Skip to main content

How Schools Are Spending Unprecedented Education Relief Funding

By Austin Reid  |  May 11, 2022

The year-old American Rescue Plan provided nearly $123 billion in relief to K-12 schools—the largest-ever one-time federal investment in that system.

Known as ESSER III, the funding was the third round of aid from the federal Elementary and Secondary School Emergency Relief Fund. Including ESSER I and ESSER II, the program has made nearly $190 billion available to the states, about five to six times the annual federal spending on K-12 education.

The ESSER program is a major experiment in federal education funding. The funds are intended to be extremely flexible, with 90% spent at the discretion of local school districts. Schools have until September 2024 to obligate funds and early 2025 to draw them down.

This flexibility and emphasis on local decision-making were intended to help states respond quickly to the many educational challenges caused by the coronavirus pandemic. The ESSER program’s goals can be broadly categorized as assisting pandemic response efforts; providing fiscal relief to state and school budgets; and supporting student academic and mental health recovery efforts.

Unlike past education relief packages, which were guided by federal and state priorities—the Race to the Top program in the American Recovery and Reinvestment Act, for example—states and the U.S. Department of Education are prohibited from directing or restricting how districts spend their ESSER allotments.

States control 10% of ESSER funds. NCSL has tracked how states are planning to spend these funds, analyzed their priorities and summarized state legislative action.

The following analysis of how local schools are spending their ESSER allotments was developed in consultation with many education stakeholders who play a role in implementing and monitoring the program.

State Administration of ESSER Funds

While ESSER I and ESSER II funds were made available to states immediately, ESSER III funds were delivered in two tranches, with two-thirds available in March 2021. In many states, executive, state education board or legislative approval was necessary for ESSER funds to be received by the state treasury and made available for distribution through state education agencies.

Most states had completed the necessary steps to receive funds by the start of the state fiscal year on July 1, 2021. To receive the remaining one-third of ESSER III funds, states had to submit spending plans for approval by the U.S. Department of Education. State plans were reviewed on a rolling basis starting in summer 2021, with most approved by October 2021. Most states had full access to all ESSER funds by late 2021, but several waited until a March 25, 2022, deadline to make ESSER III funds available to districts.

States are largely responsible for overseeing the application process for school districts to receive U.S. Department of Education funds. Federal regulation provides basic parameters but largely leaves the application process up to states. As a result, every state followed somewhat different application processes and timelines. State application requirements varied widely in the amount of detail required in district spending plans. State and local ESSER plans must include stakeholder input, though stakeholder engagement processes varied considerably across districts. Federal guidelines suggested that districts submit plans to state agencies within 90 days of states receiving access to ESSER funds, but actual deadlines have varied in practice. Districts are required to post their approved plans online, although they can be hard to find on district or state websites. The amount of detail in district plans varies greatly, and plans can be altered as needed.

How Districts Are Spending ESSER Dollars

Funds allocated to local districts are meant to be flexible. Federal guidance outlines 20 separate and broad uses for ESSER III funds, and districts must spend at least 20% of funds to address learning loss, but this is not a comprehensive list. In general, districts can use the money for any expense seen as necessary to addressing the pandemic’s impacts. The Department of Education’s expansive guidance even encourages states and districts to consider “pre-existing challenges that, if left unaddressed, will impede recovery from the pandemic.”

Gaining a picture of ESSER III spending has been difficult into 2022 given that application submission timelines vary widely by district and that federal and state reporting systems reflect when dollars are drawn down from federal accounts but not when districts commit to using the funds. Continued disruptions to schools and state agencies caused by surges in the delta and omicron variants of the coronavirus added to challenges for districts in applying for funds and for states in approving plans.

The most comprehensive tracking of districts’ ESSER spending plans has been conducted by Burbio, a company that collects and organizes publicly available data on local schools. Burbio provided NCSL with spending highlights from a data set capturing over $50 billion in spending across 3,000 ESSER III plans representing 60% of the U.S. K-12 public school population.

Districts spent the largest share of the money—about 29%—on academic interventions. Spending on educators and staff accounted for 22.2% of planned spending. Within this category, nearly 80% of districts plan to spend money on hiring staff, while nearly 56.1% planned to increase educator and staff compensation. Nearly 71% of districts planned facility upgrades, accounting for 17.4% of spending. Technology accounted for around 10% of planned spending, while combined expenditures on COVID mitigation strategies and student mental health services accounted for 6.6%. Interestingly, at least 15% of planned spending did not fit neatly into Burbio’s broad categories or were difficult to discern based on external reviews of district plans.

Other resources provide additional insight into local ESSER spending. The Edunomics Lab, an education finance research center, recently launched an ESSER tracker that provides spending data for some states and districts on the third and final round of ESSER funding. The Center on Reinventing Public Education, the Collaborative for Student Success and the Edunomics Lab launched the EduRecoveryHub, which highlights practices and innovations funded by ESSER and validated by experts in specific content areas. A School Superintendents Association survey in January 2022 asked superintendents how districts planned to spend ESSER funds.

District Spending Challenges

While there are many ways districts can use ESSER funds, headwinds have slowed the planning and spending of funds in districts.

According to NCSL’s analysis of federal ESSER data, 19.1% of the program’s funding, or $36.2 billion of the total $189.5 billion, has been drawn down as of Feb. 28. Data shows that states have spent 87.5% of ESSER I funds, 33% of ESSER II funds and 5.49% of ESSER III funds.

