Executive Summary

Between March 2020 and March 2021, Congress allocated $189.5 billion for a new Elementary and Secondary School Emergency Relief (ESSER) Fund. The arrival of this federal aid was a lifeline for schools attempting to serve students amid the COVID-19 pandemic. This funding was distributed in a very different manner, and with very different rules and requirements, than we see with other forms of federal and state education aid. This report explores the most significant ways in which this funding differed from school districts’ standard funding allocations, and what those differences can teach policymakers both about how to evaluate the ESSER investment and about how to structure and manage future school funding distributions. Our conclusions are informed by in-depth interviews with a number of district and state officials involved in administering and using dollars.

Though approximately one year still remains in the grant term, it is important to begin considering what can be learned from this period. Lawmakers are already proposing significant changes to school funding policy based on an incomplete assessment of the ESSER experience. Now is the time to make sure that our understanding of it is accurate and thorough, and to learn what we can about how to construct school funding policies for the greatest impact.

Our research into the ESSER experience yielded policy lessons in four areas:

• Purpose: the need to define an investment’s goals and evaluate its use accordingly. While the relief dollars were intended to help manage the effects of the pandemic on schools, this meant different things at different points. Initially, the focus was on health and safety. Over time, pandemic response came to include mental health support and academic recovery. Meanwhile, ESSER dollars were also part of, and meant to support, larger economic stimulus efforts. More recent discourse has focused primarily on the efforts to address the effects of disrupted learning, but when evaluating the return on the ESSER investment, policymakers should recall the full range of goals that districts sought to achieve.
• Size: the consequences of providing funds in such large amounts, and how best to do so. The size of the ESSER allocations affected district choices and experiences in three main ways. First, some interviewees felt that the spending timeline was too short for such a large grant, and that may have undermined longer-term academic recovery efforts. Second, the large amount of money created opportunities and challenges with regard to spending decisions. It enabled districts to spend both on new priorities and on addressing long-standing problems that were exacerbated by the pandemic. However, because the majority of districts’ expenses are for staff, deploying the full amount effectively often meant using short-term dollars for hiring and salaries, and accepting the risk of layoffs after the end of the grant term. Third, the size of the grant strained district finance teams, which saw an increase in workloads and turnover; districts would have benefitted by reserving some grant funds for administrative costs.
• Timing: the impact of deadlines, delays, and the simultaneous funding of different entities. The limited-time nature of the relief prompted many districts to attempt new or experimental initiatives—something that could be further encouraged through good guidance about evidence-based strategies. Districts generally spent the first ESSER allocation quickly, on urgent health and safety needs. Subsequent allocations saw delays related to planning challenges, difficulty hiring, and materials shortages. Simultaneous funding of so many districts at once was also a factor: They faced competition for staff, materials, and contractors, which sometimes disadvantaged high-need districts. When possible, policymakers should consider prioritizing higher-need school districts in disbursement schedules. Since states, counties, and towns received pandemic relief funding alongside school districts, there were chances for collaboration and coordination. These opportunities can be fostered in the future through purposeful, simultaneous funding of different government entities responsible to the same community.
• Flexibility: how to give latitude without engendering wasteful spending. One of the distinguishing features of ESSER funding was its flexibility, at least at the level of formal usage requirements and limitations. In reality, however, district leaders encountered constraints along the way. First, most general requirements for spending federal money still applied. Some states applied their own preexisting requirements or added new processes for receiving or using ESSER dollars. And some expenditures that were formally allowed were impeded by a lack of clarity about the rules. Still, districts did make use of the latitude afforded to them, which had the effect of heightening existing local strengths and weaknesses. Districts where leaders had experience handling flexible funds were more prepared to make good use of ESSER money; districts whose leaders were not ready and eager to implement fresh ideas were less able to do so. One important form of flexibility with these funds was the unusual ability to use ESSER dollars for both operational and capital expenses. Given the importance of school facilities for student learning, this ability should be far more common.

ESSER money differed greatly from the school funding norm. Now is the time to consider what policymakers can learn from this experience.