School Districts Need Budget Relief as School Starts Amid Pademic: U.S. Senate Must Pass HEROES Act

Here we are in mid-July.  Facing enormous challenges, school district leaders are trying to figure out how they can safely provide school this fall. Here are the two biggest questions:

• How can schools be reopened safely as COVID-19 is now raging across many states and local hot spots?
• What funds—in the midst of recessionary state budget shortfalls—will be available to plan for staffing levels, programming, and safety precautions during the pandemic?

While the news this past week has been filled with reports about school districts’ reopening plans (here and here.), next week the U.S. Senate will return from recess and begin to debate the HEROES Act, passed by the U.S. House of Representatives on May 15.

The proposals on the table involve confusing estimates of the massive dollars involved and the debate has become highly politicized. However, there is no question that school districts are going to need more money. The Center on Budget and Policy Priorities explains: “State and local tax revenues have crashed in recent months due to massive layoffs, business shutdowns, and social distancing measures to fight the virus… We estimate that state budget shortfalls will total about $555 billion over fiscal years 2020-2022, a sharper drop than even the worst years of the Great Recession of a decade ago—not including the added costs to fight COVID-19… In the Great Recession, states relied disproportionately on budget cuts to close their shortfalls, and they’ll almost certainly follow a similar path without more federal aid.  State and local governments are already starting to cut services and furlough or lay off teachers… and other public workers.”

Chalkbeat’s Kalyn Belsha reports on several reasons the CARES Act, an early relief bill passed by Congress in March, is inadequate to the current education funding crisis. She reports that Sarah Abernathy, the deputy executive director of the Committee for Education Funding calls the CARES Act a mere ‘down payment’ which barely begins to cover funding necessities.” “Congress set up the main $13.2 billion emergency education fund in the CARES Act to quickly help school districts and charter schools pay for new costs associated with the coronavirus pandemic. Districts don’t get all of that money; state education agencies can keep 10%, and districts have to set aside some money for private schools in their area.”

Belsha adds: “It’s widely acknowledged that the CARES Act isn’t nearly enough to cover the cost of what schools will need to operate in the coming school year and beyond, especially because many districts are likely to see their budgets slashed as local and state tax revenue falls… (I)n several states, the CARES Act dollars will mostly go toward making up for state budget cuts to education. That’s the case in Georgia, New York and Texas.  Just south of Atlanta, Clayton County Public Schools, which serves about 54,000 students, nearly all of whom come from low-income families, is getting $17.5 million from the CARES Act. That will go toward Chromebooks, Wi-Fi for students, and staffing costs, says Superintendent Morcease J. Beasley. But Georgia also cut Beasley’s budget by about $45 million, essentially wiping away those federal dollars and more. To make up the difference, Beasley said his district had to freeze staff salaries, dip into its savings, and cut school operations by about 15%.”  School districts across the country face the same dilemma.

Belsha adds that many school districts have not yet been able to access the CARES Act dollars they have been promised: “Schools are only just starting to tap this money. Buy the end of May, about 1% of that $13.2 billion had been spent… That hasn’t changed much yet.  Figures provided by state education agencies indicate that in Delaware, Illinois, and Virginia, districts and charter schools have been reimbursed for less than 1% of the money available to them.  In some places it’s higher: Montana schools have spent and been reimbursed for about 4%, while South Carolina schools have spent about 7%.  Kansas schools have spent and been reimbursed for about 9%.  Part of that is because it’s taken time for the money to reach districts.  States had to apply to the federal government for their share, and school districts generally had to apply to their states, which is typical for a large federal grant program. In many states, school districts also have to seek approval as they spend the money.”

For Education Week, Daarell Burnette II and Madeline Will explain the likely consequences if Congress fails to appropriate enough to ensure that school districts can continue paying teachers despite an expected precipitous drop in state funding: “(S)tate income and sales tax revenue has plummeted, and, without a sizeable Congressional bailout, tens of thousands of teachers are at risk of losing their jobs in the coming months. Georgia’s state legislature, for example, cut more than $950 million out of its K-12 budget last month. And Nevada’s state legislature this month is debating a proposal to cut out of its budget more than $156 million, almost a quarter of the state’s K-12 public school spending.” In Ohio, Governor Mike DeWine made an administrative cut of $300 million out of the FY 2020 budget for the fiscal year that ended on June 30, and school districts expect significant additional cuts from the FY 2021 budget that covers next school year.

The debate beginning next week when the U.S. Senate returns is likely to be contentious. Education Week‘s Andrew Ujifusa reports that Senator Lamar Alexander (R-TN) has said he estimates K-12 public schools and colleges and universities need an additional $50 or $75 billion, which is far less than the $90 billion the HEROES Act, passed in May by the House of Representatives, allocates for a state stabilization fund dedicated to education. A more generous Senate bill introduced by Senator Patty Murray (D-WA) includes $200 billion for states to support public schools.  Clearly we can anticipate intense negotiation in Congress during the next two weeks.

