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April 17, 2020

Understanding Federal Action, State Choices on School Funding Amid Health Pandemic

Now more than ever, parents, families, and communities are reminded of the critical role educators and schools play in developing young minds, caring for children’s health and safety, and allowing our economy to function and grow into the future. Despite doors being closed for the remainder of the school year, teachers, staff, and community members are working hard to provide meals, emotional support for students, and distance learning opportunities. At the same time, highly consequential decisions are being made by Congress and state and local leaders that will have significant and lasting impacts on students now and long after they return to the classroom. 

It’s critical that Virginia leaders protect investments in Virginia schools state K-12 funding has yet to recover from the last recession more than a decade ago or it will be the students in the highest poverty communities and students who face the greatest barriers who will ultimately lose out. Here we summarize:

  • Gov. Northam’s proposed amendments to the 2020-2022 state budget, 
  • Federal aid from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that must be maximized to protect state investments in Virginia’s public schools, and 
  • Lessons we should keep in mind from the last recession as we go forward. 

Governor’s Action on the State Budget

(Status: The governor has proposed to eliminate $50 million and suspend $490 million in state preK-12 funding for the 2020-2021 and 2021-2022 school year – unless reenacted by GA in a future special session.)

This past week, Gov. Northam announced his plans to temporarily suspend an estimated $2.3 billion in new and discretionary spending as part of his amendments to the enacted 2020-2022 state budget. His proposal “unallots” these fundsmeaning they will not be funded in the budget, unless re-enacted by the General Assembly in a special session later in the year. The governor had to act on the budget by midnight of April 11, but with the economic uncertainty caused by the COVID-19 pandemic, has elected to postpone the vote on most new spending until a later yet to be determined date.

The amendments strip out $50 million in funding for additional school counselors and leaves $490 million in aid for early education and K-12 up in the air for the General Assembly to act on in a special session. The unallotted funds include a substantial increase to Virginia’s At-Risk Add-On program ($61.3 million), which directs resources to school divisions with the highest concentration of students from low-income families. Other unallotted investments include resources for the Virginia Preschool Initiative ($91.5 million) and increasing students’ access to school meals ($10.6 million). These investments aim to strengthen support for the very students that will be most impacted by the missed educational opportunities resulting from the current crisis. 

Students of color, English Learners, students with disabilities and those living in localities with weak to no broadband services face additional barriers to learning during this time due to systemic inequities in access to resources. We also know that recessions are linked to students of color and students in households with low incomes falling further behind on academic assessments and college attendance. This adds to further harms caused by guardians losing income or employment, which we know from past recessions hits communities of color hardest. There are substantiated fears that this crisis will exacerbate the considerable inequalities Virginia already sees in student outcomes. 

To avoid cutting education services, at this time, state and local leaders should look to maximize federal resources from the CARES Act. The state should maximize flexibility in federal dollars to protect key K-12 investments that will support students that will face the most barriers when they return to school and to mitigate long-term impacts.

Federal Aid in CARES Act

The Federal CARES Act includes funds to state, local, and tribal governments with different allocations and required uses. The two main funding programs relevant to K-12 are the Education Stabilization Fund and the Coronavirus Relief Fund.

Education Stabilization Fund

($305 million in federal funds to Va. state and local school divisions)

The funds most clearly directed to Virginia’s K-12 schools come from the Elementary and Secondary School Emergency Relief Fund  summarized here by Chalkbeat. Virginia is estimated to receive $238.6 million from this fund with at least 90% going to local school divisions based on their Title I, Part A funding from the most recent fiscal year it was distributed. The Virginia Department Of Education (VDOE) will receive the other share of these funds (up to 10%). VDOE is permitted to use 0.5% of the Relief Fund for administrative costs, and they have discretion over how they use or distribute their remaining allocation to school divisions.

These resources can be used for a wide range of services, that include (not complete list): 

  • activities to address unique needs of children from low-income families, students with disabilities, English learners, “racial and ethnic minorities”, students experiencing homelessness, and youth in foster care; 
  • mental health services and supports; 
  • planning and coordinating long-term closures; 
  • coordination with local health departments; 
  • purchasing computers or technology to assist with distance learning; 
  • purchasing supplies to sanitize facilities; 
  • any activity authorized by the Elementary and Secondary Education Act of 1965.

In addition to this relief funding, Virginia will also receive $66.8 million as part of the Governor’s Emergency Education Relief Fund. The state can award these resources to local school divisions or higher education institutions that have been most impacted by COVID-19 to provide emergency support and other education-related entities to provide emergency educational services. 

