Flexibility: Local Choices Amid a Global Pandemic

One of the chief distinguishing features of ESSER funding, especially when compared with other federal grants, was its flexibility. There were few formal usage requirements or constraints written into ESSER’s authorizing bills. The funds simply had to be used to “prevent, prepare for, and respond to COVID-19.”¹ While the American Rescue Plan Act further defined these uses, the parameters were still quite broad; they encompassed all activities authorized by the major preexisting federal education statutes, as well as activities focused on specific high-need populations, expenditures necessary to maintain services and employ staff, efforts to coordinate with other government entities, and a few other purposes. It would be hard to find an educational purpose not allowed by these rules as long as there was a plausible connection to COVID-19—a link that, given the pandemic’s broad effects on student learning, physical health, mental health, and socialization, was usually quite easy to make. The only true usage directive for districts was the obligation, introduced with ESSER III, to use 20 percent of that funding to address learning loss.²

Given different local situations and rapidly shifting circumstances, it made a great deal of sense for Congress to give districts a high degree of autonomy and discretion. Several district leaders expressed gratitude for the ability to respond to the needs of their school community, whether those needs were related to safety, technology, academics, mental health, or any number of other concerns.

Beyond providing space for districts to tailor their COVID responses, the federal government specifically encouraged creative uses of the money. In a cover letter announcing districts’ ESSER I awards, U.S. Secretary of Education Betsy DeVos wrote, “My Department will not micromanage how you spend these funds, but I encourage you during these challenging times to see this unprecedented disruption as an opportunity to rethink the way students access education,” and emphasized the value of technological investments.³ A year and a half later, a federal guide for spending ESSER III dollars advised that, although the money was meant to support pandemic response, “the significant support provided should also be viewed as a rare opportunity for investing in planning and implementation of long-term improvements. Many schools and districts have thought about doing things differently or developing a comprehensive improvement plan to better serve all students, but never had the time, money, or expertise to do so. Now may be the time.”⁴

The true experience of using ESSER funds, however, differed somewhat from this ideal of flexibility. District leaders encountered a variety of formal, political, and practical constraints along the way, even as they made extensive use of the latitude afforded to them.

As districts began to spend ESSER dollars, they encountered three main types of limitation: federal rules, state procedures, and effective constraints arising from a lack of clarity about the funds.

First, while ESSER’s own rules were quite loose, most general requirements for spending federal money still applied to ESSER dollars. Federal grants are governed by uniform guidance requiring that expenditures fall under 55 broad headings.⁵ Spending within that list must be “necessary and reasonable”—a requirement that serves less as useful advance guidance and more to put districts on notice that audits are always possible. This is not an idle warning. Audra Chilton, director of finance of Surry County Schools in North Carolina, said, “if it's federal funds, you're always a little bit more nervous with it…I feel like we get audited on them six different ways.”

She also mentioned having had to complete many duplicative reports about ESSER funds, which is not surprising. Federal grants carry general reporting requirements: monthly reports for any award exceeding $30,000 total, as required by the Federal Funding Accountability and Transparency Act (FFATA) of 2006.⁶ Over 90 percent of ESSER allocations exceeded this threshold. Surry County Schools received more than $19 million in total ESSER dollars.

Despite the specific reports mandated for ESSER—quarterly reports for ESSER I and detailed annual reports for ESSER II and III—FFATA requirements were not waived or loosened, and ESSER money was not earmarked for enlarging the administrative teams that handle federal reporting. General federal procurement rules applied to the use of ESSER dollars as well. Any purchase over $10,000 had to go through competitive bidding; anything above $250,000 had to go through a formal competition with sealed bids or proposals.⁷ Some federal rules affected specific uses of the money. For example, federally funded construction projects must pay workers at rates set by the Department of Labor under a law called the Davis-Bacon Act.⁸ Together, these federal requirements—all separate from, and unchanged by, ESSER’s authorizing legislation—took time and administrative capacity, and in some cases limited usage or increased costs.

Second, some states added their own requirements or processes for receiving or using ESSER dollars, or applied preexisting requirements to the money in ways that slowed or limited districts’ deployment of the relief dollars. ESSER grants were first given to state education agencies to pass along to districts. Some states distributed the money prospectively, while others did so on a reimbursement basis.

One lead finance official for a large, East Coast urban district expressed frustration with his state agency’s process. Because of the money’s emergency purpose, it was made available for spending as early as possible, but the state agency couldn’t match that speed when it came to formally processing the grant, so individual grant expenditures were often authorized by the state after they had already occurred. Making allowability determinations after spending had already happened created uncertainty, especially with such a large grant. “If something is determined not allowable after we've spent the money,” the official explained, “suddenly we have local pressure that we have to cover [the cost] in order to be compliant with the grant.” In this way, late disbursement may have had a chilling effect on ambitious expenditures. And such lagging or retroactive approvals were not unusual. Jess Gartner, CEO of the school finance services company Allovue, said, “Many districts didn’t get [state] approval to spend ESSER III—the majority of ESSER funds—until nearly a year after the [American Rescue Plan Act] legislation was passed. Media were asking how dollars were spent before…districts even had their plans green-lit.”

