More than $150 Billion in K-12 Relief Funds Remain Unspent

At the start of the 2020–21 school year, states had spent only $17 billion of the nearly $175 billion in K-12 emergency relief funds provided by Congress and the Department of Education during the pandemic. More than $150 billion in federal aid intended to safely reopen schools and support student learning during the pandemic remained unspent as of August 31st, according to the U.S. Department of Education.

With growing questions about how states are using federal aid, ensuring that unspent federal relief funds are appropriately used to help students recover learning losses during the pandemic should be a priority for governors and state lawmakers during the upcoming state legislative sessions. Ohio’s new program using federal relief funds to create an ‘after school enrichment’ education savings account (ESA) program should become a national model, particularly since school districts are required to use 20% of their American Rescue Plan Act funds to address learning losses.

Unspent elementary and secondary school emergency relief funds

The below table shows a breakdown of federal education funds awarded to state education agencies since March 2020. Congress and the Department of Education distributed $12.8 billion through the CARES Act, $52.9 billion through the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, and $109 billion through the American Rescue Plan Act.

As of August 31, 2021, state education agencies reported spending $17.2 billion of the nearly $175 billion awarded to date. Nationally, states had spent just 10 percent of emergency relief funds. Maine, Maryland, Nevada, Vermont, and Virginia reported spending less than 5 percent. In other words, the overwhelming majority of the federal emergency aid that Congress appropriated to help schools during the pandemic had not been spent by the beginning of the current school year when the vast majority of public schools reopened for in-person learning.

As we have previously explained, it is possible that states have spent more than these amounts. In March, the Government Accountability Office reported that the Department of Education’s system for tracking data may not accurately reflect the rate at which states and school districts are using these funds. This is because funds are not reported by states as having been spent even if they are currently obligated. Nevertheless, the currently available data showing unspent funds likely presents an accurate picture of the vast amount of federal education relief aid that remains in state and local education agency coffers and could be used to help improve student learning now.

Importantly, these unspent ESSER funds do not reflect the total federal emergency funds available to state and local governments that could be used for education. For example, AEI fellow John Bailey explained that state and local governments could also use some of the $350 billion provided through the Coronavirus State and Local Fiscal Recovery Fund through the American Rescue Plan, which can be used for “programs and strategies to address the education and well-being needs of children in disproportionately impacted populations and communities.”

Growing questions about how states are using relief funds

In 2020, the Department of Education’s Office of Inspector General warned that the Department needed to maintain appropriate oversight to ensure that CARES Act funds were spent appropriately and in a timely manner. The Inspector General pointed to lessons learned from the Department’s management of emergency funds awarded through the 2009 American Recovery and Reinvestment Act, which showed that awarding temporary funding increased the risk that funds could be “misused.”

Last year, private sector observers also urged aggressive oversight of emergency funds awarded during the pandemic. Deloitte analysts offered recommendations to the Department of Education to “limit fraud, waste, and abuse.” At FREOPP, we urged Congressional and watchdog oversight to ensure that funds were used in a timely manner to reopen schools and to help students recover from learning losses.

These early concerns now appear to be warranted with growing questions about how school districts are using funds and why much of the federal relief funds remain unspent.

Writing in The Hill this month, Citizens Against Government Waste’s Ryan Lanier highlighted examples of school districts using COVID relief funds on questionable projects, “including sports facilities and an urban bird sanctuary.” ProPublica analyzed state reports of expenditures of relief funds between March and September 2020 and found that “just over half of the $3 billion in aid was categorized as “other,” providing no insight into how the funds were allocated.”

In October, the California State Auditor issued a report warning that the state department of education needed to ensure that school districts “promptly and effectively” use federal relief funds or risk returning unspent funds to the Treasury. Auditor Elaine M. Howle wrote:

“As of June 30, 2021, nearly 90 LEAs had spent less than 20 percent of their initial ESSER allocations and more than 140 had spent less than 20 percent of their initial GEER allocations. We project that these LEAs will collectively have nearly $160 million in unspent initial ESSER and GEER allocations, which would then revert to the federal government after the spending deadlines.”

Using available aid to fund tutoring ESAs for at-risk students

One way that states could use the billions in unspent federal emergency aid would be to fund education savings accounts for tutoring to help children recover from learning losses during the pandemic. For example, Ohio Governor Mike DeWine recently signed an executive order to establish an ‘after school emergency enrichment education savings account’ using federal COVID relief funding:

“The program will provide up to $500 per year for children ages 6–18 from families with an income of less than 300% of the Federal Poverty Level. The funds in accounts can be used for various enrichment and educational activities, including tutoring, day camps, music lessons, study skills services, and field trips.”

The executive order answers a state law passed by the legislature over the summer. The program will cost $50 million during the first year and $75 million next year.

The Buckeye Institute, a Columbus-based think tank, championed the creation of the new program. In June, Executive Director Rea S. Hederman Jr. called the program “an important step in helping parents afford desperately-needed resources giving them the flexibility necessary to improve their children’s educational outcomes.”

It’s also a good way for the state to use emergency federal funding to help children begin to recover from learning disruptions that occurred during the pandemic. Under the American Rescue Plan, local education agencies must use “at least 20 percent of funds to address learning loss through the implementation of evidence-based interventions and ensure that those interventions respond to students’ social, emotional, and academic needs and address the disproportionate impact of COVID-19 on underrepresented student subgroups.”

In terms of evidence, there is good reason to believe that funding tutoring would be an effective way to help students recover from learning losses that occurred during the pandemic. A Brown University meta-analysis of experimental evidence found that tutoring is “one of the most versatile and potentially transformative educational tools in use today” to improve student learning.

Help children recover from learning losses

When Congress provided more than $170 billion in emergency education aid to states to support K-12 education during the pandemic, most lawmakers likely intended for funds to be used to help schools safely reopen and support student learning while schools operated remotely. Since public schools have already safely reopened during the 2021–22 school year, states and local education agencies should now use unspent emergency funds to help children recover from learning losses by funding tutoring ESAs for at-risk children.