School districts in the United States have been facing budgetary and operational challenges for years, with the COVID-19 pandemic worsening the burden. Now K–12 schools have a chance to tackle some of their most pressing issues by tapping into an estimated $90 billion in unspent federal stimulus funding. But the deadline for action is fast approaching: schools must obligate their allocated funds by September 2024,1 although districts in some states have requested and received extensions.2
The Elementary and Secondary School Emergency Relief (ESSER) Fund, enacted three years ago in response to the pandemic, allocated $190 billion in federal funding to US public schools. As its expiration looms, three key questions emerge:
- Where have districts spent ESSER stimulus funds so far?
- How much is left to spend, and how do schools plan to allocate the remaining dollars?
- Are district leaders likely to reconsider their spending priorities once the stimulus funding expires?
We surveyed 487 US K–12 public and charter school district administrators to explore these issues (see sidebar, “About the survey”). The results, as discussed in this article, reveal that schools may fall short of addressing their most critical priorities before the relief funds expire. Most districts are beset by challenges that ESSER funding alone cannot address, such as student learning delays and absenteeism, staffing shortages, deteriorating school infrastructure, and declining student mental and physical health.
In the face of these pressures, leaders are making difficult choices. While they report an increasing and sustained focus on teachers, teaching, and student well-being and support, many expect to deprioritize spending on solutions targeted to learning-delay recovery. Some districts are investing in one-time infrastructure projects to spend down stimulus funds without incurring long-term commitments. Post-stimulus, districts expect to focus on basic operations, moving away from new digital tools and supplements and other purchasing patterns that emerged during the pandemic.
School districts have almost half of ESSER funding available to spend
School administrators will need to move quickly. An estimated $90 billion in funds remains unspent, and districts have yet to budget about a third of those funds. In the first years of ESSER funding, schools spent about $2.7 billion a month on average.3 To use up the remaining dollars, they will need to spend or obligate roughly $5 billion a month between July 2023 and September 2024. The share of relief funding spent to date varies widely by state—in 10 percent of states, schools have spent over 60 percent of allocated ESSER funds,4 while districts in another 10 percent of states have spent less than 40 percent of their allocated funds5 (Exhibit 1).
Some respondents report challenges in spending ESSER funds, such as navigating reporting, compliance, and reimbursement policies (34 percent); inflation (31 percent); and difficulty in balancing competing needs across departments (26 percent). Still, the process has gotten easier over time: one-fifth of district leaders report no challenges in spending ESSER funds, double the number that responded similarly in 2022.
Schools expect to spend on teacher retention and student well-being
In the remaining years of ESSER funding, more than half of districts plan to continue prioritizing both student learning delays and student mental health and well-being. The extent of this prioritization varies somewhat by district poverty levels. A larger percentage of higher-poverty districts plan to focus on addressing learning delays, whereas a larger percentage of lower-poverty districts expect to focus on student mental health and well-being challenges (Exhibit 2).
For many districts, day-to-day operational challenges will take priority. Districts plan to spend most on essentials needed for schools to operate (for example, maintaining facilities, compensating teachers and staff, and addressing student behavior challenges)—a shift from the pandemic-related expenditures (such as pandemic-focused student safety and HVAC upgrades) that characterized ESSER spending from 2020 through the end of the 2021–22 school year (Exhibit 3).
Four key themes emerged when we surveyed district leaders about how they plan to spend their remaining ESSER funds:
1. Retaining current teaching staff. More districts plan to spend remaining stimulus dollars on teacher retention, including one-time spending on professional development and bonuses. Teacher turnover has continued to rise as teachers face greater workloads and student behavior challenges, with districts leaning on one-time payments to keep staff on board. For example, Oakland Unified is spending $16 million of ESSER II and III funding6 on one-time teacher payments while the state of Missouri has allocated $50 million of ESSER funding7 toward programs to encourage teacher retention. And to help build the capacity of teaching staff, the state of Connecticut has allocated $5.9 million in ESSER funding8 toward a Science of Reading Masterclass for 11 districts.
2. Increasing focus on student well-being. Addressing students’ physical health, mental health, and overall well-being are high priorities for most districts. Over the next three years, the district leaders we surveyed expect to increase their spending on combating student absenteeism and behavioral challenges and on broader support for student mental and physical health.
Student absenteeism is a nationwide issue, with 72 percent of public schools reporting an increase in chronic absenteeism9 in 2022. At least six states10—California, Idaho, Kentucky, Mississippi, Missouri, and Texas—determine K–12 funding through student attendance11 rather than enrollment, meaning that chronic absenteeism can result in significant reductions for districts12 in state-provided funding.
Meanwhile, students are facing greater mental health challenges. In a recent CDC survey, nearly half of American children13 expressed feeling sad or hopeless for two or more weeks in the past year, and 87 percent of schools14 reported that the pandemic has had a negative impact on their students’ social–emotional development. States and districts alike are using ESSER funding to help address these student concerns. At the state level, Illinois is using $121 million15 to create seven regional social–emotional learning (SEL) hubs that will help schools implement SEL interventions and supports, and some districts, such as Washington’s Bethel School District, are using ESSER funding16 to hire behavioral health staff and to provide students with access to counseling services.
