Many schools are facing a fiscal shock of mammoth proportions in the next academic year, at least if the northeastern states are indicative. This conclusion was drawn from an October 26 webinar by Edunomics Lab at Georgetown University. 

This is just one example of what happens when federal money used to support state and local programs runs out. In this case, it’s the Elementary and Secondary School Emergency Relief (ESSER) Fund, which was part of the CARES Act, passed by Congress in March 2020. This funding has helped schools around the country pay for a variety of services, including special education and school security. It must be entirely spent down by September of next year, leaving these schools facing the need to take dramatic steps.

According to a slide from the webinar, “Many districts will face difficult tradeoffs in cutting staff, eliminating programs and closing schools.”

Four states were studied: Connecticut, Massachusetts, New Hampshire, and Rhode Island.

It appears that Rhode Island is facing the biggest shortfall.  “The end of ESSER funding will have a 14% impact in Rhode Island,” according to Edunomics. That’s a huge figure, and even taking into account that much of this was spent on one-time projects (which is, according to the Government Finance Officers Association and other sources, the way one-time money should be spent), Edunomics still anticipates that “the jolt to district budgets will be closer to 7%.”

A few other points made about Rhode Island in the webinar:

• “High poverty districts tend to have deeper cliffs. While these districts will benefit more from state increases, they also received more ESSER and have more remaining.” 

• “Reserves can’t mitigate the cliff as districts are required to return unexpended state funds to the state, and we see minimal local reserves in the districts we examined.”

• “Statewide enrollment is down 3% while staffing is up 22% over the last decade. Many districts will struggle to afford the larger FTE counts once ESSER ends.”

Though Rhode Island may be facing the biggest shortfall of the four states, all of them are confronting significant problems, particularly in the high poverty districts. 

The school districts that have already used a smaller portion of their ESSER funding have some months to soften the blow of the end of federal dollars. But the rate at which they’ve been using the available money varies widely. In Connecticut, for example, “districts have spent ESSER on pace with the national average, although it varies widely across districts. . . 22% of CT districts have spent more than 90%.” 

Clearly, the districts that have used the ESSER funding to increase the number of full-time equivalency positions (FTEs) are likely going to have to make the biggest adjustments. In this way, New Hampshire appears to be in better shape than the other three states studied because collectively the states districts have continued to reduce FTEs, but still, according to Edunomics “many districts may need to continue to right size their staffing where enrollment continues to fall.”

Reported CT Insider, Edunomics Lab director Marguerite Roza said during the webinar that "It’s going to be a tumultuous year.”