Wise Spending of Your Federal Relief Funds
Who decides how to spend the money generated by the American Rescue Plan? Districts do, and it’s a huge responsibility.
BY MARGUERITE ROZA AND CHAD ALDEMAN/School Administrator, August 2021

Marguerite Roza, director of the Edunomics Lab at Georgetown University, develops practical models for making complex school finance and spending decisions. PHOTO COURTESY OF THE EDUNOMICS LAB
Hours after the American Rescue Plan was signed into law in March, we started hearing from overwhelmed school district leaders with urgent financial questions: “What if we can’t spend all this money by the deadline?” and “How do I write a budget for federal dollars that just quadrupled?” And this one: “What exactly do they want us to do with this money?”

One message simply said, “HELP!”

Even seasoned education leaders were facing financial conditions they’d never before seen. The federal funding is highly flexible, meaning school districts face important decisions on how to spend it. That flexibility is both a blessing and a challenge as intense planning is involved in making decisions about how to use flexible funds.

In response, the Edunomics Lab, a Georgetown University research center modeling complex education finance decisions, released a set of principles to guide spending decisions. In the hurried months since the bill passed, districts have worked at warp speed to craft interim budgets, pencil out costs, vet contractors and respond to state and federal requests for information, all in the midst of the annual budget cycle and contract negotiations.

Even so, countless unknowns linger: How will state funding play out? How many students will come back to school? And the most vexing: How deep are the learning gaps and what investments will best address them?

As the calendar turns to fall, now is a good time for school district leaders to step back and take stock of where things stand. These five key questions can help district leaders ensure they make the most of their federal dollars.

»Is the district on pace to be financially sustainable?

At this point, school districts already have begun obligating their federal money. Some have added staff, awarded pay raises, contracted for building repairs, purchased equipment and backfilled existing budgets and more. With spending pressures coming from every direction, districts going forward could establish a multiyear spending schedule for the remaining funds.

Rather than let the money slowly drain away and mix with other funds, district leaders could commit to drawing it down in prescheduled allotments, such as 40 percent in 2021-22, 30 percent in 2022-23, 20 percent in 2023-24, and 10 percent in 2024-25.

Setting a plan with at least a high-level drawdown schedule will help frame budget tradeoffs and the potential choices available. Getting agreement on a spending schedule also will reinforce that these are one-time funds and set expectations during labor negotiations.

A spending schedule coupled with multiyear forecasting can help districts steer away from spending federal relief funds on recurring costs, such as across-the-board salary raises or hiring new, full-time employees in permanent roles. Instead, district leaders might consider other, more financially sustainable options for adding labor, such as outsourcing, paying stipends to current staff who agree to take on more work or other creative ideas.

Finding nonrecurring options might take some creativity. The Brooklyn Community High School in New York City is paying students to provide one-on-one tutoring to classmates who need additional support. While that approach wouldn’t work in all schools, existing staff often have more labor to give, and districts can use stipends to pay for it.

According to a Pew Research analysis of national data, teachers are more likely than other workers to take on second jobs, and they may appreciate the chance at extra income. Plus, as school district employees, they typically have health benefits already, so any new money can go directly into their pockets. Stipends needn’t be recurring and can be discontinued when federal funding dries up.

»Are the relief funds flowing equitably across the district’s schools?

Imagine it’s 2023 and a report shows your district disproportionately invested its federal funds in the more affluent schools. While hypothetical, this scenario is likely to play out in some communities as leaders use federal funds to add staff or increase compensation.

The numbers vary widely by state and district, but the latest round of relief funds represent about $2,450 per student nationwide. To avoid inequitable allocations, district leaders can start by calculating how much money they will receive and then frame their spending decisions on the per-student allocations by school. Putting the spending figures in per-student terms not only helps compare a range of choices on an apples-to-apples basis, but it also helps school leaders track whether funds are being spent on the most disadvantaged students.

To keep track of per-pupil spending figures, districts will want to both estimate and subsequently track the number and demographics of the students who are actually served. In a scan of different summer plans, we found calls for a $13 million summer program in Atlanta estimated to serve 24,000 students. If all the students show up, the program will come in at $458 per pupil. If half don’t show, the per-pupil costs could double.

We’ve seen costs for summer programs vary from $400 to $3,000 per pupil and tutoring costs vary from $200 to $3,500 per pupil. For targeted programs or other investments with uncertain enrollment projections, districts may want to allow spending to scale up or down based on student demand rather than budgeting for a program based on an all-or-nothing sum. Big one-time expenses are likely to look even larger in the rearview mirror if the intended participants don’t turn out.

