Make the Most of Stimulus Funds: Budgeting Best Practices

Business

As school districts across the country are beginning the process of developing their 2022-23 school-year budgets, the world is still reeling from the impacts of COVID-19. New revenue, lost revenue, rising costs, labor market shifts, and a changing educational landscape all together make it a challenging time to predict and plan for the future. Below are several considerations and ideas to help you navigate these uncertain times, with the goal of helping school systems make this year’s budget one that sets you up for success even in the face of rapid and largely unpredictable change.

Certainty Amidst Uncertainty

Although we are undoubtedly surrounded by unknowns, there are a few things we do know.

School District Budgets

First, we know that most states seem to be recuperating from budget shortfalls last year.1 State 2020-21 budgets ended up faring much better than initially projected, and so far there’s been no substantiated alarm to suggest that 2021-22 will be dramatically different. That being said, inflation is rising quickly, and district financial officers are having a difficult time finding firm projections for next year. In the past five months, prices have continued to rise on some goods and services, with inflation tracking above 5% in October.2 In short, we are waiting — and will likely continue to wait — to learn what next year’s local and state tax revenue will look like, even as we can predict that the costs of goods and services will rise

Economic Trends

Schools are not immune from trends we’re seeing in the labor market and economy more generally, and we should cautiously anticipate their impact while taking into consideration important differences about the public education sector. For example, teachers have not participated in the Great Resignation at the level experienced across other industries.3 But we know that teachers are utterly exhausted (even more than usual), certain subject areas have been hard-to-staff for years, and attracting great talent matters in education just like everywhere else. In the coming year or two, we can expect educator talent to grow demanding of their school district employers.

With so much uncertainty, what do you know?
  1. Most states seem to be “recuperating” from budget shortfalls last year
  2. Schools are not immune from trends we’re seeing in the labor market and economy more generally
  3. Once-in-a-generation stimulus funds are still on the table
  4. K-12 education as a whole is going through a paradigm shift

Stimulus Funds

We know there are still once-in-a-generation stimulus funds on the table. Whatever murkiness first existed around the use of stimulus dollars has now been largely settled, and districts should be equipped to make decisions about how they will put these funds to good use. Districts have one last chance to spend ESSER I dollars at the start of next school year — by September 30, 2022, with the deadlines for ESSER II dollars and ESSER III dollars coming in September 2023 and September 2024, respectively. While there are some restrictions on how the one-time emergency dollars can be spent, there is nearly unprecedented flexibility.

Paradigm Shifts in Education

Looking beyond these various economic and financial factors, districts are also creating their budgets in a time when K-12 education as a whole is going through a paradigm shift. For instance, many districts have experienced fluctuations in enrollment as families and students have sought alternatives in charter, online, and private schools, as well as nearby public school districts.4

In a piece published by ASCD, Tom Vander Ark identified five changes that have taken place as a result of the pandemic: device access, internet access, enterprise tech, hybrid and remote learning, and team teaching out of necessity; as well as five more significant shifts that are still in process: broadening conceptions of achievement, deeper learning experiences, credentialed learning, meaningful equity work, and new learning models.5 In summary, parents’ and students’ expectations for what a high-quality education looks like, and school systems’ capacity to deliver on it, are changing. This shift in demand is likely to shape the landscape of public education in new ways over the coming years.

Planning for Sustainability: Considerations and Ideas from the Field

To balance between what we do know and what we will continue to learn (and, likely, relearn), here are four ideas from district leaders across the U.S. on how to most effectively navigate this budget cycle.

1. Focus on the returns your district really needs for its investments.

District budgeting is about relative priorities, and purchasing typically balances the importance of product and service cost, convenience, and capability. Given what you know (and what you think you know) about your district’s financial health, get clear now about which of these factors matters most at the present time to your district. Not every district will be the same.

One district business manager that we spoke with emphasized cost as being a primary factor right now, given the continuously rising costs of health insurance, retirement contributions, and charter school payments, as well as the immediate impact on the budget of more expensive equipment and school meal supplies.

On the other hand, an assistant superintendent we interviewed emphasized capability, stating that their district is not immediately hurting for funds and that it’s more important now to invest in products and services that “make their lives easier” and “gets teachers what they need.”

