After an unprecedented federal investment in K-12 education, school districts and states are racing to finalize plans for optimizing the final round of pandemic aid, even as they plunge into a future without that support.
Congress in March 2021 approved the third and largest round of pandemic relief for K-12 schools, totaling $122 billion and colloquially known as ESSER III. The funds came with two calendar requirements: “obligate” the money, or commit dollars to particular expenses, by Sept. 30, 2024; and “liquidate,” or transfer funds to their intended recipient, by Jan. 30, 2025.
Districts have spent the last three years pouring those billions of dollars into beefing up staffing for instruction, mental health, and social-emotional support; fixing broken building systems; upgrading outdated technology; and bolstering efforts to protect against viral spread.
Research evidence is mounting that those funds have contributed to students’ academic recovery from the instructional time they lost during the pandemic, though students’ progress hasn’t yet caught up to pre-pandemic levels.
Now, districts face the twin tasks of spending down the final portion of COVID relief aid, and ensuring they haven’t left money on the table, while figuring out how to navigate the next era—one in which students’ needs remain high, but no special infusion of federal funds will be there to address them.
Districts are on track to spend nearly all their ESSER funds, the Education Department says
With a handful of days remaining before the obligation deadline, school districts and state education departments nationwide had collectively obligated 87 percent of ESSER III funds, or roughly $107 billion, according to the U.S. Department of Education.
That number has prompted headlines suggesting districts may end up sending billions of dollars back to the federal government. In Arizona, the state superintendent of education recently called out districts by name that, he said, hadn’t spent any of their ESSER III dollars. But when the local TV station ABC 15 followed up, at least one of those districts, in Pima County, said it had begun spending the funds.
On a call with national education reporters on Sept. 19, Education Department officials said data dashboards, including its own, lag behind the actual amount of money districts have obligated. Using the trajectory of previous rounds of ESSER spending as a model, the department estimates that the federal government will be able to confirm 90 percent of the funds as obligated by Oct. 1, and 99 percent of the funds by January.
Still, the final days of ESSER haven’t been free of chaos. The U.S. Department of Education unveiled a redesigned website earlier this month, but the upgrade caused some pages, including several with crucial guidance on rules and regulations for spending ESSER money, to be unusable.
The outages “caused some challenges in accessing materials,” said Melissa McGrath, chief of staff for the Council of Chief State School Officers, a membership organization for heads of state education departments nationwide. “We have been in communication with officials at the U.S. Department of Education and know they are working to address it.”
A department spokesperson confirmed Tuesday that the agency is aware of the issues with some pages not being accessible. “We are working hard to ensure stakeholders are connected with the resources they need, which includes daily adjustments to the site as we receive and respond to ongoing feedback,” the spokesperson wrote.
Researchers say ESSER money spent on instructional interventions helped improve student learning
The current period of greatly expanded federal funding for K-12 schools began in March 2020, when Congress approved and President Donald Trump signed into law a spending package that included $13.5 billion for schools to pay for tools to prevent the spread of COVID-19, like masks and hand sanitizer. That set of education aid came to be known as ESSER, which stands for Elementary and Secondary Schools Emergency Relief.
Congress followed up in December of that year with another $57 billion for schools, colloquially known as ESSER II.
A few months later, President Joe Biden had taken office and spurred Congress to pass the American Rescue Plan, a massive spending package that included the largest set of relief funds schools had yet received, totaling roughly $122 billion. The Biden administration urged schools to quickly and wisely spend those funds to help students recover and move on, academically and emotionally, from the pandemic.
All told, schools nationwide got roughly $200 billion in pandemic aid from the federal government to invest between 2020 and 2024. That’s roughly a quarter of the overall amount of all the money spent annually on America’s K-12 schools. And it’s more than double what the federal government typically spends in one year on K-12 education.
As the sun now sets on the ESSER era, educators and researchers alike are interrogating how meaningful the funding turned out to be, especially given the wide range of logistical challenges districts faced in making their investments.
ESSER funds flowed to districts through the series of formulas the federal government uses to determine districts’ Title I allocations of annual aid to support high-need students. That formula, among other quirks, sends a disproportionate sum of funds to districts in smaller states. That means some districts with similar levels of poverty received vastly different sums of ESSER III dollars.
Researchers at Harvard and Stanford universities used those funding disparities to compare the effects of increased spending on academic outcomes. They found that, for each $1,000 in additional ESSER spending, test scores in reading and math jumped slightly, according to results published this month in a National Bureau of Economic Research working paper.
In districts that chose to invest their ESSER money specifically in instructional interventions, rather than in infrastructure or staff compensation, students’ test scores reflected roughly a month-and-a-half of additional learning time, said Sean Reardon, an education professor at Stanford University and one of the report’s five co-authors.
These effects mirror the general research consensus on the power of education spending to drive concrete academic improvements, particularly among students from lower-income families.
“Even though the effects were not large, they were about enough to essentially pay for themselves in terms of future earnings increases,” said Tom Kane, an economist and education professor at Harvard.
