Federal COVID relief aid to schools will dry up soon. Are districts ready?

For the past couple of years, the Detroit Public Schools Community District has been able to tap its share of federal COVID relief aid to fund after-school enrichment programs that help students recover from learning lost during the pandemic.

But those funds will soon run out, and Detroit and other districts face some tough decisions about which programs and employees they can afford to keep once federal support is gone. 

Detroit parent Aliya Moore said she is concerned that her daughter’s newly funded after-school debate team will be “snatched,” along with funding for new positions such as parent outreach coordinators.

“That’s my biggest fear,” said Moore, who is a frequent critic of the district. “Just going into (next) school year, and a lot of these people are not there.”

For districts, there’s an added challenge: Looming deadlines attached to the federal aid put them under time pressure to map out their spending and use up the remaining funds quickly and effectively, while also figuring out how they’ll manage without it. 

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What they’re eager to prevent is a so-called fiscal cliff, where a steep drop in funding forces sudden and severe budget cuts that could ripple throughout the school system.

Superintendents in Michigan are generally optimistic that their districts can avoid that scenario, especially given the prospect of increased state funding. But experts say it will take work.

“Districts need to plan now, so students don’t face chaos at the start of the 2024 school year with classrooms and teachers shuffled, programs abruptly dropped, demoralized staff, and leaders focusing on nothing but budget woes,” wrote Marguerite Roza, a professor at Georgetown University who studies school finance, in a recent article.

What is federal COVID aid?

Michigan hasn’t seen anything like this: more than $6 billion in federal funds aimed at helping students recover from the pandemic, by far the largest one-time federal investment in schools in state history. Most of it was distributed based on poverty levels in each district’s community. The Detroit district alone received $1.27 billion.

Congress gave districts plenty of leeway on how they could spend the Elementary and Secondary School Emergency Relief money, or ESSER funds. So far, they have used it for a wide array of projects, including summer school expansions, staff bonuses, air filtration improvements, building renovations, tutoring, and mental health programs.

But they’re on a tight schedule to spend it. The federal government wants the funds deployed quickly to accelerate the recovery from the pandemic.  So districts have only until 2024 to get state approval for all their spending plans. Much of the spending itself must be complete by 2025, though districts may apply for extensions through 2026.

Districts aim to reduce spending without affecting the classroom

Having such a massive spending initiative roll out — and wrap up — so quickly was never going to be easy for Michigan districts. The state’s highest-poverty districts, which received by far the most funding per student, are taking the longest to spend the funds amid supply chain disruptions and a tight labor market.

Even districts that budgeted carefully and avoided long-term spending commitments that couldn’t be sustained without federal support will see disruptions from the loss of short-term programming that has been critical to the COVID recovery effort.

The Detroit Public Schools Community District, for instance, has notified as many as 100 staff members, including central office staff, master teachers, deans of culture, and attendance agents, that their positions paid for in part using federal COVID aid may be cut or consolidated by the end of the school year. 

Neighboring Ecorse Public Schools will end a tutoring program designed to help students manage the effects of the pandemic.

DPSCD Superintendent Nikolai Vitti said the district isn’t planning to make budget recommendations that would hurt student achievement. “However, at a high level, if hard decisions are not made, then we will not be able to fund some of the COVID initiatives that we believe are most important to students,” he said.

Detroit has moved relatively quickly to plan out and spend its COVID aid. Of the $1.27 billion DPSCD received, $700 million is already earmarked for an infrastructure program that will renovate and rebuild schools across the city. The rest has gone toward expanding programming and providing additional staff at individual schools, among other things. 

Vitti said that although no decision has been made yet, “it will be difficult to fund nurses and expand after-school programming and summer school next year.”

The DPSCD school board will convene on Saturday for a retreat and its first in-depth conversation about the expiring funds. Board members have insisted that district leaders find a way to maintain expanded mental health programming, even if it was funded by COVID aid.

Moore, whose daughter is a seventh-grader at Paul Robeson Malcolm X Academy, plans to attend Saturday’s meeting to hear what COVID-funded initiatives board members intend to keep or cut. With pandemic recovery far from complete, she’s hoping the board will prioritize after-school programming and academic recovery programs moving into the 2023-24 school year. 

“I don’t feel like at this time any school should be denied after-school opportunities,” she said.

Some districts have huge sums left to spend

For other districts, it’s the federal deadlines that are proving to be the bigger challenge. 

