5 steps districts can take to prepare for a big financial reckoning

The ESSER gravy train—which sent approximately $190 billion in federal COVID-19-relief money to the nation’s public schools—will quickly turn into a 'catastrophic derailment.'
Noah Wepman
Noah Wepmanhttps://www.newleaders.org/
Noah Wepman, the former chief financial officer for the District of Columbia Public Schools, is chief financial and strategy officer for New Leaders, a national nonprofit training equity-minded school leaders.

In September 2024, school districts across the country will experience a financial reckoning the likes of which they haven’t seen since the Great Recession: a perfect storm of declining enrollment, rising costs and, most importantly, the end of Elementary and Secondary School Emergency Relief (ESSER) funds. One education finance expert said the ESSER “gravy train”—which sent approximately $190 billion in federal COVID-19-relief money to the nation’s public schools—“will quickly turn into a catastrophic derailment for districts that have poured the one-time money into recurring costs.”

When that happens, it’ll be clear which districts are prepared and which aren’t. It’ll also be obvious which districts put equity and student needs at the center of tough decisions.

I know, because as the former chief financial officer of the District of Columbia Public Schools (DCPS), I grappled with many of these issues after the 2008 global financial crisis. I understand the difficulty of making tough decisions about staff and eliminating programs while prioritizing student success, particularly for students of color and those experiencing poverty.

Preparing for the coming fiscal cliff isn’t the responsibility of chief financial officers alone, since most districts will simultaneously spend the ESSER money even as they look for budget cuts. Because of that, this pending perfect storm will require a partnership of district leaders, school administrators, teachers and families—a community partnership built on trust, respect and transparency.

Facing the financial reckoning

Here are five things districts should consider doing to keep students and their successes at the center of discussions about budget reductions:

1. Inventory district-funded programs, then examine student data. Districts notoriously layer reform on top of reform, creating what I call “school reform lasagna.” After a while, these well-meaning interventions blend together so seamlessly that it’s nearly impossible to know what works and what doesn’t. DCPS’s inventory was illuminating because of administrators’ lack of oversight and the sheer number of programs—programs that in some cases leaders didn’t know the district was funding in the first place.

Once you have the inventory, the next step is to investigate the return on those investments. This could be as simple as comparing dollars spent, students impacted and outcome data, which can provide directional information or more complex academic ROI. What does your data tell you about the areas of greatest student need? Is it middle school math? Social-emotional supports? This data should inform a district’s highest priorities.

2. Engage in strategic abandonment discussions. This is the most difficult work since every program has users and families who won’t want it to end. For example, DCPS freed resources by eliminating a popular but ineffective early-grades reading program. Transparency and communication are key when you are working to end programs.

3. Set your district’s priorities and create (or update) your five-year financial plan. Typically, school districts budget one year at a time, rarely considering the impact of today’s spending decisions on tomorrow’s budgets. Because district revenue has increased over the last decade, districts have been able to get away with the lack of long-term planning. As the fiscal cliff looms, though, that strategy is a recipe for disaster. School systems must begin thinking in the long term.

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I created DCPS’s first five-year financial plan. It provided insight into the “total cost of ownership” of any program—and whether the costs were sustainable based on future revenue projections. It also provided transparency when we had to make hard choices. In fact, long-term financial plans are a tool for engaging community stakeholders in decision-making.

4. Budget for equity. Research is clear that principals have an outsized impact on student outcomes. Exceptional leaders need the resources and autonomy to make decisions on staffing and instruction that best serve their students. In addition, it’s known that money matters for student outcomes. Systems can accomplish two things simultaneously: empowering principals and preparing for fewer resources by implementing student-based, equity-driven systems for funding schools.

5. Innovate and experiment with new school models or staffing approaches. Necessity is the mother of invention. Around the country, districts are piloting different types of school models, such as large multi-teacher classrooms and multi-school leadership teams. These new ideas allow the best educators to reach more students without expanding budgets. They also expand a district or state’s ability to offer student interventions that are flexible, customizable and, most importantly, sustainable. Now is the time for schools to test different approaches and strategies that, if successful, can be scaled district- or even statewide.

These actions build on each other and can’t be rushed. It takes time to work through each step. Wait too long and districts will be forced to resort to seniority-based layoffs and across-the-board cuts. While that’s a plan designed to look like everyone feels the pain equally, this approach typically is felt the hardest by students furthest from educational equity. Districts need to start planning ahead—while they also focus on the here and now.

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