Interviewees also generally reported that states’ usual requirements for spending, such as mandated competitive processes for procurement, remained in place, separate and apart from federal purchasing rules. And some states imposed federal-style requirements not demanded by ESSER’s authorizing laws; the budget director of one Minnesota district said that the state education agency treated the money like the more restrictive Title I dollars, and mandated reporting on staff time and attendance that is often required for federal grants but was largely unneeded in the case of ESSER.

From the state side, Alex Charles, head of the Federal Programs Office in the North Carolina Department of Public Instruction, said that his compliance-focused team was a bit thrown by the openness of the grant funding. “It took us a little bit of time to get over that hurdle,” he said. “I think for us, it was getting over those things that were inherently unallowable under most [federal education] grants, like the construction pieces and capital projects, and now with them being allowable, having to retrain our brains.” He said, “I was the guy who was known as saying no, because I’m going to keep them safe. The last thing I want is for to ever be in the situation of repayment.”

Third, some expenditures were impeded less by formal requirements or processes and more by a lack of clarity in a fast-moving situation. John Carlson, who in addition to being chief administrative officer for Rochester Public Schools is also the president of the Minnesota Association of School Business Officials, said that the association held webinars with the state education agency to share information and offer an opportunity for local officials to ask questions. This was necessary because “there was a lot of trying to understand on the fly.” He said, “We always want to try to do the right thing. And so we're trying to be careful and make sure we completely understand, and not just start spending, spending, spending without understanding what the boundaries are with that money.”

Sometimes state departments of education were equally unsure of the rules, with frustrating consequences for districts. Keri Randolph, former chief strategy officer of Metro Nashville Public Schools, reports having to crowd-source information. “[Our] federal programs team hosted a meeting of similarly sized districts where we just compared notes,” she said. “TDOE [the Tennessee Department of Education] was not there. We were trying to understand, because we weren’t getting information in a timely or consistent manner from the state. Things were moving quickly, and we had lots of questions at all levels—state, district, school—so we hosted the monthly meetings and more districts asked to join over time, because there wasn’t always timely, clear, or consistent information coming out. It was challenging for everyone.” She said that system and building leaders wanted to make their investments quickly. If one plan was going to be disallowed, they wanted to know so that they could pivot to a new strategy right away, but the confusion slowed districts’ COVID response.

Several interviewees also felt that the rules were interpreted more loosely as time went on. Districts’ many questions about allowable uses appear to have prompted federal and state education officials to expand their parameters for a COVID-related expense. While this category was initially understood to include very specific health and safety measures and remote learning expenditures, later, it came to encompass any effort that would help the district support students academically and personally after COVID-related setbacks. As a result, districts’ use of the money became freer as the pandemic wore on, but this late-breaking flexibility may have heightened the concerns about spending deadlines discussed above.

Overall, practitioners’ experiences suggest that, if the priority is flexible funding, it is not enough to simply authorize aid without legislating new restrictions. Where possible, Congress and federal agencies should waive or loosen preexisting federal rules. States should meet federal flexibility with flexibility of their own, avoiding additional process or compliance requirements. And federal and state agencies should provide prompt, clear, and consistent guidance, erring on the side of permission rather than prohibition.

One effect of allowing districts to make flexible spending decisions is that iplaces the money within the current structures and politics of the district. Any existing tendencies, whether functional or dysfunctional, are likely to be heightened in more locally controlled process.

In districts without a strong leadership vision or a clear plan for the funds, this sometimes manifested in scattered spending. One budget official for a large, northeastern school district said, “We didn’t have the strength in leadership and the clarity of vision of where we’re headed, and that vision being informed by… what students needed. If that anchor was there, then we would know very clearly what we needed to put the money towards. But without that anchor, we’re throwing money at anything that pops up that people say is important. And that’s not moving us towards what we need.” That’s not to say that her district failed to make any high-impact choices—many of its investments, including in new curricula, comprehensive school libraries, tutoring support, and programs for English learners, are likely to pay off in the long run. Still, the process left much to be desired in terms of efficient and targeted spending.