The clearest justification for passage of the HEROES Act is described in an analysis by the National Education Association, which calculated what is likely to be lost from each state’s general revenue fund over Fiscal Years 2020, 2021, and 2022, and how those losses will affect each state’s education budget for K-12 public education. NEA projects large job losses. “States are experiencing a precipitous decline in revenues as a result of the economic fallout from the COVID-19 pandemic. Using current economic projections… NEA estimates that without additional federal emergency aid, state general fund revenues in support of education could fall by about $200 billion affecting about one-fifth of the education workforce after accounting for the use of state rainy day funds and funding available under the CARES Act… The HEROES Act, which has passed the House, would help stem some of the state revenue shortfall. It includes $90 billion for a State Fiscal Stabilization Fund (SFSF) dedicated to education, to remain available until September 30, 2022, to prevent, prepare for, and respond to the coronavirus… The grants to states under the SFSF are intended to maintain or restore state and local fiscal support for elementary, secondary, and postsecondary education… NEA estimates that the SFSF would restore or save at least 825,000 jobs in elementary and secondary and higher education.”

During 2018 and 2019, we all watched a two year wave of teachers’ strikes across several states and cities to protest the educational impact of education job losses lingering from the 2008 Great Recession: classes of 40 students per teacher and shortages of counselors, social workers, school psychologists, nurses and certified librarians. It is unlikely that these educational concerns are driving President Trump’s threats to withhold federal dollars from school districts that refuse to open full time, five days a week next month. Washington Post White House reporter Philip Rucker and his colleagues speculate that President Trump’s sole concern regarding school reopening is economic: “After some economists advised Trump that the economy could not fully recover until schools reopen, because most parents need childcare to return to their jobs, the president suddenly made schools a focus.”  This is, of course, about the President’s reelection strategy.

Ironically, however, while President Trump seems to grasp the economic need for daily supervision of children during the school day, he seems not to have noticed another economic consequence if teachers and other staff are laid off due to state budget crises.  If he did understand, he would be pressuring Congress to be generous in its recessionary relief. Reuters reporter David Lawder lays out another part of the economic justification for Congressional passage of the HEROES Act when the Senate returns this week:  “K-12 schools are a cornerstone of the economy, and a massive jobs engine.  Nearly 51 million American kids attend public elementary, middle, and high schools compared to about six million in private schools… With a total workforce of about eight million Americans before the pandemic, kindergarten through 12th grade public education is also one of the largest U.S. employment sectors, exceeding construction, hospitals, finance, and insurance and transportation and warehousing. Total expenditures for these schools were $721 billion during the 2018 fiscal year…. That is more than the U.S. Defense Department’s $671 billion budget that year, or the Pentagon’s $705 billion request for fiscal 2021… The Department of Education says public school spending is heavily skewed toward salaries and benefits, which made up 80% of the per-pupil total spending of $12, 612 in 2018. About 11% goes to purchased services and 7% to supplies. Maintaining these jobs is particularly important for local communities because of the economic multiplier effect, said Elise Gould, senior economist at the Economic Policy Institute in Washington. That $721 billion in public school spending in 2018 translated to about $1.08 trillion in direct GDP output, she calculates, not including the economic benefits of better-educated workers.”

Of course public schools’ primary importance is to nurture and educate the nation’s young people in institutions that are universally available, accessible for every child, and operated according to the law. However, if Trump is worried more about economics in the midst of the current recession, his best choice next week is to push Congress to negotiate a federal recessionary relief package that will support the nation’s public schools in the midst of what is expected to be a deep and long-lasting recession.

In a NY Times column on Wednesday, the former chair of the Federal Reserve, Ben Bernanke understands the need to support public education and to recognize the economic impact of those eight million education jobs across every city, suburb, town and rural area of the United States: “The coronavirus pandemic has set loose a recession of shocking speed and severity… As a member of Gov. Phil Murphy’s Restart and Recovery commission in New Jersey, I have worked to help put together an effective reopening strategy, one that not only will allow the state’s economy to move forward but also will address the glaring inequalities the pandemic has revealed. The experience has been eye-opening. It’s become abundantly clear that the responsibility for responding to the pandemic cannot lie only with local and state governments. Congress must act decisively—and it must act in ways that don’t repeat mistakes of the recent past, during the Great Recession. Our state governments serve a dual role as providers of critical services—health care, public safety, education, and mass transit—as well as large employers… New Jersey has successfully flattened the curve of new COVID-19 cases and hospitalizations. But since the state had to virtually shut down in order to control the spread, that success has come with a staggering price tag… Budget gaps like the one in New Jersey cannot be closed by austerity alone.  Multiply New Jersey’s problems to reflect the experiences of 50 state governments and thousands of local governments and the result, without more help from Congress, could be a significantly worse and protracted recession.”