The state has one year to allocate the combined $305 million in funds (Gov. Emergency Relief and Elementary and Secondary Emergency Relief) that can be directed towards education and K-12 schools. VDOE can provide clear guidance to school divisions on distributing these resources to help students who face the most barriers to learning during this crisis, while avoiding putting an undue data collection burden on instruction or support staff. The majority of this funding is being distributed to school divisions based on the share students they serve who live in households with low incomes, and the funding should correspondingly be directed to schools with a high share of these students.

Coronavirus Relief Fund

($3.31 billion in federal aid to Va. state and local governments)

The centerpiece of aid going to state and local governments is the $150 billion Coronavirus Relief Fund of which Virginia will receive $3.31 billion. These funds will be absolutely essential for ensuring that the state and localities have resources in the coming year to try to weather the financial crisis brought on by the health pandemic and sustain core public services like education, public safety, infrastructure, and safety net programs.

The CARES Act directs these funds to (1) “necessary expenditures incurred due to the public health emergency” from COVID-19 and (2) “were not accounted for in the budget most recently approved.” It’s critical that state leaders broadly interpret this language so they can respond to the entirety of the crisis facing Virginia familiesin terms of both their physical health and their financial security. Many of Virginia’s congressional representatives have already reached out to the federal government for a broad interpretation from U.S. Treasury Secretary Mnuchin.

These resources should be eligible to help protect Virginia’s students when they return. The projected revenue shortfalls that threaten services to schools have been caused by the pandemic and therefore are necessary and incurred due to it. In addition, there will be almost no public service left untouched by COVID-19. Schools that have been closed will re-open and need to catch up. Months of missed classes, even with the best distance learning efforts in place, will no doubt contribute to learning gaps, and it will be students with the most barriers that will have the least access to remote support tools. Schools will need to make additional investments in a wide array of services, such as the recently proposed investments in the At-Risk Add-On program, school counselors, and English learner instructors to catch students up and keep them on track.

Student in classroom smiling and reading a book. Text reads "It's critical that state leaders protect investments in Virginia schools. State leaders should look to maximize federal aid, make use of the state's reserves, learn from mistakes made during the last recession, and make choices to ensure that students who face the greatest barriers receive needed support now and long after they return to the classroom."

Lessons from the Last Recession

While Virginia’s economy had recovered from the last recession, state funding for K-12 schools was never fully restored. State funding was down 8% per student in the current school year that was just cut short by COVID-19. The funding adopted by the General Assembly in the last legislative session would have brought us close (3% below 2009 levels adjusting for inflation). The fact that Virginia’s K-12 funding has been unable to recover from cuts made more than a decade ago shows just how damaging and long lasting austerity measures can be during a recession. It’s critical that state leaders recognize the harm caused by the choices of past governors and General Assembly members and choose a different path in responding to the impacts of this crisis. 

State funding cuts last recession hit the highest poverty school divisions almost three times harder than the lowest poverty school divisions. This happened in part because high-poverty communities have less local wealth and rely more heavily on state resources to fund their schools systems. Per capita property values in Lee County, for example, are almost one eighth what they are in Arlington County. When these divisions see larger state cuts, they are more limited in their ability to respond. This has also had a disproportionate impact on Virginia’s schools with the most students of color. Support staffing decreases were four times larger in divisions with the highest percentage of students of color compared to school divisions with the highest share of white students. 

Further, the structural nature of the cuts made last recession has kept them in place on a permanent basis. The support staff cap, like many of the cuts made in the last recession, were not one-off solutions that would automatically be removed when the economy recovered. Instead, they were permanent changes to Virginia’s primary school aid formula, the Standards of Quality, that requires lawmakers to go into the formula and remove. A UVA student succinctly made this point when testifying before the Virginia Board of Education as they last voted on the support cap: “It is not a temporary solution to current economic hardships. Instead, it is a permanent reduction in the Standards of Quality which will outlast the current recession.” We cannot afford to make that same mistake again for another generation of students.

We need to remember that the height of the funding cuts did not occur in 2009 when the economy was at its lowest point. Instead, the low point occurred years later in the 2011-2012 school year after the federal American Recovery and Reinvestment Act (ARRA) funds went away and the state had not taken sufficient action to generate new revenues to fill the gap. As a first step, Virginia must make use of all federal resources to protect education services. As a second step, the state will need to intervene and generate revenues of its own in order to protect schools in the years that follow, by asking Virginians and corporations most able to afford it to pay their fair share. 

Going Forward

By maximizing federal aid, making use of Virginia’s reserve funds, and learning from mistakes made during the last recession, we can buttress our schools against these headwinds.

Categories:
Budget & Revenue, Education

Chris Duncombe

chris@thecommonwealthinstitute.org

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