The issue came into sharp relief last year when hundreds of superintendents nationwide asked the U.S. Department of Education to extend the deadlines, saying that supply chain and staffing problems were slowing spending. The department said no, barring a change to federal law. (In Virginia,  lawmakers are seeking to ratchet up the pressure with a bill that would require districts to return unspent funding to the state this summer.)

In Michigan, some observers have argued that state lawmakers should withhold new investments from districts that still have enormous amounts of federal funding to spend.

As of January, Michigan districts had spent 30 percent of the third and largest round of federal funding. They still have $2.1 billion to spend — which is equivalent to 10 percent of all state education spending this year.

Detroit has spent 38 percent of its federal funds, but other districts that received very high levels of federal aid — roughly defined as more than $10,000 per pupil — have much more ground to make up. 

Flint Community Schools has spent 12 percent of the third wave of COVID funds. Hamtramck Public Schools spent 14 percent, Eastpointe Community Schools spent 5 percent, and Pontiac City School District spent 7 percent.

Benton Harbor Area Schools hasn’t spent any of its funds.

A recent report from the Citizens Research Council, a Michigan think tank, linked the vast majority of the unspent funds to a handful of high-poverty communities.

The report warns that rapid spending won’t be easy given the staff shortages and supply chain problems that have plagued the pandemic-era economy.

It notes, too, that spending the money effectively will be even tougher on a tight timeline. 

Flint Superintendent Kevelin Jones said his district will be able to spend the money on time, and that it has emphasized one-time investments to make it easier to manage the end of COVID funding. In 2021, the district used federal funds to pay teachers one-time bonuses of $22,500.

“From the beginning, the district understood that ESSER funds served as a one-time” funding source, he said in a statement, noting that the goal of its spending was still to create a lasting impact.

Strong state budget provides a backstop

The closest parallel to the challenges facing Michigan schools may be the 2011 expiration of federal funds linked to the Great Recession.

Many districts used those dollars to build new programs, hoping that the state would step in to continue them when federal dollars dried up. Instead, amid a disastrous economy, state leaders opted for a steep cut to school funding, leading to a brutal round of cutbacks in school programming.

Things look different this time around. The state budget is far stronger, bolstered by historically high sales tax revenues. Gov. Gretchen Whitmer’s recent budget proposal taps an estimated $4 billion school aid surplus to call for a second straight major increase in school funding. Democrats, fully empowered in Lansing for the first time in decades, say they are eager to support increased school spending.

While the federal COVID aid program is much larger than the Great Recession package was, experts say the boost in state funding this time will do much to smooth the transition away from pandemic-related funding and ease the risk of a fiscal cliff.

Westwood Community School District, set in a high-poverty suburb west of Detroit, avoided using COVID aid to pay salaries or hire staff. Superintendent Stiles Simmons said the district used the money instead to pay $1,000 bonuses to classroom aides and improve facilities. When it needed new staff to help students cope with the pandemic, it relied on new state funding to cover salaries.

When the funds expire, aides might miss their bonuses, Simmons said, and the district won’t be able to continue paying educators $60 an hour to teach summer school. But he said he’s more worried about the possibility of a recession or a change in political support for schools than the expiration of COVID funds.

“If things continue as they are at this point, it’s difficult to see the cliff, but just knowing how things ebb and flow … especially with the economy, we have to always be on the lookout,” he said.

Even with rising state funding, DPSCD school board member Sherry Gay-Dagnogo said the coming budget adjustments for school districts warrant a reconsideration of the way Michigan funds schools, calling the current formula inequitable. Since the passage of Proposal A in 1994, Michigan school funding has been based on the number of students attending the district. In Detroit, a series of economic downturns and a decline in the city’s population eroded student enrollment.

“Now’s the time, because we have a Democratic majority, to revisit Proposal A,” Gay-Dagnogo said. “We’re not talking about taking away funds from other districts. We’re talking about equalizing the dollars.”

She added: “You can’t plug in short term money for long term positions in perpetuity, but we have to have a solution for how to make sure that we are not displacing (staff) that really care and want to serve our children properly.”

Koby Levin is a reporter for Chalkbeat Detroit covering K-12 schools and early childhood education. Contact Koby at klevin@chalkbeat.org.

Ethan Bakuli is a reporter for Chalkbeat Detroit covering Detroit Public Schools Community District. Contact Ethan at ebakuli@chalkbeat.org.