3. Maintaining existing facilities. Many US schools need critical infrastructure improvements. As buildings have gotten older, 41 percent of districts need to replace HVAC systems, over a quarter must replace roofing, and schools in more than 10 percent of districts need critical structural-integrity upgrades.17
For the remaining years of ESSER funding, just 38 percent of district leaders list investing in new capital projects as a top priority. Yet spending on maintenance of existing facilities is expected to be the third fastest-growing district budget expenditure. This may be due to ESSER’s use-it-or-lose-it funding structure, which provides incentives for districts to make one-time investments (including for infrastructure improvements), as opposed to investing in categories that require ongoing sources of funding. New building construction, which typically requires multiple years of planning and budget allocation, was the third fastest-growing spend category in 2020–23, when more years of ESSER funding remained, but has dropped to 30th place for the next three years.
4. Scaling back spending on learning-delay interventions. The effects of the pandemic and virtual learning are still visible in students’ academic performance. More than 20 years of progress may have been reversed during the pandemic, with the average American student falling behind 12 weeks, or a third of a year, of schooling.18 Early in the pandemic, school leaders viewed learning delays as a top priority to address and sought to tackle this problem through digital technology and high-dosage tutoring programs. Yet student achievement remains markedly down from prepandemic levels,19 and research shows that it will not bounce back easily, highlighting the need for continued interventions.20
Over 50 percent of district leaders hope to prioritize addressing learning delays with remaining ESSER funds, yet only about 30 percent plan to spend significantly on supports like high-dosage tutoring and intervention curricula. This may be because of concern over the high cost21 of large-scale tutoring and digital learning programs, as well as the supply constraints (including tutor and teacher shortages) limiting the application of these interventions at scale. While learning-delay recovery is critical, many approaches to it involve recurring funding that may not be available after the relief funding expires. A report by the Council of Chief State School Officers22 asserts that considerable state-level support post-ESSER will be needed to extend tutoring supports beyond 2024.
Few schools are fully prepared for more constrained budgeting
Seventy-two percent of district leaders express concern over their district’s ability to continue funding pandemic-era recovery programs after stimulus funds expire. Budget concerns among district leaders are not just limited to ESSER’s expiration. All 50 states23 use either enrollment or attendance as a metric to help determine district funding, meaning that declining enrollment will lead to declining state funding. Nationally, K–12 public school enrollment is projected to decline slightly24 through 2040, with large urban districts facing the steepest projected enrollment decreases and enrollment in smaller districts expected to remain flat or slightly increase in line with recent enrollment changes.
Unfavorable population dynamics are a large driver for enrollment attrition. US birth and immigration rates have been falling25 since before the COVID-19 outbreak, decreasing the number of school-aged children. The pandemic accelerated these trends and sparked a shift in enrollment26 from traditional public schools to charter schools, homeschools, and private schools.
Even as financial uncertainty looms, post-ESSER inflationary pressures may continue to make addressing spending priorities challenging. Districts are planning for increases in spending across their largest budgetary line items. This may create tension between district leaders’ priorities and their concerns, expressed by more than 70 percent of district leaders, regarding their ability to continue to fund key programs post-ESSER.
Baseline needs will be the most resilient school spending categories post-ESSER
As district leaders plan for the drop-off in available funds after ESSER’s expiration, certain categories of spending are expected to be more resilient to budgetary declines than others. Some budgetary priorities that saw significant increases in district spending during COVID-19 are expected to sustain this spending growth even after the relief fund’s expiration. Many of these priorities address ongoing challenges that worsened during the pandemic, which the influx of ESSER dollars alone could not remedy, while others cover baseline essentials for district functions. These sustained priority-spending categories include student mental health and social–emotional curriculum. Other categories—such as analytics and reporting tools—are resurging in importance, and some areas, such as new facilities and teacher training, are undergoing temporary funding spikes during the relief funding period. Areas of low spending growth include general core and supplemental curricula and AI-based learning platforms and virtual reality/alternative reality software and hardware (Exhibit 4).
Student and teacher challenges remain, and fiscal difficulties lie ahead. What can districts do?
Pandemic-related learning delays27 continue to concern districts. If student performance improvement follows historical prepandemic trends, it could take decades for students to fully catch up. Each district has a unique learning-loss trajectory, meaning that there is no one-size-fits-all recovery approach.
However, most districts must also continue to juggle myriad other concerns relating to student behavior, health, and well-being, along with teacher retention and basic facilities maintenance, all of which require adequately addressing ongoing support and funding. And they need to address these concerns with still-limited funds: the $190 billion in ESSER stimulus funding allocated to US public schools over a five-year period amounts to an increase of less than 5 percent a year in total annual budgets, or only an additional $800 in funding per student each year on average.28 In districts where funding has fallen due to decreased enrollments, these additional funds barely fill in the gaps.
ESSER stimulus funding alone is not enough to enable districts to adequately tackle student learning delays in addition to the historic and structural staffing shortages, decades of underinvestment in school infrastructure, record levels of student absenteeism, and declining student mental and physical well-being that many school districts face. Districts should strive to prioritize among these needs.
The $90 billion in remaining federal stimulus funding presents both challenges and opportunities for school districts across the United States. Although the window for action is narrowing, there is sufficient time for districts to ensure that remaining ESSER funds are strategically allocated toward priorities that will improve student outcomes, address long-standing teacher and facilities challenges, and bolster the district’s ability to weather estimated fiscal abnormalities.