The budget director of another big, urban district pointed to a similar challenge, one borne of local political circumstances. He explained that although district leadership had made plans for ESSER III, it was engaged in labor negotiations at the same time and ended up dedicating a large portion of relief funds to staff salaries. That served a purpose, but it meant that the district didn’t deploy nearly as much of the funding as planned for new initiatives. His district’s greatest success in spending, he said, came out of the most restricted category: the 20 percent of ESSER III dollars that had to be spent on addressing learning loss. The district is using most of that money on a helpful new academic intervention for struggling students. But beyond the health and safety expenditures in the beginning of the pandemic, he had trouble pointing to another big investment that is making change in the district. Such challenges were less present in districts with strong leaders who made clear plans and were committed to executing them. When asked about local pressure to spend in suboptimal ways, several interviewees responded that the goals had been clear, and by sticking to their approved ESSER plans, they managed to forge ahead without too much pushback.

Local flexibility was also easier to deploy in districts where leaders were accustomed to handling flexible funds. Keri Randolph recalled that Metro Nashville did spend a great deal of its $426 million in ESSER funds centrally, but a substantial portion was transferred to schools for their use. School leaders were experienced with this responsibility, because the district already used a flexible model known as “student-based budgeting” for allocating funding to schools. Many were poised to make use of the dollars creatively. For school leaders who needed more support, Randolph said, these new dollars were actually the most helpful, because they were forced to develop plans that would make a difference for student achievement and engagement. The district also had resources and staff in place to help school leaders make use of the federal dollars. These included Title I facilitators and community superintendents, who were marshalled to support the budgeting process and who received training on the district’s strategic vision for this pot of funds. Flexible federal dollars, funneled through all of these preexisting structures and capacities, set the district up for a better ESSER experience.

The varied experiences of different districts with these funds show that flexibility is most likely to pay dividends in districts with experience with, and good support for, creative budgeting. Meanwhile, districts with less effective leadership or more dysfunctional local politics could see flexibility turned into some amount of infighting or inefficiency. For these districts, broad but clear directives, like the 20 percent set-aside to address learning loss in ESSER III, can be helpful for putting funding to good purpose.

The funding was also flexible in a specific and notable way: It was permissible to use ESSER dollars for both operational and capital expenses. (Operational expenses are those related to the goings-on in a school or district, like instructional and staff costs, as well as ongoing services such as transportation and food service. Capital expenses are those related to specific infrastructure projects, like new construction, furniture, or building improvements.) This is rare. Generally, operational and capital budgets are separate and draw upon different funding sources, and very little financing for facilities improvements comes from the federal government; the lion’s share comes from local revenues.⁹ ESSER dollars were a rare opportunity for districts to take a single pot of funding and consider what their students needed most, ranking potential capital and operational investments on the same priority list. It was also a unique chance for high-poverty, low-wealth districts to address critical infrastructure needs with federal dollars, since they tend to have a much harder time raising the local dollars that usually support these projects.¹⁰

It was understood from the beginning that certain kinds of physical plant improvements would be considered an allowable form of COVID response. This permitted category broadened over time. ESSER II and ESSER III were both explicitly authorized for “projects to improve the indoor air quality in school facilities,” and “repairs and improvements… to reduce risk of virus transmission and exposure to environmental health hazards.”¹¹

The federal Office of Elementary & Secondary Education held an information session on the topic in late 2021.¹² It advised that districts could use the dollars for COVID-related improvements like air conditioning and air filtration systems, the replacement of water fountains, and renovations to permit social distancing. It also emphasized the overall health and academic benefits of better indoor air quality (for instance, for students with asthma and allergies) and the value of selecting air quality improvements that increase energy efficiency. In answering audience questions at the end of the session, Department officials said that replacing a roof with ESSER dollars would be easily justifiable if a leak was creating mold that affected air quality, and they confirmed that the relief funds could be used for mold, radon, and asbestos abatement.¹³ The answers emphasized environmental health benefits but did not make any connection to specifically COVID-based hazards.

Keri Randolph of Metro Nashville Public Schools spoke of the ability to use ESSER dollars for capital projects as an exciting opportunity, but not an easy one to take advantage of. “We have large capital needs, including a huge amount in deferred maintenance [costs],” she said. “The hard part was that those were some of the hardest funds to deploy. Capital funds are almost never federal funds.” She referred to the Davis-Bacon Act rules regarding construction wages as a particular challenge and noted that the state department of education was also unfamiliar with the rules for federally funded construction projects.

Still, she said Nashville made a lot of HVAC improvements, which everyone agreed were permissible under ESSER rules, and also did some playground projects, which allowed for social distancing and more outdoor time for students. Surry County Schools in North Carolina took a similar tack, focusing capital spending on narrowly COVID-related needs. In addition to $2 million in air quality upgrades, Superintendent Travis Reeves remembers spending on tents, tables, and chairs to serve lunch outdoors (rented from a local Boy Scout camp), as well as computer equipment and internet services.

