In a Nutshell:

• Another round of federal education relief funds is headed to Michigan public school districts to help them during the pandemic.
• The formula used to share the dollars among school districts favors some much more than others. The formula does not align with the purpose of the funding – to help ALL children impacted by the pandemic. 
• Should Congress decide to provide additional K-12 education relief, it would be wise to consider a district allocation method that is more equitable.

The recent round of federal stimulus includes a lot more money for public schools to help them navigate the obstacles involved in providing K-12 education to millions of children during the pandemic. But, the method for dividing this funding among school districts benefits some districts far more than others. If additional federal education aid is made available, policymakers would be well served to select a more equitable distribution formula that recognizes that all students are affected by COVID-19.

Elementary and Secondary School Relief Fund- Redux

In late December, after months of political stalemate, Congress passed and President Trump signed a new $900 billion pandemic relief bill as part of a much larger spending bill to keep the federal government open. This headline number is less than half of the $2.2 trillion contained in the HEROES Act approved by the House of Representatives last fall.  President-elect Biden and many congressional leaders have called the assistance a “down payment” on the additional funding that will be needed in early 2021 to deal with the pandemic.

While the overall funding might be less, buried deep in the 5,700-page Coronavirus Response and Relief Supplemental Appropriations Act, public school districts across the country will find a lot more money to meet the challenges presented by COVID-19. This funding could not come soon enough as schools confront rising costs of operating during a pandemic and the prospect of funding cuts this fiscal year because of the economic slowdown’s impact on state and local tax receipts

The new federal relief package provides $82 billion to the Education Stabilization Fund created within the CARES Act. There are, however, a number of notable changes in how the money is divided up among states and schools within states. Most notable is the fact that the amount of K-12 funding is around four times greater than under the CAREs Act ($13 billion). Of the total going to states, $54 billion is designated for K-12 public schools and another $23 billion for higher education. The CARES Act split the education relief pot about 50-50 between K-12 and higher education.

Additionally, private schools are slated to receive $2.8 billion of the $4 billion discretionary pot reserved for governors to meet their state’s education needs. Under the CARES Act, private schools did not get a separate direct allocation, instead they received funding via an existing “equitable services” provision in federal law. The new money for private schools can’t be used for religious instruction or go to the schools directly; a public body must administer services or assistance to private schools.

As with CARES Act funding, states and their districts will receive relief funds based on Title I formulas, the federal program supporting children from low-income families designed to ensure that all children meet challenging state academic standards. Generally speaking, Title I directs greater funding to schools with a high number or percentage of children from low-income families. Student population is also a key determinant with higher weights provided to larger districts.

Michigan’s estimated share for K-12 education will be over $1.6 billion.  Again, this is four times more than the $390 million received from the CARES Act. As with the previous aid, the state must direct at least 90 percent to public school districts, including charter schools, while 10 percent is reserved for the Michigan Department of Education’s efforts to respond to the coronavirus. 

Michigan’s 800-plus local districts and charter schools will share in almost $1.4 billion. The Michigan Department of Education recently notified districts and charter schools about the availability of the funding, but has not provided information about allocation amounts. This one-time money is available for districts to use through September 2023. For budgeting purposes, schools will be able to program the money over four school years and use it for everything from cleaning buildings to addressing learning loss.

Title I’s Distorting Effects?

Because Title I is being used to distribute relief funds among public school districts, Michigan’s largest and poorest districts will benefit the most. In a previous blog we highlighted the fact that the decision to use the Title I formula with the CARES Act funding creates winners and “mega-winners” among districts.  The mega-winning districts will receive the most federal aid with this most recent stimulus package (both in terms of total funds and on a per-student basis).

To show the wide variation in funding amounts caused by Title I, we highlighted school district allocations in Wayne County and Detroit Public Schools Community District specifically. Detroit receives about one-quarter of the dollars distributed by the Title I formulas. With the CARES Act funding, the district received $85 million of the state’s $350 million. This equated to $1,685 per Detroit student, compared to an average of less than $200 per student across the state. But, the  Detroit district is not the only major beneficiary of Title I. By design, the formula favors those districts with high concentrations of economically-disadvantaged students. This includes many majority-Black districts across the state, such as Flint, Benton Harbor, and Lansing. 

This bias toward some districts showed up with the previous round of federal funding and the same will happen with the new relief funds. Detroit Public Schools Community District will receive $340 million, again nearly one-quarter of Michigan’s total allocation. This amounts to an average of $6,740 per Detroit student, approximately 82 percent of the district’s foundation allowance ($8,142).  This compares to just $765 per student across the state after accounting for Detroit’s portion of the funding, the equivalent of less than 10 percent of the minimum foundation allowance.

Title I’s often confusing and complex formulas result in some very disparate allocations, even among districts with similar demographics. While different in size, each urban district listed below has a student body where 81 percent of children are considered economically disadvantaged. Yet, the estimated amount of per-student federal relief dollars they will receive varies substantially – $6,740 (Detroit) to $733 (Dearborn Heights). There is also a wide range when these funds are compared to each district’s approved 2020-21 General Fund budget. For Detroit, the funding equates to 40 percent of its budget, but for Grand Rapid (the eighth largest district), the funding amounts to 15 percent.

A More Equitable Way to Divide Relief Funds

This is the second round of federal education relief funds. As some leaders in D.C. have stated publicly, they view this as a “down payment” on future fiscal stimulus. Whether education will be included in future aid packages is unknown.  However, if more dollars are sent directly to public school districts, Congress would be wise to revisit the allocation method previously used with an eye towards a more equitable formula.

Because the relief dollars are intended to serve ALL districts and ALL students during the pandemic, not just the students in a handful of districts, the distribution method employed should reflect this reality.  Title I is designed to address the unique learning needs of students in the country’s largest and poorest districts (whether it achieves this goal is up for debate). Calls to reform the Title I program have come from all corners, conservative and liberal, but that is a separate debate that should be had outside of the discussion of providing federal aid during the pandemic.

While it is the case that poorer districts have been hit particularly hard by the pandemic, it is also true that no district has been spared entirely. To better reflect the reality of the impact of COVID-19 on K-12 education, including private schooling, Congress might consider using a flat per-pupil allocation supplemented by a separate Title I allocation to address the increased needs of children in high-poverty schools.  Such an approach would ensure that, at a minimum level, ALL children in ALL schools (including private and regardless of the size and demographics of the school) will be assisted more equitably with the federal dollars. The added challenges some students face could be addressed through a separate Title I distribution.

Note: This report was updated to reflect that the relief funds will be available to spend through September 2023.