School leaders fret over disbursement of federal funds

Most years, Kimberly superintendent Luke Schroeder has his district’s budget figured out by the second week of November.

This year, with three months left in the 2020-21 budget year, he’s still not sure how things are going to line up.

“The joke going around is we know our FY 22 budget before our FY 21,” Schroeder said. “We still don’t know what exactly we’re going to receive.”

It’s been a complicated budget year for school districts, beset by holdbacks and supplemented by a windfall of federal dollars to help pay for coronavirus-related expenses. It’s been far from predictable, especially during the 2021 legislative session.

The latest twist came earlier this month, when the Joint Finance-Appropriations Committee provided direction for almost $200 million in school district aid approved by the federal government last December. Districts could spend about $104 million of the award this year, and the rest after July 1.

For some districts, that just meant putting off improvement projects a few months until the new money came into play. Others say it sent them scrambling as they realized money that they budgeted to meet shortfalls won’t be available in time to cover costs for the current fiscal year, which ends June 30.

How did we get here?

Last May, in the early days of the pandemic, Gov. Brad Little sent school districts a memo outlining his proposed K-12 budget cuts for fiscal year 2021. He suggested that half of that almost $99 million holdback could come from suspending salary increases for administrators and classified staff, freezing teacher movement on the career ladder and suspending leadership premiums.

The state’s Board of Examiners agreed with the holdback, removing the money from the public school budget.

Fast forward today: The Legislature did not freeze the career ladder or leadership premiums, nor did the governor recommend that. The 5 percent holdback cut deeper into districts’ discretionary funds instead, to the tune of about $76 million. The idea was that districts would get federal relief money to help round out their budgets.

“It’s a little easier to use the federal funds for the discretionary portion of the budget,” Division of Financial Management Administrator Alex Adams said.

And districts have been awash with federal funds. Through the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, districts got backfill money, money for technology, social-emotional learning, blended learning, child nutrition and more. Districts also received two rounds of Elementary and Secondary School Emergency Relief (ESSER) funding. The CARES Act provided the “ESSER I” dollars; a second federal stimulus law, passed in December, provided “ESSER II” funding.

All told, the state cut public school spending by about $99 million, but districts are eligible for $870 million in federal relief funds — including an additional $439.9 million through a third federal stimulus law, the recently passed American Rescue Plan Act. The Legislature hasn’t appropriated this money yet.

Of course, free money is never quite free money. Much of the funds had to be spent on specific things, within a specific amount of time. ESSER funds are among the most flexible. The ESSER I money, for example, is $43 million that districts must spend by September 2022.

When JFAC was looking at public school budgets this spring, it looked like districts had amassed plenty of funding to make it through the end of the fiscal year, said Rep. Wendy Horman, a JFAC member.

As of March 22, Idaho’s districts and charters have still only asked for $16.4 million of ESSER I money from the State Department of Education, less than 40 percent of the $43 million fund, almost a year after those funds were made available.

The committee decided allocating just over half of the ESSER II funds, $104 million for this fiscal year, would be “more than sufficient” for districts through June 30th.

“We thought, well, $104 million for them to use in the next three months — they haven’t spent $43 million in the past year, how could they possibly spend $104 million in the next three months?” Horman said.

Superintendents say the picture is more complicated. Many have spent the ESSER I money, but not asked the State Department of Education for it yet because the process for “drawing down” those funds is time consuming, or wasn’t done immediately.

“What’s happened is that districts have spent that ESSER I money on PPE (personal protective equipment), you name it, and there’s not enough money in the backfill with only 50 percent of the ESSER II dollars to make the budgets work for this year,” said Andy Grover, director of the Idaho Association of School Administrators. “I’m not sure it’s a fault of anyone, it’s just an issue that came out of calculations and data that was used.”

The budget scramble

Most districts made out just fine with about half of their ESSER II funds. An analysis from the Legislative Services Office shows that the 2021 ESSER II appropriation alone is plenty to cover most districts’ discretionary shortages this year, without even taking any other pools of funding into account. Again, most districts.

The money isn’t given out per pupil, but weighted toward districts with a high proportion of disadvantaged students. Districts with more Title I students get more funding. For an example of how this impacts things:

  • The Boise School District, with 24,000 students, is expected to receive around $14.8 million in ESSER II funds overall. Neighboring West Ada, with closer to 40,000 students but far fewer Title I students, should receive around $13.9 million.
  • Schroeder’s Kimberly School District, with about 2,000 kids, stands to receive close to $600,000 in ESSER II funds. Rural Buhl school district, with closer to 1,300 kids, expects more than $1 million.

Some districts who make out on the lower end of ESSER II money say they needed the entire pot to make it through this fiscal year.

Schroeder, from Kimberly, was going to use most of the ESSER II funds to move his employees and staff up the career ladder.

“We were going to use that money to pay people what was appropriated to them. And right now I’m telling you I don’t think we can afford it,” Schroeder said.

Jeff Gee, superintendent in the Ririe School District, also anticipates his district will be more than $100,000 short this year without state action because he budgeted for having all of the ESSER II funds available.

“We can meet what the Legislature gives us, but this is a moving target throughout the year,” Gee said. “When that moving target ends up with cuts, and we know the funds are there, that’s probably the most frustrating part.”

The path forward

The State Board of Education plans to have a special meeting in the next few weeks, where it will consider helping districts even out their budgets, president Debbie Critchfield said on Tuesday.

The State Board could use an extra bit of money, a 10 percent set-aside shaved off the top of ESSER II, to help. A legislative analysis anticipates it could cost $8.6 million of the State Board’s $19 million set-aside to bring ESSER II funding for FY21 in line with discretionary cuts.

The board hasn’t met to discuss that option yet, but superintendents are optimistic things will balance out. Still, with three months left in the budget year, and another $400 million in federal dollars yet to be allocated, the fiscal future seems far from final.

“We’re very much in limbo, but we’ve just been through a pandemic, too,” Schroeder said. “There’s a lot of unknowns.”

Sami Edge

About Sami Edge

Reporter Sami Edge, a University of Oregon graduate, joined Idaho Education News in 2019. She is a 2019 Education Writers Association fellow reporting on Latino student outcomes in Idaho. She also is a 2019 American Press Institute fellow. She can be reached at [email protected].

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