Dive Brief:

• The nonprofit Albert Shanker Institute last week released a report recommending steps the federal government can take to stem the short-term impacts of the coronavirus pandemic on schools, including:
  • Passing a large federal aid package, much greater than the CARES Act.
  • A multi-phase allocation of funds distributed in two phases, with the first providing funding in years one and two, and the second providing funding in years three to five.
  • Equitable distribution of the funds alongside eligibility requirements.
• The recommendations urge states, in the longterm, to build up a reserve for future downturns, offer more progressive school funding with higher-poverty districts receiving more funding, and have balanced revenue "portfolios" or strategically (not ideologically) configure sales, income and property taxes in a way that protects against a bad economy and flourishes in a good one.
• The organization recommends that the funding come with strings attached for states, which include:
  • Cuts, if they must be made, first coming to aid programs outside of the needs-based formula to "ensure a more equitable distribution of harm." 
  • A greater or equal amount of per-pupil revenue be cut from lower-poverty districts as higher-poverty ones.
  • No austerity constraints imposed during either funding phase.

Dive Insight:

Holding states accountable to improve financial reserves may make the funding idea more palatable for Congressional Republicans. Earlier in April, Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy said they would oppose Democrats’​ plan to match a $250 billion proposal for small businesses with the same amount for state and local governments and hospitals.

The coronavirus also struck just as many state ed bugets were starting to recover from the economic impact of the Great Recession. Districts are now bracing for impacts of the emerging recession and preparing for a budget shortfall, which may happen as soon as the 2020-21 school year. During the Great Recession, budget cuts negatively impacted students in grades 3-8, with student achievement about a quarter less than expected between the 2008-09 and 2014-15 school years.

Some districts had to spend a lot just to give their students online access so they could participate in distance learning and provide enough food for their families. Los Angeles Unified School District spent an estimated $200 million in emergency costs related to the pandemic, but it's unknown from where those funds will eventually come. The district won’t immediately become insolvent, but it does mean the district won’t maintain a balanced three-year budget, which is state law.

Meanwhile, the proportion of state funding used to pay teacher pensions increased from 7.5% to 14.4% between years 2001 and 2018. States usually pay for pensions from their K-12 education budgets. If states didn't require pensions be paid from the education budget and allocated that money from general funds, districts would fare better.