Researcher warns of ‘fiscal cliff’ for US school districts

Federal pandemic relief funds will come to abrupt end in 2024  

SCHOOL SYSTEMS HAVE been awash in millions of dollars of federal aid meant to cope with the impact of the COVID pandemic, but the gravy train will quickly turn into a catastrophic derailment for districts that have poured the one-time money into recurring costs, according to a Georgetown University education finance expert. 

Marguerite Roza, who directs the university’s Edunomics Lab research center, offered a grim warning to education officials on Thursday in a presentation at Harvard’s Kennedy School. Roza said a lot of the country’s 14,000 school districts, which have faced enrollment declines and other factors putting a squeeze on funding, “are propping up their budgets” with the federal aid. But with a September 2024 deadline to spend the federal money, school systems could face a sudden and painful budget crisis after that date, Roza said in her talk, titled “The Fiscal Cliff Coming to a District Near You.” 

The federal government has committed $190 billion to schools through the Elementary and Secondary School Emergency Relief, or ESSER, program. The money, which amounts to more than $3,500 per pupil, has come in three waves, but the bulk of it – about $128 billion – has not been spent yet, Roza said. Massachusetts districts received $2.9 billion in ESSER funding. 

Thanks to the ESSER money, Roza said, districts are benefiting in the current school year from funding levels above what they normally would receive, a situation that she said will continue for the 2023-24 school year. But she has dubbed the following 2024-25 school year, when the federal funding will suddenly be gone, “the bloodletting,” suggesting some districts will have to make drastic spending cuts to balance their budgets going forward. 

She cited Minneapolis as an example of questionable spending, saying the district has used half of its ESSER funds to make up for budget gaps created by years of declining enrollment. “When the funds run out, that’s the cliff we’re talking about,” she said. 

Roza shared budget projections for the Spokane, Washington, school district, which show the system already in the red, with a $7.7 million deficit this year. That explodes, however, to $62 million in the 2024-25 school year and $114 million the following year. Closing the budget hole would require cuts of about $4,000 per pupil in the district of 28,000 students. 

Former Massachusetts education secretary Jim Peyser, who facilitated the session, said districts in the state could be “approaching or falling off that cliff” after spending or making plans to spend ESSER funds on initiatives with recurring costs. 

In December, the nonprofit Boston Schools Fund issued a report warning of a “potential fiscal cliff” facing the Boston Public Schools, which have seen steep enrollment losses and tapped ESSER funds to help stabilize the district’s budget.

James Mikolowsky, director of policy at the Massachusetts Business Alliance for Education, said it’s hard to know without more information the extent to which lots of Massachusetts districts may be at risk.  

“I don’t think we have enough publicly available information to know how concerned we should be about whether this fiscal cliff is going to be a big problem for districts in Massachusetts,” said Mikolosky. 

Meet the Author

Michael Jonas

Executive Editor, CommonWealth

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

MBAE is part of a consortium of groups, EdImpact Research, that formed to track and analyze ESSER spending by Massachusetts districts. Mikolosky said the initial reports on ESSER plans submitted to the state a year ago often lacked enough detail to know whether districts were using the money for new hiring or other recurring costs that will create a budget crunch. 

He said Massachusetts districts could, in theory, be better positioned than those in other states to avoid the ESSER cliff if their budget planning has factored in state aid that is supposed to be ramped up over the next several years as part of the Student Opportunity Act passed in 2019.