A version of this commentary appeared in Bridge Magazine on July 5, 2021.

Over the past couple weeks, school districts across Michigan have been wrapping up labor negotiations and putting the final touches on their budgets for the upcoming 2021-22 school year. This despite the fact that Lansing has not yet approved next year’s K-12 budget. Eyeing a June 30 state deadline to complete their spending plans, many districts are actively discussing and planning how to program the historic influx of federal stimulus dollars pouring into their checkbooks.

Congress allocated $3.7 billion to Michigan in March as part of the American Rescue Plan Act to help students regain lost learning from the pandemic and re-open safely this fall. With this third round of funding, the federal government has now injected over $6.0 billion into Michigan’s public schools since last year’s CAREs Act, the single largest investment in history.

There is little doubt that this record level investment is changing the financial landscape for many schools. On average, the latest round of aid equates to $2,500 per-student, roughly one-third of the per-pupil foundation grant. The flood of federal dollars, coupled with a very healthy and growing state education budget, paints a much brighter fiscal picture compared to last year at this time when the pandemic was still raging and school budgets were adopting per-pupil cuts in the face of uncertainty.

Still, caution is advised moving forward. While state and federal revenue is plentiful, school board members and superintendents would be wise to plan carefully to program the new-found federal dollars to assure the maximum possible benefits to student learning, while safeguarding the long-term fiscal health of their districts. Doing so will require some fiscal discipline.

To begin, schools must recognize that these are one-time funds and budget accordingly. Given the fact that the federal money is being layered ON TOP of a growing state revenue base, districts are advised against programming the money as replacement revenue in their on-going operational budgets. There is no need to back-fill education cuts because dedicated school operating revenues remain strong and Lansing kept K-12 schools financially whole throughout the pandemic.

Budgeting the money as temporary will head off future budget challenges; avoiding a “fiscal cliff” that would require them to shutter programs and lay off employees when the money eventually runs out. 

Instead, school officials should look to address their one-time, short-term needs with a particular focus on the immediate impacts arising from the pandemic. To this end, Congress directed that 20 percent of the money ($670 million statewide) must be used to address learning loss through the implementation of “evidence-based interventions” and ensure that those interventions respond to students’ social, emotional, and academic needs and address the disproportionate impact of COVID-19 on underrepresented student subgroups. 

What these learning loss efforts will entail, how they will look, and how they will be implemented is going to be unique to individual students and schools. In some cases, this might look like extended classroom time/school year, tutoring, and/or new delivery models. Congress required districts to gather local input and finalize spending plans by the end of August. 

That leaves $2.7 billion (statewide) in discretionary dollars. One area that merits serious attention is facility improvements and repairs. The scale of federal funds will allow some districts to make measurable improvements to their aging infrastructure, a long-standing financing challenge faced by many poorer districts, The Detroit Public Schools Community District has an estimated $530 million need across nearly 100 buildings. It should consider using some of its $800-plus million federal award to benefit both current and future students.

Michigan schools are in line to receive $3.7 billion in federal resources. Significantly, this funding is being layered on top of a growing revenue base. Local officials must act prudently and treat these resources as temporary to avoid future budget problems.