Three ways to send stimulus money to students and educators who need it most

With state and local governments quickly approaching fiscal cliffs caused by the COVID-19 pandemic and resulting shutdowns, another massive federal spending package likely is on its way. The House recently approved the HEROES Act, a $3 trillion bill that includes about $58 billion for K-12 education. While there’s been little consideration given to the consequences that this spending will have on future generations that will be saddled with public debt, policymakers at least should ensure that any money earmarked for education is used wisely. To do this they must consider how these dollars are allocated. Here are three principles to help guide them.

First, dollars should be allocated based on students. Unfortunately, the reality is that current school finance formulas at all levels — federal, state and school district — are fundamentally flawed. A primary shortcoming of the American Recovery and Reinvestment (ARRA) Act of 2009 was that its primary vehicle for delivering education dollars — the $48.6 billion State Fiscal Stabilization Fund — relied heavily on state formulas that often failed to account for existing spending disparities caused by local wealth. Additionally, it also used parts of the federal Title I, Part A program — which provides money for low-income students — to divvy up $10 billion, despite the fact that these methodologies result in inequitable distribution patterns that shortchange some low-income students. 

The recent Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included more than $16 billion for K-12 education, doubled-down on this approach by delivering the bulk of funding to states, and then districts, based on their respective shares of Title I funding.  

Federal policymakers already have endorsed weighted student funding (WSF) with a pilot program. So rather than relying on flawed funding systems that are in place, they should practice what they preach when it comes to allocating stimulus dollars. They could create a simple formula that attaches dollars directly to students by establishing a per-pupil allotment along with a poverty weight that targets additional funding to disadvantaged students. While funding ideally would go directly to districts, or even schools, potential implementation challenges could be mitigated by sending dollars to states based on federal student count data and then leveraging existing state mechanisms for identifying and counting low-income students. 

Importantly, allotments should be phased out for high-spending, low-poverty districts, and saved dollars could be repurposed for students who need them most. This would be a major improvement compared to the ARRA in 2009, under which substantial resources were siphoned off to well-resourced districts. 

The second principle is to push spending flexibility down to the local level so that leaders are empowered to make tradeoffs over how dollars are spent, which is especially critical when funding is tight and tough decisions must be made. District officials were rightly frustrated by the strings attached to ARRA’s Title I and IDEA Part B components, which limited their ability to align spending with local needs. Perhaps this is why the most popular use for both of these restricted funding streams was for professional development, which is especially odd at a time when core teaching positions and other resources were being threatened. But district leaders must also do their part to ensure that spending decisions are made closest to students by giving school leaders a greater say over dollars, since the typical principal only controls about 8 percent of their operating budgets. 

Third — because there will be unique challenges in each state that D.C. leaders can’t possibly anticipate — governors should be given substantial room to maneuver with at least a portion of stimulus funding, just as they did with the $3 billion Governor’s Emergency Education Relief Fund that was part of CARES. Governors must have the ability to invest in solutions that meet the immediate needs of all schools and families, including online learning platforms that are tragically underdeveloped in many states. They also should be empowered to help shore up private schools that also have been hit hard by the government-imposed lockdown. Without this support, there could be a costly influx of students into the public education system at a time when districts will be dealing with substantially lower funding for students they already serve. 

While much of the policy debate around stimulus funding will focus on the question of “how much,” it’s critical for stakeholders to scrutinize how dollars are allocated. With these simple and fair principles, federal policymakers can help ensure that any additional stimulus funding for K-12 education is directed to the kids, families and educators who truly need it most. 

Aaron Garth Smith is director of education reform and Christian Barnard is an education policy analyst at Reason Foundation. Follow on Twitter @ReasonFdn.