Despite evidence of success, lawmakers on Capitol Hill appear to have little appetite for further rounds of ESSER. The Biden administration has proposed increases for Title I and other K-12 spending programs, as well as $8 billion in new funds for states to spend on academic recovery. But Biden’s budget is unlikely to pass as proposed, and negotiations over the federal budget for fiscal year 2025 are still far from finished.
U.S. Secretary of Education Miguel Cardona has urged states to pick up the baton and offer more robust funding support to districts. During the call with reporters, department officials praised Indiana and North Carolina for recent new investments in public schools.
But the economic boom that contributed to massive surpluses for state coffers appears to be waning. Some states are already preparing to prune budgets in anticipation of a downturn in revenue. And some states—among them, Arizona, Pennsylvania, New Hampshire, North Carolina, and Wyoming—are in the midst of lawsuits alleging they’re underfunding schools in violation of their constitutions.
Student achievement challenges appear to be particularly acute in states that took the strictest approach to keeping schools and businesses closed during the early part of the pandemic, according to Kane.
“Those communities now have more work to do to help students catch up,” Kane said. “If we don’t do that, we’re in effect forcing students to pay the cost for public health measures that were taken on behalf of all of us.”
Districts that invested ESSER in hiring new staff expect tough decisions on cuts
School districts have been facing down a future without ESSER ever since they got the money in the first place.
Deana Chrzan oversaw finance for the Ashford school district in Connecticut from 2021 until earlier this year—most of the grant period for ESSER III. The 400-student district went on a hiring spree with short-term contractors including behaviorists, speech and language experts, occupational therapists, and reading specialists.
Those roles were short-lived by design, though. “We doubted the federal government would have a plan for continuing to finance some of these things we were going to need going forward,” Chrzan said.
Chrzan just started serving as business manager for the 800-student Woodstock district, which focused ESSER III investment on new staff members, and now has to figure out what to cut to make room for those new employees in future budgets.
In both scenarios, Chrzan worries that taxpayers who are already struggling with bills of their own will be reluctant to approve taxes high enough to keep all these expenses in the budget.
In retrospect, Chrzan thinks the federal government should have given districts a smaller allocation of funds they could have used over a longer period of time. That would have taken off some of the competitive pressure smaller districts like Ashford faced—many qualified job candidates flocked to higher-paying, nearby larger districts like Hartford and New Windsor.
Students have made considerable academic progress, but in her view, they haven’t caught up to where they would have been had the pandemic never happened. Now the money needed to keep up that momentum is going away.
“There’s going to be a reckoning,” she said. “It’s not going to be what’s in the best interest of the children.”
Some states want more time to deplete ESSER dollars
Districts and states that obligate all their ESSER III money by Sept. 30 will unlock the opportunity for some extra flexibility with cash that remains to be spent. States have until Dec. 31 to apply for a “late liquidation” waiver from the federal government, which allows districts that met the obligation deadline to continue liquidating their funds as late as March 28, 2026—about a year-and-a-half from now.
Fifteen percent of superintendents who answered a survey this summer from AASA, the School Superintendents Association, said they need a liquidation extension for some of their ESSER III dollars. Roughly 600 superintendents in 46 states replied.
So far, the department has granted those requests to four states—Delaware, Kansas, Kentucky, and Nebraska—and Puerto Rico.
To justify late liquidation, states have to detail how they or their districts plan to take advantage of the additional time.
Delaware’s application sought to extend the deadline for $137 million worth of spending in nine of the state’s 19 public school districts and one charter school. The application says districts will use the extra time to spend funds for intensive tutoring and HVAC projects. On the latter efforts, some districts experienced delayed shipments because of supply-chain issues lingering from the pandemic disruption.
Kansas, meanwhile, applied only on behalf of its state education department, noting it plans to continue spending $24 million past the liquidation deadline on contracted services like curriculum programs for math and the science of reading; implementation of a competency-based education framework that lets students gain tangible skills at their own pace; and systems for tracking and monitoring students’ academic and social-emotional progress.
The federal education department has also been keeping tabs on states’ and districts’ compliance with two complicated rules that came with the ESSER offering. While spending ESSER money, districts must demonstrate “maintenance of effort”—spending at least as much in state funds on K-12 and higher education as they did the previous year—as well as “maintenance of equity”—spending at least as much in state and local funds on high-poverty K-12 school districts as they did the previous year.
Every state has met maintenance of effort requirements. But Alaska and North Dakota, according to department officials, didn’t meet the maintenance of equity rule.
North Dakota’s violation was small, and the state agency is collaborating with the federal department on a compliance plan.
But tensions have mounted between the department and the state of Alaska. Late last year the department sent Alaska a letter arguing the state had shortchanged four of its largest districts by $17.5 million in state funds.
Since then, Alaska has contested the federal interpretation of its budget process, arguing it owes only a few hundred thousand dollars to one district to comply with the equity rule.
More recently, the department has begun penalizing the state education department by requiring federal approval before the state spends from a pot of $1 million in administrative funds, and labeling the state “high-risk” for receiving future grants.