Moreover, now that states are reporting school-by-school spending figures, leaders have a tool to help monitor whether their spending is likely to enhance equity or exacerbate existing inequities. In addition to the per-pupil costs of interventions, leaders will want to explore how the federal dollars are being allocated across schools in the district, and how much of the spending thus far has gone toward the most disadvantaged students. If district leaders can’t answer those questions, or if the money is disproportionately going toward the most advantaged students, it may be time to re-evaluate.

»Is funding reaching students with the highest needs?

The pandemic affected students differently. In addition to targeting spending based on schools and student demographics, district leaders also may want to consider the different academic and social and emotional needs of students. While we can’t yet quantify all the needs, research suggests that academically some students suffered steep setbacks while others stayed on pace or even fared better than normal.

If the pandemic did not affect all students the same, then one-size-fits-all approaches such as extending the school year for all students or reducing class sizes across the board may be unnecessary and expensive. Instead, targeted approaches may be a better fit to keep costs from escalating while helping struggling students get back on track.

The responses also might look different in different parts of the country.

In many places, schools operated remotely for much of the 2020-21 school year. In those districts, students spent less time with teachers and peers so investing in ways to recover that lost time may be high on the list of priorities. For example, by adjusting its school calendar and revising fall and spring breaks, Louisiana’s East Baton Rouge Parish School System found a way to add the equivalent of nine additional days of instruction to the 2021-22 school year.

Districts that operated in-person for much of the year may have different priorities. They may be further along in terms of diagnosing student needs and tailoring their offerings accordingly. Those districts may look toward different types of enrichment activities, facilities or curriculum upgrades or other practices to allow students and families to have a say over how the dollars are spent.
Chad Aldeman is policy director of the Edunomics Lab at Georgetown University. PHOTO COURTESY OF THE EDUNOMICS LAB, GEORGETOWN UNIVERSITY

»How can spending reflect ongoing input from families?

Some leaders will bristle at a call for ensuring community input into spending plans. Expectations that school districts hold large public forums to provide for hours of what may seem like ill-informed public comment on complex budget issues may feel like a stretch right now. But soliciting public input need not happen only at school board meetings.

One way to invite feedback on spending priorities is to ask the community to weigh in on a list of cost-equivalent investments. This can be done by survey or by inviting principals to communicate directly with their parents.

Principals are a particularly important stakeholder group trusted by parents and teachers, and some districts are sending funds directly to schools so they can make decisions that work for their students and families. Chicago budgeted $47 million, or about $132 per pupil, for school leaders to spend at their discretion, and New York City sent $600 million of its federal relief funds, about $625 per student, directly to schools via its student-based funding formula. These moves recognize that principals have a unique lens on student needs, are likely the first group to hear questions and complaints and have a keen sense of whether a given program is likely to work.

Other strategies also work to embrace deeper partnerships with parents and community organizations. Idaho gave a portion of its relief funds directly to low- and moderate-income families to purchase educational materials, devices and services of their own choosing, as opposed to the state purchasing the same device for all students.

Getting that input does mean being transparent about the range of options on the table, the trade-offs involved with each and the metrics that will be used to evaluate success.

»Are the investments working?

Maybe the most important step in making sure the funds do the most for students isn’t a financial step at all. It means taking time away from the spreadsheets to spell out the intended outcomes and then measuring the effects on students.

School district officials can start by creating a way to gauge student progress (or participation or other goals) to see whether investments are achieving their intended objectives. Are reading skills improving? Are middle schoolers engaged? Are high schools on track for their postsecondary goals? Such measures could work to help principals and other leaders modify efforts as they seek to ensure success.

One thing is certain: School districts should prepare to be judged for how they spent their federal relief money. Relief funds undoubtedly will draw big scrutiny. Those who spend the time to compute costs, identify desired outcomes, involve their communities and be nimble along the way will have the most to show for it.

MARGUERITE ROZA is a research professor at Georgetown University in Washington, D.C., and director of the Edunomics Lab. Twitter: @margueriteroza. CHAD ALDEMAN is policy director of the Edunomics Lab.

Additional Resources

A few informational resources on spending the new federal funds on local schools.

»Edunomics Lab series of 30-minute, interactive webinars to help districts decide how to use new federal relief dollars effectively while avoiding long-term spending obligations.

»A presentation by Edunomic Lab’s Marguerite Roza on how districts can make the most of federal funds.

»A national survey of parents by the Walton Family Foundation on using federal relief funds to best benefit their school-age children.

»A Chiefs for Change planning tool that offers a starting point for multiyear planning.

»K-12 Leaders’ Guide to Successful Technology Integration, produced by Digital Promise, that shares lessons from seven years of implementing the Verizon Innovative Learning Schools program, which provides technology, internet access, professional learning and support to hundreds of Title I schools nationwide.