On Wednesday, June 14, the Research Council participated in a discussion about Michigan’s allocation of nearly $6 billion in federal education relief funding provided to public schools to respond to the pandemic. This was part of Michigan State University’s Institute for Public Policy and Social Research June public policy forum held in Lansing.
The general topic of the forum examined how Michigan has been spending its share of the federal American Rescue Plan Act (ARPA) money approved in early 2021. The Research Council presented its current research and analyses on the topic to a downtown Lansing gathering of roughly 50 people engaged in Michigan public policy circles. The Research Council’s presentation focused on the historic amounts of federal relief funding flowing to the state’s public K-12 schools, a topic of the January Memorandum, Spending Deadlines Hang over $3.5 Billion of Unspent Federal K-12 Education Relief Funds.
In addition to CRC’s presentation, forum attendees also heard from Dr. Eric Scorsone, Center for Local Government Finance & Policy and Bridge Michigan’s state politics reporter Jonathan Oosting. Dr. Scorsone presented his team’s research and analyses on the $4.4 billion allocated to local governments across the state, while Mr. Oosting discussed his recent reporting on how a number of communities intend to use their one-time windfalls to address everything from gun violence and home repairs to “micro-forests” and even the state’s first attempt at a “guaranteed basic income” program for the poor.
A recording of the forum can be viewed in its entirety here.
A few common themes appeared in the remarks of the three presenters. First, the sheer scale of the amount of the federal largesse flowing to public entities was noted. For public K-12 schools, the ARPA funding, combined with two earlier smaller relief packages, represents the single largest investment in public schools ever. The $6 billion total across all three waves of federal aid is nearly four times the inflation-adjusted revenue increase public schools received from 1993’s Proposal A school finance reforms; this was the previous all-time largest school funding bump in Michigan history.
A second common thread across the presentations was the slow-roll of spending to date by ARPA funding recipients. The federal government set firm deadlines for entities to spend the funding in order to ensure the economic stimulative effects of the aid would be realized as soon as possible. Both the local government aid and education dollars must be obligated by late 2024, with actual spending (cash outlays) occurring for short periods after this deadline. But, despite the approaching deadlines, collectively only about 40 percent of Michigan’s total ARPA allocation has been spent. This leaves approximately 60 percent to be programmed and spent over the next 18 months. It was noted, however, that there is great variation in the spend-down rates of individual entities (counties, cities, school districts, etc.). Some recipients have fully exhausted their allotments as of today, while others have barely touched their share of the funding.
Finally, all three presenters shared their personal experiences with challenges accessing and obtaining current, up-to-date financial information about ARPA allocations. Public transparency surrounding the ARPA funding has been lacking in many respects and at all levels of government. For example, the Michigan Department of Education is serving as the main point of contact for the federal education aid approved in 2021, but only recently (May 2023) released a public-facing website allowing researchers, the media, and the public to see basic information about the awards provided to individual school districts and the overall amounts spent to-date. While the federal government maintains an ARPA spending dashboard, the information that is available lacks spending details and is not the most “user-friendly” to navigate. Further, beyond a federal requirement for local schools to post their ARPA spending plans (not actual expenditures or details of that spending), few schools have gone beyond this basic reporting requirement in making their planned and actual ARPA investments transparent to the public.
Since the onset of the pandemic in early 2020 the Research Council has written extensively about various aspects of how the worldwide health emergency has impacted state and local governments, including the effects on public finances and the elevated demand for public services. The recent IPPSR policy forum provided another opportunity for the Council to share its important work to date examining the fiscal effects associated with the influx of federal education relief dollars. Moving forward, the Research Council plans to monitor K-12 schools’ use of their remaining unspent ARPA grant funds and how the expiration of the federal aid for some districts will be managed to avoid “fiscal cliff” disruptions.