This administrator told us, “Cost is always important when you’re trying to be good stewards of public dollars, and we of course want to stay off the ballot and minimize any asks of our community right now. However, now our focus is more on convenience and capability. Our teachers are swamped. You have to look at the cost-benefit ratio and not blindly go with the lowest offer on some things. For example, we went with a new formative assessment tool this year that is giving our teachers the immediate data that they need and it will save our district money in the long-term.”

The lesson? Be transparent with your team and with providers about your highest priority, and get crystal clear about what you really need. If you anticipate budget cuts, invite the providers around you to step up and collaborate with you to find the best fit between your needs and their capabilities. Know what is truly critical and what you’re likely to use in the long term so that you can write extremely clear RFP solicitations and pay for the features and services that you really need. Be clear about the extent to which cost, convenience, and capability are driving decisions at the moment, and be open about that to get the right return on your precious investments.

2. Stretch stimulus funds for lasting impact.

Look for creative ways of using these one-time funds for long-term impact. Whereas hiring new staff with one-time funding creates a problem to be solved later, there are other ways of using this money to invest in personnel. In an interview with education researcher and pundit Rick Hess, Marguerite Roza of the Georgetown Edunomics Lab illuminated the practices of “offering incentive packages to cover moving expenses plus retention bonuses, and paying stipends for teachers who take on extra work.”6 As noted above, it’s important to match these incentive programs to the needs and interests of your faculty and staff; some districts are discovering that mounting personal responsibilities mean that educators are not picking up extra work (such as for leading professional development or designing new content), even when those activities are well-compensated. That means your district may get better long-term benefit from investing in supporting educators’ wellness and mental health so that they’re able to navigate this moment and stay in their roles. However you approach it, spending now on capacity building and getting ahead of recruitment and retention challenges will pay off later.


Spending now on capacity building and getting ahead of recruitment and retention challenges will pay off later.


We know that many districts are using ESSER funds for technology and curriculum upgrades. If you are going to purchase these things now, make sure to also invest in the necessary professional development and skills training so that these tools can be fully leveraged to the extent of their capabilities long into the future. For example, acquiring a new inventory of student devices and a making the move to integrate technology in learning requires thoughtful learning and support for teachers. Consider ways of fully integrating these changes into current practice sooner rather than later.

Lastly, while buying “stuff” can make a big difference, the smartest long-term investment might be in relationships. Focus the “stuff” investments on tools that free up time and energy for district staff to do more meaningful work independently and together. Use ESSER funds now to invest in developing (and perhaps in some cases, repairing) meaningful relationships between staff, with students, and with the community. Intentional wellness efforts would also make sound investments.

Potential efforts might include…

  • Creating small group experiences that establish a sense of belonging and engagement
  • Implementing home visits7
  • Introducing therapeutic tools and practices for managing stress
  • Planning events that boost staff morale
  • Engaging in genuine dialogue sessions with the community

Even if your district is unable to continue these expenses into the future once the emergency aid expires, these one-time investments now are sure to affect retention and therefore have a positive impact into the future.

3. Don’t repeat investments that simply reproduce the old status quo.

Most district administrators, including those we talked with, are admittedly focused on “getting through” these uncertain times. We get it; there’s one fire after another, and we’re nearing two years of growing fatigue from 24/7 demands and constant pivoting. But this budgeting season presents an opportunity to think bigger and prepare to make some bold moves in service to students and families.

Some of the best innovations have come in times when money was tight and alternatives were slim. Use this moment and any needed cost savings to drive efforts around rethinking seat time, designing effective hybrid learning, collaborating with the community, and making the teaching role more manageable and enjoyable. For example, the Texas Learning Exchange (TxLx) brought districts together to “rethink educational delivery models and how to address the needs of students in this current environment.”8 The project curated a host of resources in the New Learning Models Library, and examples of how districts are adopting new learning models are summarized in case studies.

Ask your team: how will we use this moment of uncertainty to move our district in a positive direction for the future? Are we looking ahead and anticipating big shifts in the education sector? Are we thinking in a “this is how it’s always been done” mindset, or in a “this is what students need and how we should be doing things” mindset? Be innovative. Use this moment to reorient the system around what’s best for students. Ask the questions, “What if?” and “Why not?” again and again and again.

