School Finance During the Pandemic: How are States Responding?

The COVID-19 pandemic has had far reaching economic impacts, with the aftershocks only beginning to manifest for school finance. Even prior to the crisis, the vast majority of US public school districts had yet to recover from the devastation to their funding resulting from the Great Recession occurring more than a decade ago, and the COVID-19 pandemic is predicted to exacerbate those fiscal conditions (Baker & Di Carlo, 2020).

As presented annually in the past, this special State of the States edition of the Journal of Education Finance will highlight the state of affairs in education finance for each state for the current year. The issue will also provide early insight on how states have been affected by the pandemic. Several broad trends are noteworthy:

• • While the full impact of COVID-19 on school funding is not yet clear; significant reductions have occurred and are continued to be expected. While some states originally had plans to re-invest in their school finance systems pre-pandemic, revenue loss from COVID-19's negative impact on the economy curtailed many of those efforts. Pre-COVID state budgets highlighted opportunities and funding priorities that included changes to state funding formulas, teacher raises, higher education scholarship increases, and additional funding for K-12 school programs. Although some states were able to maintin their commitments to the pre-COVID allocations, many states were forced to abandon their plans.

• • In addition to pandemic-realted revenue loss, there have been education funds that have been redirected to addressing COVID-related issues (e.g., money spent on personal protective equipment [PPE] and heavier investment in long distance technology/educational resources).

• • Federal government support in the form of the CARES (Coronavirus Aid, Relief, and Economic Security) Act have temporarily assisted in maintaining educational stability across K-12 schools and universities. Most K-12 schools invested their CARES act funding heavily in e-learning programs, internet access, and technology for students. Higher education, on the other hand, heavily utilized their relief funds to address deficits that occurred as a result of student refunds associated with campus closures.

• • Addressing the needs of poverty-stricken students was a major concern for decision makers when determining CARES Act allocations. Specifically, many states highlighted how students in high poverty areas often had little access to computers and technology equipment let alone internet availability. As such, addressing this was a major priority for school districts. Additionally, in some states, CARES Act allocations for public colleges and universities was determined by the total number of PELL Grant eligibility.

• • The average per-pupil expenditures amongst states ranged roughly from $6,000-$12,000. Even when accounting for regional cost differences, it is noteworthy that some states'average expenditures per-pupil were 50 percent higher than others.

Conclusion

Education is often one of the largest allocations in a state's budget. This year's edition of State of the States heavily reflects the current condition of education finance during a time of financial uncertainty resulting from the fall out from COVID-19. However, the pandemic's full ramifications on school funding have yet to be determined, given states have only begun to enter the onset period at the beginning of its impact. Furthermore, states have been able to mitigate some of the damages through the support of CARES Act funds to provide resources and support at-risk students (especially with the provision of remote learning resources). Yet like the American Recovery and Reinvestment Act (ARRA) that temporarily mitigated the economic damage to schools resulting from the Great Recession, the support from CARES Act funding is not a permanent solution. State funding will likely experience a similar, but likely worse, catastrophic blow once that temporary funding relief runs out (as it did when ARRA funds were depleted). It seems clear that education will face truly challenging fiscal times ahead.