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Outlook: Education 2024

Jan. 29, 2024
Some schools may face financial difficulties if they have not prepared for the end of federal Covid relief funding.

The budget prognosis for schools and universities in 2024 is the same as it has been for many years: We’d like more money—we need more money—but we’ll try to do the best with what we’ve been given.

Lack of funds is a perennial theme in education. Underpaid teachers, aging facilities and deferred maintenance are problems routinely confronted by school administrators.

That said, it’s difficult to generalize about the financial outlook for any of the nation’s schools and universities. There are about 13,000 school districts, and each of them has unique factors that determine their economic well-being.

A school system with increasing enrollment and a steadily growing tax base is likely to receive more funding, keep its tax rate comparatively low and its public approval comparatively high; declining enrollment in most cases results in less state aid and requires a district to make painful cuts. Local priorities and decisions by school boards also may result in different financial scenarios, even among districts with similar sizes and demographics.

But one generalization about education budgets in 2024 is unavoidable: A significant source of funding is going away.

Pandemic ending

Covid relief funding, approved by Congress in 2020 and 2021, will end later this year. The aid has provided billions of dollars to help schools and universities across the nation survive the financial fallout from the pandemic, but the legislation calls for the money to be spent or committed by Sept. 20, 2024 (although the U.S. Department of Education has set up a process for districts to request an extension of the deadline).

Through the Education Stabilization Fund, Congress has appropriated more than $270 billion for recovery and rebuilding efforts for schools and universities.

  • $189.5 billion: Elementary and Secondary School Emergency Relief (ESSER) has been allocated for preK-12 districts in three parts: $13.2 billion in the CARES Act, $54.3 billion in the CRRSA Act, and $122 billion in the ARP Act.
  • $75.3 billion: Higher Education Emergency Relief (HEER) has been allocated for higher education institutions under the CARES, CRRSA and ARP Acts.
  • $5.5 billion: Emergency Assistance to Non-Public Schools (EANS) has been allocated for non-public schools under the CRRSA and ARP Acts.
  • $4.3 billion: Governor’s Emergency Education Relief (GEER) has been awarded to governors for emergency education relief.

When that aid is gone, school districts that do not have other funding sources will come face to face with a “fiscal cliff” and freefall into a budget crisis. They may have to curtail programs, reduce staffing or even shutter facilities to make ends meet.

State support

Districts that hope for state funding to make up for some of the Covid funding that is going away may find their legislatures are unable or unwilling to provide more support for schools. According to a recent study, for the school year 2020-21, state support for local schools declined in the recession of 2007 to 2009, and more than a decade later has yet to recover.

“The Adequacy and Fairness of State School Finance Systems,” a January 2024 report from the Albert Shanker Institute, the University of Miami School of Education and Human Development and Rutgers Graduate School of Education, says that 39 states allocate a smaller share of their economies to K-12 schools than they did before the 2007-09 recession.

“About 60 percent of the nation’s students that we identify as being in ‘chronically underfunded’ districts...are in just 10 states,” the report says.

Those states are Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina and Texas.

The report calls on states to step up their school funding to address students’ needs.

“In some states, adequate and equitable funding might require only a relatively modest increase in total funding (particularly state aid) along with better targeting,” the report says. “In other states, particularly those in which funding is inadequate and effort is low, larger increases are needed, and may include both local and state revenue.”

Capital improvements

Another indication of the financial health of school districts is funding for capital improvements—school construction and renovation and other facility upgrades.

In most states, school districts gain the authority to carry out these improvements through bond elections. The success of these ballot questions generally indicates that patrons are positive about the district’s finances and how they are being allocated. But, again, a district’s financial well-being may depend on local conditions that are beyond its control.

A district with a large and growing tax base will be able to borrow the millions needed for school construction with only a minimal, if any, tax increase; school systems with a small or shrinking tax base may have to seek a sizable tax increase for even modest facility upgrades. The rules set in each state for bond elections also affect the chances of success at the ballot box. Most states require only a simple majority of voters to approve a bond proposal, but several require a higher vote threshold. In Idaho, for example, a two-thirds majority is needed to pass a bond request.

Persuading voters to authorize millions of dollars in spending to build new schools or renovate existing campuses is a positive sign that patrons feel good about a district’s finances and trust school leaders to carry out improvements. By that barometer, the outlook for schools in Texas—specifically, school construction—is rosy.

In 2023, school districts in Texas won voter approval for more than $36 billion in capital spending—over $21.6 billion in May bond elections and over $15 billion in November elections. Ten Texas districts won voter approval in 2023 for bond requests that exceeded $1 billion.

Other districts around the nation won approval of large bond requests: Charlotte-Mecklenburg (North Carolina), $2.5 billion; Utica (Michigan), $550 million; Tucson (Arizona), $480 million; Beaufort County (South Carolina), $439 million.

The billions of dollars that voters have approved for school facilities in these and other districts will result in hundreds of newly built and renovated campuses in the next several years. Replacing outdated facilities with modern learning spaces will show their patrons and others controlling the purse strings that money for education is being wisely spent.

About the Author

Mike Kennedy | Senior Editor

Mike Kennedy has been writing about education for American School & University since 1999. He also has reported on schools and other topics for The Chicago Tribune, The Kansas City Star, The Kansas City Times and City News Bureau of Chicago. He is a graduate of Michigan State University.

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