4. Fill gaps with new private-public partnerships and cross-sector collaboration.

School districts have long relied on regional shared-service models for talent such as substitute teachers and special education teachers. However, it’s not as common to see private-public partnerships and cross-sector collaboration. What might be possible when organizations unite around shared students and shared goals?

So many agencies stepped up and took on new responsibilities during the crisis. For example, in southwestern Pennsylvania, the Allegheny County Department of Human Services (DHS), Trying Together, and the United Way proposed a solution when the local school district remained closed to in-person learning for a full calendar year. In partnership with more than 40 community organizations and after-school providers, the county used their own funding and later private donations to stand up 75 Community Learning Hubs — safe spaces where children could engage in virtual learning — across the city.9 The county also has data-sharing agreements in place with local school districts, which help everyone better address issues such as mental health, food insecurity, and truancy. This is just one example of cross-sector partnerships that benefit children.10

Rather than retreat back to the ways things were pre-pandemic, use this opportunity to lean into private-public partnerships and cross-sector partnerships. Over the last 18 months, numerous corporate philanthropies have established commitments to investing in equity, and school districts are an excellent place to begin. Explore relationships with companies and organizations in your region that may be willing to form lasting, authentic partnerships to bridge the gap between what schools can do and what businesses need. Reach out to willing partners, especially those who are already working with the same children served by your school district, and look for opportunities to coordinate more effectively. Look for any potential areas of overlap or unnecessary silos and begin to build coalitions. One administrator told us, “Start small. Look for focused projects and potential quick wins that invite partners to the table, and then grow from there.”


In a time of budget uncertainty and continuous change, opportunities abound to work with, share services with, and find efficiencies with other organizations, whether than be other nearby school districts, other public agencies, or local nonprofit organizations.


Look for cost-saving opportunities, as well as opportunities to leverage assets more effectively. Consider the current models of shared substitute services and shared special education services as just the tip of the iceberg. What else might be possible through collaboration?

Conclusion

One district administrator told us, “I know it’s stressful, but it’s also an exciting time for school leaders to reflect on how we do things, and to reimagine the student experience. Some of our students loved remote learning; some loved the new levels of choice that became available. How can we use that to move forward?”

In this uncertain time, be creative. Be transparent with stakeholders. Be bold, and use the uncertainty as an opportunity. Don’t discount the power of grounding yourself and your team in what you do know, and work outward from there. Stay focused on what kids need, and what your best available information says will serve them in the long run.


1 U.S. Census Bureau. (September 23, 2021). Quarterly Summary of State and Local Government Tax Revenue: 2021 Q2.

2 The Wall Street Journal. (November 10, 2021). U.S. Inflation Hit 31-Year High in October as Consumer Prices Jump 6.2%.

3 Klein, R. (November 17, 2021). Why There Hasn’t Been a Mass Exodus of Teachers. FiveThirtyEight.

4 A recent analysis by the National Alliance for Public Charter Schools (September 22, 2021) found that charter school enrollment increased by 7% across the nation in 2020-21. Additionally, Chalkbeat and the Associated Press (December 22, 2020) reported survey data suggesting that public school enrollment in 2020-21 decreased by 2%.

5 Vander Ark, T. (September 1, 2021). 5 Changes, 5 Shifts, and 5 Implications for What’s Next in Education. ASCD.

6 Hess, Frederick. (November 10, 2021) Ed Finance Guru Marguerite Roza on How Schools Can Best Spend Covid Aid. Education Next.

7 FutureEd. (n.d.) Home Visits. COVID Relief Playbook.

8 See Texas Learning Exchange.

9 Allegheny County Department of Human Services, Trying Together, United Way. (n.d.) Learning Hubs Data Report: 2020-2021 School Year.

10 StriveTogether serves as a network for dozens of collective impact partnerships across the country, and would be a great resource for additional ideas and technical assistance.

Meredith Bortz

Meredith Bortz is an independent consultant and senior advisor to Outside Angle, a human-centered organizational development firm. She provides communications and project planning leadership to education organizations and collaboratives committed to equity and inclusion. Meredith has developed a broad understanding of education policy and practice through her work, including previous roles as Chief Operating Officer at Sevenzo, a senior consultant at Battelle for Kids, and a policy analyst at the Tennessee State Collaborative on Reforming Education (SCORE).