ESSER Countdown: Six Months To Go

In the words of the Swedish rock band Europe, “It’s the final countdown.” The deadline for the state and local education agencies' (LEA) obligations to obligate the last of their Elementary and Secondary School Emergency Relief (ESSER) funds is quickly approaching. September 30th, 2024 is the last day for American Rescue Plan (ARP) Act ESSER funds to be obligated. Here is the latest on funding allocations, deadline extensions, and more.

Current Spend

As of the latest reporting period ending in December 2023, only ~60% of ARP ESSER funds were awarded. It should be noted that federal reporting only captures dollars spent, not just obligated. Experts agree that district spending is currently on track to meet spending deadlines.

• 99.6% of CARES Act funds for education have been spent and reimbursed as of Dec. 22.
• 97% of education funds under ESSER II/CRRSA have been spent and reimbursed as of Dec. 22.
• 58% of ARP funds have been spent and reimbursed as of Dec. 22.

Extension Requests

The U.S. Department of Education (USDE) have provided some flexibility for extending deadlines, but only for liquidation (pay of funds), not obligation. As of Jan. 17, no states have yet requested extended spending deadlines for K-12 funding for ARP ESSER. Most school districts don't plan to extend their deadline for spending federal pandemic relief funds (ESSER), with only 13% considering applying for extra time and 65% not seeking an extension.

USDE updated extension guidance (1/9/2024) advises states that intend to apply for an extended spending deadline for ARP ESSER funds must demonstrate how spending extensions would allow them to address learning loss. The department encourages extension investment in strategies to support student attendance, high-quality tutoring, and increase summer and extended learning time. Those with approved applications could spend ARP dollars through March 28, 2026, provided the money is obligated by Sept. 30, 2024.

• 12 states and the District of Columbia and Puerto Rico requested and received approvals for late liquidation for ESSER I: Connecticut, Illinois, Indiana, Mississippi, Nevada, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin.
• Six states have approval for late liquidation under ESSER II: Delaware, Kentucky, Massachusetts, New Jersey, New York, and South Carolina

Extension requests are just a stop gap measure for any district facing major budget deficits. Enrollment declines and rising employee salaries will persist past the end of any extension, meaning serious budget conversations will need to happen at the district level.

What Now?

Right now, school boards across the country are in the midst of working on their first budget post federal relief funds. A study of 200 school board budget meetings by Georgetown’s Edunomics Lab found, “the majority of trustees in these meetings aren’t engaging on budget discussions beyond a generic “let’s protect students and classrooms” statement or a “hearty thanks to the CFO for the presentation.” Too rarely do trustees investigate different budget options, weigh tradeoffs or explore expected impacts using student data.”

As you develop a balanced budget for the next fiscal year, here are some key questions to consider.

1. What’s the ROI?

Many elementary and secondary schools have very different needs than when they entered the pandemic, and shifting student demographics can drastically change state aid allocation. Re-assess programs and services introduced before the pandemic to determine if they still meet student needs. Do you have an ESSER investment that has seen a more significant positive impact than a prior investment? Check-out North Carolina Department of Public Instruction’s ESSER Funding Cliff Toolkit for a step-by-step guide to reviewing and planning your budget post ESSER.

“The toolkit is designed to support leaders through the process of reviewing data, determining Return on Investment (ROI) for ESSER investments, and developing a budget process to support their 2024-2025 budget planning.  The toolkit is explicitly designed to support conversations and discussions between decision makers including the superintendent (or charter school leader), chief finance officer, and administrators with budgetary responsibilities. Reviewing data, determining ROI, and budgeting should be a collaborative effort that supports and encourages healthy, yet transparent, dialogue around which ESSER investments were most impactful to understand what should or should not be funded moving forward."

2. What Does the Community Say?

In times of budget cuts, there are no decisions that will make everyone happy. It is important to get the community’s feedback and buy-in on any drastic budget changes. Communicate student progress on purchases and spending priorities with stakeholders to justify any shift in spending priorities and how they have contributed to the school’s vision and goals.

3. Where Do Our ESSER Dollars Stand?

Take stock of your remaining portion of ESSER dollars. Will you be able to meet the obligation deadline? Schools can reduce the risk of losing all ESSER funded purchases at once by requesting an extension of liquidation or utilizing multi-year contract options. This way, if your school cannot allocate immediate replacement funding for a product or service, you can have extra time to do so while still keeping those supports for students.

Looking Ahead to the End of ESSER

Unfortunately, the end of ESSER is coinciding with falling district enrollments and slowing state revenues. Several states are moving to minimize their “hold harmless” policies, which shield districts from large drops in state aid to sudden enrollment declines.

In the coming months, districts must strike a delicate balance between addressing immediate needs and planning for long-term sustainability. By asking the right questions and making informed decisions, education leaders can confidently navigate the ESSER countdown and ensure that funds are utilized effectively to support student success well into the future.