgets

As families, educators, and community leaders wrestle with COVID-19, we'll be trying to bring conversations to readers that will be helpful in confronting the challenge.

Nora Gordon, an economist at Georgetown University, is one of the nation's leading scholars of federal education spending. She is also a research associate of the National Bureau of Economic Research, nonresident fellow at the Urban Institute, and associate editor of Education Finance and Policy. I recently had the chance to talk with Nora about what the coronavirus and the CARES Act will mean for school budgets. Here's what she had to say.

Rick: Congress recently passed a new stimulus bill with $13.5 billion available for formula grants to states and an additional $3 billion to be divided up for governors to allocate at their discretion. What will this actually mean for districts and schools? Is this enough money?

Nora: This money is for the short-term COVID-19 response. It's not for the long haul ahead, where we'll need to make up for lost state and local revenue from the recession—and support the higher costs schools are going to face in getting students caught up. Even as a starting point, when we put $13.5 billion into perspective, it's not much for the short-term response. For fiscal year 2019, Congress appropriated $13.5 billion for special education, and $15.9 billion for Title I—not recovery money, just business as usual.

Rick: What are some of the expenses that schools and districts could cover with these new funds?

Nora: These funds—and here, I'll focus on the $13.5 billion in formula grants through the Elementary and Secondary Schools Emergency Relief Fund, or ESSERF—are intended to help immediately with costs related to the crisis. The law gives many options for what these costs might include, including (but not limited to!) public-health coordination, sanitation, ed tech, summer school and after-school programs, and mental health. It also has some very expansive options at the school and district levels: "providing principals and others [sic] school leaders with the resources necessary to address the needs of their individual schools" and "activities necessary to maintain the operation of and continuity of services in local educational agencies."

Even though this language reads to me as if the funds can support many activities, districts need to hear this from their states, which in turn need to hear it from the U.S. Department of Education. Our compliance structure and culture means that yes, even in times like these, districts are worried about the monitoring of their federal funds. That's why we need clear federal guidance, and soon.

Rick: What specific things are districts worried about on the compliance front?

For one thing, maybe because these funds are being distributed within states according to existing district Title I allocations, some people are confused about whether this aid is Title I. It isn't.

There are important differences between these funds and Title I. ESSERF has no supplement not supplant provision. Supplement not supplant in other programs is intended to prevent districts from using federal funds to save state and local dollars, rather than to provide more services. This makes sense, because supplement not supplant in a program like Title I is all about imagining some counterfactual situation without funds from that program, and the counterfactual is out the window right now. ESSERF does have a maintenance-of-effort requirement, but it also has a waiver option for this for places where state and district revenue for schools cannot remain at prior levels.

I'm also hearing that the equitable-services requirements of ESSERF are hard to figure out. This is about funds for private schools serving low-income children. Even though these funds aren't a big part of the money, the requirement is a big deal, because districts that can't tell if they are in compliance with equitable services will be reluctant to take any ESSERF money. Hopefully the federal guidance will spell this out clearly.

Rick: What should we be spending money on right now?

Nora: Now is a good time to remember that students are humans. I've been thinking a lot of Maslow's hierarchy of needs these days. What families need help with now are their regular expenses, like rent and food, as they lose income from the economic impacts of COVID-19. Even when schools reopen, these parental-income shocks will stay with us for some time. We should be spending money on cash transfers, SNAP, Medicaid, unemployment—these things aren't just humane, they are also first-order needs for building human capital.

Like any economist, I love cash. It's a great way to meet local needs that vary a lot and the federal government can't fully anticipate. Just as we have those $1,200 checks coming out to help households with different needs, I'd like to see maximally flexible aid for school districts with different needs. The less time districts need to spend navigating a web of federal grants with different allowable uses, the more time they have to help their students, and the faster they can get their federal funds.

Rick: What should we be spending money on in the coming years?

Nora: At the same time that states and districts will be experiencing a huge hit to revenue, schools will be facing greater needs. To get kids back on track after all the learning that isn't happening now, we'll have costs from summer school, extended day, tutoring. This is going to be critical for the students most at risk of missing out on distance learning—like those with disabilities, English- language learners, homeless students, those in rural districts, or those in Bureau of Indian Education schools.

Rick: Okay, and besides providing the funds, what's the biggest thing states or the feds can do to help with all this?

Nora: Provide flexibly. We don't want to put all the federal money into programs like Title I and IDEA, because districts are going to be losing a lot of general aid from their states. State general aid is very unconstrained, and existing federal programs are divided up into pots with more specific allowable uses. The State Fiscal Stabilization Fund from 2009 is a good model for flexible federal funding. It sent federal funds to states based on population and poverty, and then states ran funds through their own formulas to the district level. This helped maintain school spending and was a way to let districts use federal aid to cover basic expenses, like paying regular classroom teachers. That type of flexibility in federal aid will be key to making up for the recessionary impact on state aid.

Rick: What else have we learned from past crises and recessions about what works for students, schools, and systems?

Nora: After the Great Recession, we learned that if you appropriate enough federal funds, they can fill in for state and local funds—but the federal dollars need to keep flowing as long as those tax bases continue to suffer.

This interview has been edited and condensed for clarity.

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