Superintendent Dorrell Green of Red Clay Consolidated School District in Delaware mentioned the value of being able to consider capital and non-capital priorities alongside each other. “The flexibility actually gives you the opportunity to address the real need,” he said, adding, “I can just speak from us as a district in looking at capital improvements. We probably have some of the oldest facilities in the state.” Normally, he explained, districts receive state aid for operational purposes, but for capital expenditures, they need to put a state-approved referendum on the ballot for local voters to approve the funds. (This is not unusual nationally; much school construction is financed by specific, voter-approved taxes or bonds.) ESSER provided a different avenue. He said, “the money was pre-loaded: Here are the parameters that you can use it for, whether that’s programmatic, operational, facility-wise. You just have the need [and] you’re held accountable for the spending.” That latitude, he said, “allowed us to be intentional, whether that was air quality, additional supplies that may have been needed around [personal protective equipment] or specific cleaning of facilities, or programmatically, looking at the behavioral health needs, the mental health needs, the learning recovery, [or asking ourselves,] what does that out-of-school time or wraparound services and supports look like, [or looking at the need] for additional tutoring. I think the flexibility was refreshing.”

Though Department officials did not make this connection, there would have been a powerful reason to expand the permissible capital expenditures to a broader range of building improvements than just those related to air quality and larger spaces. ESSER III contained a strong emphasis on academic recovery, and research has repeatedly shown the negative academic effects of poor school facilities. For instance, student absenteeism is higher in schools affected by mold, vermin, poor ventilation, and other visible problems; students perform worse academically in hot weather when their schools lack air conditioning (a problem that is becoming more widespread with advancing climate change); poor school facilities can harm teacher retention; and overcrowding has a harmful effect on student achievement.¹⁴ Investments in school facilities should rightly be seen as investments in learning. This was not an approach that interviewees reported taking, however.

The U.S. Department of Education did not encourage using ESSER for all kinds of construction. In December 2022, updated federal guidance advised against using the funds for new construction out of concern that such large and time-intensive projects might run afoul of the spending deadlines or displace spending on “other essential needs or initiatives.”¹⁵ Those were real challenges in many districts. Miriam Rubin, former budget director of Boston Public Schools, confirmed that there was a concern that large construction projects would have to extend past the ESSER spending deadline. Smaller investments were made on things like window-unit air conditioners, air filters, and window repairs. Big projects might have been more feasible if they had begun earlier, but Rubin recalls that initially, the desire to build ran up against more urgent concerns. “This is really bringing me back,” she said, “but that first year, we didn’t know how much money we would need to just return to school. So we didn’t really know how much money we were going to have to do stuff like that. And we needed to be able to say we had endless money if we were going to enter into big capital projects.”

If this was a challenge in Boston Public Schools, which received over $430 million in COVID relief funding, then it was prohibitive in districts that got smaller allocations. John Carlson of Rochester Public Schools said that relatively few Minnesota districts did large capital projects, even ones directly related to COVID safety like HVAC system replacement. While Rochester did purchase smaller items like air-scrubbing machines and air purifiers, he said, “I don’t know that we would have had a single bucket of our money, though, that would have been big enough to even tackle an indoor air quality project. I’m doing one [with non-ESSER dollars] at a high school this year that’s $40 million. If I would have taken every penny from this [relief money], that would have covered one project.” Instead, Rochester focused its ESSER plan on operational expenses, like paying for social workers and counselors to support student mental health and running its Summer of Discovery learning and enrichment program.

Tracy O’Connell Novick, board member of Worcester Public Schools in Massachusetts, drew an analogy between the costs of responding to the COVID-19 crisis and the size and expense of big facilities improvements. Of the pandemic, she said, “it was a big enough problem where really only the federal government could tackle it.” School construction, she believes, needs its own emergency relief package, since “when I think of the massive amount of need in terms of school facilities across the country…that’s absolutely one where, really, only the federal government can tackle it.” (Notably, the last comprehensive federal survey of K–12 public school infrastructure estimated that the needed investment for repair and modernization was $197 billion, an amount fairly close to the total ESSER allocation.)¹⁶

Ultimately, districts’ approaches to using the ESSER dollars for capital purposes show how valuable it can be to be able to deploy flexible funds this way, considering capital priorities alongside operational priorities to determine what will best support the school community. Districts’ experiences also show how compliance concerns and formal rules can limit their use of federal funds for this purpose. Spending timelines must be realistic if funds are to be used for construction, and designated, large infusions of federal funds may be necessary if districts are to make larger or more systemic facilities improvements. Districts are also unaccustomed to viewing capital expenditures as investments in student learning. More direct federal guidance could help shift this thinking.