Labor Shortage, Inflation and Supply Chain Issues

Labor shortages and supply chain issues have created significant obstacles to ESSER spending. Many of the favored academic and mental health recovery strategies, including tutoring and mental health counseling, are labor intensive. High-quality teachers, tutors, counselors and mental health professionals are in short supply and face intense demand for their services. Districts that often compete against each other for educators now also compete with the health care system for mental health professionals. Even strategies that draw on existing labor, such as extended learning time, require teachers to work longer hours. For some teachers, the additional stipends to teach longer days aren’t worth it.

Districts that hoped to upgrade HVAC systems or complete other construction projects have faced delays due to labor and supply chain issues. In fall 2020 and into 2021, schools also faced delays in purchasing technology and hardware due to semiconductor shortages.

More recently, the spike in inflation affecting the prices of goods and services has prompted some districts to adjust their spending plans.

District Capacity Challenges

School districts faced enormous operational challenges at the very time they needed to submit their ESSER spending plans. District and school leaders took on health and safety administrator roles by navigating ever-changing guidance, shifting operations during COVID-19 outbreaks and conducting contract tracing programs. District administrators faced the ongoing challenges of ensuring their schools had enough teachers, substitute teachers, bus drivers and cafeteria workers during widespread labor shortages—sometimes filling those roles themselves. Within schools, leaders and educators were tasked with responding to increased academic, mental health and behavioral challenges as many students returned to in-person instruction for the first time in more than 18 months.

Putting together a strategic spending plan alongside organizing stakeholder engagement meetings proved a daunting task in this chaotic context. Even where plans were in development, continued disruptions caused schools to shift from recovery strategies to response mode. For instance, schools that might have expected to launch academic intervention programs were suddenly thrust back into hybrid and virtual learning formats or had to implement new rounds of COVID mitigation strategies.

A variety of administrative complications also hindered efforts to spend funds quickly. Despite the lack of federal restrictions, some districts assumed the use of ESSER funds would be limited based on their experiences with past federal education stimulus programs. There have also been anecdotal reports of state agencies or auditors declaring some expenditures to be noncompliant with ESSER guidance, even though the requested reimbursements were consistent with the program’s parameters.

Additional Federal Support

In addition to ESSER, federal stimulus packages provided other funding streams that could be used to support schools. In many cases, these additional funding streams were spent before local ESSER funds.

According to NCSL’s analysis, $6.6 billion from the Coronavirus Relief Fund and $4.4 billion from the Coronavirus State Fiscal Recovery Fund—nearly the full amount of the $13 billion ESSER I allocation—supported K-12 schools in over 30 states. States also gained access to $10 billion from the Centers for Disease Control and Prevention for COVID-19 screening testing in schools, and could receive full reimbursement from the Federal Emergency Management Agency for implementing health and safety protocols.

Finally, the ESSER fund was also intended to provide fiscal relief to districts facing anticipated state education spending cuts. However, thanks in part to the strength of various federal stimulus programs, most states have actually increased K-12 spending. Between ESSER and state funding, many school districts have seen sizeable budget increases.

The ESSER program—a once-in-a-generation investment in K-12 education—presents a massive opportunity to spur recovery efforts to improve student learning and mental health. NCSL will continue to work with education stakeholders across the country to provide updates on its implementation.

State and Federal Reporting

State and federal efforts to account for the spending of ESSER funds are somewhat limited. A few states, such as Washington, Indiana and Georgia, have well-organized and accessible portals for tracking state and local expenditures. State spending trackers and district plans can be found in NCSL’s state ESSER tracker.

The federal government maintains at least two portals that track ESSER spending, one through the U.S. Department of Education, the other through the U.S. Treasury Department.

However, the federal data are incomplete and do not keep pace with district spending of the funds. Only funds that have been liquidated from state accounts are considered “spent” for reporting purposes. Before “spending” funds, districts must first obligate them by entering into contracts for good and services.

Districts will then draw down or “liquidate” funds periodically over the course of the contract or perhaps all at once when the contracted services have been fulfilled. For instance, if a district hired a new teacher, the district would obligate the entirety of the salary at the start of the year but slowly draw down or “spend” the funds with each paycheck over the course of a year.

Due to cash management concerns, districts typically obligate funds, then submit their expenses for reimbursement through the state education agency. Once the funds are liquidated by the state, the expenditure data can then be reported publicly through state or federal data systems. Since data is often not collected in real time, there can be some delay between the funds being spent and then reported as spent.

Additionally, state and federal reports do not detail exactly how the funds are being spent. The ESSER fund, with its broadly defined uses, is inherently difficult to track, as many expenditures could be counted under various reporting categories. For instance, would paying a teacher a stipend to work an extended learning day be categorized as part of salary and benefits or as an academic intervention?

Given that the ESSER fund was created and distributed to schools in a matter of weeks in spring 2020, states have relied on existing data reporting systems, which may contain between two and four reporting categories. Since the categories and reporting are not consistent from state to state, reporting at the national level has proved challenging. In fall 2021, the U.S. Department of Education proposed that states report 25 separate subcategories of ESSER expenditures. However, the requested categories were reduced to four after state and local groups noted the millions of hours required to report or revise previously reported expenses with the level of detail proposed.

Austin Reid is the senior legislative director in NCSL’s State-Federal Relations Program.

  • Contact NCSL

  • For more information on this topic, use this form to reach NCSL staff.