A fiscal cliff looms with the impending end of the education windfall

August 29, 2023 5:50 am

As the education landscape braces for this impending fiscal cliff, it becomes paramount for district leaders, lawmakers and community figures to recognize and address this inevitable challenge (Jon Cherry/Getty Images).

In the wake of the unprecedented challenges posed by the COVID-19 pandemic, education has been at the forefront of societal concerns.

As we grapple with the daunting task of educating our children and bridging the learning gaps exacerbated by the pandemic, we cannot overstate the crucial importance of a well-funded and robust education system. However, a financial precipice looms on the horizon, threatening to undermine the progress made in the wake of the crisis.

For the past three years, school districts across the United States have enjoyed a windfall of funding courtesy of the federal government’s response to the pandemic. With the federal Education Stabilization Funds (ESFs), districts were provided with an influx of financial support to address the significant learning losses experienced during the tumultuous years of 2020 and 2021. As a result, education budgets swelled, offering a lifeline to districts struggling to adapt to the rapidly changing educational landscape.

The impending fiscal cliff

While this influx of funding undoubtedly provided much-needed relief, it also comes with a catch.

Districts were required to plan and allocate this funding within a short timeframe before the full extent of the learning gaps became apparent. This policy has led school districts to use a significant portion of these funds for ongoing operational expenses, inadvertently setting the stage for a fiscal cliff once the funds inevitably run dry in September 2024.

The numbers are staggering.

Kansas and Missouri school districts have collectively received close to $6.55 billion in federal ESF since 2020. Missouri’s share is close to $4.4 billion, with the most recent Elementary and Secondary School Emergency Relief (ESSER) payment amounting to nearly $3 billion. Conversely, Kansas received approximately $1.9 billion in ESF, with the final ESSER payment reaching $1.3 billion.

Looming teacher shortages

As the funds flowed another issue gained prominence: The pressing problem of teacher shortages.

Across the nation districts have been grappling with a lack of educators, particularly during the pandemic. The National Education Association (NEA) reported a staggering gap of 567,000 educators in American public schools compared to pre-pandemic levels. Fortunately, updated Bureau of Labor Statistics (BLS) data suggests that teacher labor force participation has begun to rebound. Yet, a concerning pattern emerges as we analyze how districts utilized these funds.

Heather Schwartz, a researcher at the nonprofit RAND organization, found that a significant portion of the federal pandemic funds (amounting to $190 billion) was directed toward bolstering payrolls. This move has led to a situation where districts employ many teachers with short-term, one-time funding.

However, this also raises a red flag: Are districts inadvertently setting themselves up for a crisis when these funds inevitably dry up?

The alarming possibility of a mass layoff of teachers during the upcoming 2024/25 budget process looms large. The Georgetown Edunomics Lab, through the insights of Katherine Silberstein and Marguerite Roza, has pointed out that the combination of the federal funding cliff and a widespread decline in student enrollment could create a perfect storm for districts in the 2024 school year and beyond.

Urgency to act now

As the education landscape braces for this impending fiscal cliff, it becomes paramount for district leaders, lawmakers and community figures to recognize and address this inevitable challenge. By failing to do so, we risk eroding the significant progress made in education over the past few years and jeopardizing the future of our students.

In the words of the wise adage, “failing to plan is planning to fail.” The time to address this issue is now to ensure that we don’t watch the hard-fought gains of the education sector fall into the abyss of financial uncertainty.

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Torree Pederson
Torree Pederson

Torree Pederson is founding president of Aligned, a nonprofit, nonpartisan business group working in Kansas and Missouri on educational issues impacting the full development of our children, supporting child care providers and investing in the workforce of tomorrow. She has spent the past 15 years running business leader-led organizations focused on workforce development, and served more than 10 years as executive director of the Greater Kansas City National Tooling & Machining Association. Before joining the education advocacy arena, Pederson spent 10 years in corporate finance/accounting/audit, working for Sprint and Hallmark in Kansas City.