The Massive ESSER Experiment: Here’s what we’re learning.

An historic, massively expensive experiment is nearing its home stretch. In March 2021 the federal government sent $112 billion out to 14,000 districts with almost no strings attached. The Elementary and Secondary School Emergency Relief, or ESSER, funding came on top of another $60 billion from two earlier waves of pandemic relief dollars for schools (in sum, roughly three times the annual federal investment). Never before had schools seen anything like it.

To say school districts were (and still are) flush with cash is an understatement. District leaders have more money at their disposal than ever before. Normally leaders spend budget seasons trying to pare back planned expenditures to match their revenue reality. But with ESSER, districts had to come up with new ideas for how to spend one-time funds within a limited time period. Many invited employees, parents, and communities to submit suggestions. Some initially worried they wouldn’t spend it down by the September 2024 deadline.

With 18 months to go before this grand experiment ends, here’s what we’re learning:

Districts are now on track to spend it all, with only a small window left to correct course.

After a slow start, districts have reached a pace–roughly $5 billion a month—that will exhaust all ESSER funds by the deadline.

One challenge: in most districts, spending plans were developed before leaders understood the magnitude of drops in middle school math outcomes and even larger impacts of learning loss on high-needs students. Though not standard practice, districts can revise their spending plans. This would make sense in districts where planned investments aren’t focused on these challenges or aren’t working to close gaps or to address ongoing issues like absenteeism.

And in fact, across the country, 2023-24 budgets are being prepared right now to deploy any remaining sums. That makes the next few months particularly high stakes for ESSER. Worth watching: Will districts take advantage of this last opportunity to leverage remaining funds to meet their students’ most pressing needs?

Many states have fallen short on tracking what districts are buying or what’s being delivered.

While districts were given wide latitude to spend these windfalls, federal regulation emphasized that “transparency on how ARP ESSER funds are used and their impact on the Nation’s education system is a fundamental responsibility of Federal, State, and local government.” (Does that mean no one is responsible?) The federal tracker on states’ use of relief funds shows only how much has been spent, so any transparency comes directly from states and districts—and even that’s a mixed bag. Different states use different buckets to code expenditures, and to date, 22 share no detail beyond how much money each district has spent (see here for what data are available in each state). Even for states that do offer more detail, “other” is a common category, providing little transparency into how funds were actually spent. In district financials, the detail is even patchier.

Figure 1: 22 states report no details on how ESSER dollars are spent

Should we have expected better data? State agencies did get a collective $900 million for administering the money, which might have been used to generate information to help the system learn as it goes and improve on what it does. That said, much agency time has been spent responding to different surveys, requests, and proposals made by the Department, some for reports issued long after the information was useful.

Let us all issue a hearty thanks to those states that have shared the data they do have. We’ve assembled those data on the Edunomics Lab ESSER Expenditure Dashboard and used it as a backdrop to our investigations of hundreds of districts’ financials. Without it, we’d know even less than we do.

Investments in social-emotional learning are more popular than expanded learning time.

ESSER 3 requires that 20% must be used to address learning loss from the pandemic. While it appears that portion is being spent at a faster clip than highly flexible 80%, only a few states offer spending detail on those dollars. In Wisconsin and California, just 5% of ESSER 3 expenditures have gone to lengthening the school day or year, or adding time in summer. Two thirds of districts in these states chose none of those options, instead using their 20% for investments like professional development (notable since PD doesn’t directly touch students), technology, or curriculum.

In contrast, we see a higher number of districts investing in social-emotional learning (about half) even as the spending totals tend to be low (amounting to 6% of total ESSER expended so far in California).

Half of relief funds are paying for labor, setting the stage for a painful fiscal cliff.

In the 20 states that provide some detail on what was purchased, it’s clear that labor is the largest item (just under 50%). What we don’t know is how much of that is going to new hires versus pay raises versus stipends, although federal guidance did authorize districts to use these temporary funds to award permanent salary increases. If history is any guide, districts will struggle to rein in labor expenses as the clock runs out.

A sampling of district financials finds many are using large portions of ESSER to “backfill their budgets” – essentially covering recurring expenses rather than investing the dollars in anything new. Districts like Seattle used ESSER funds for “continuity of operations” (which meant paying for recurring budget items) thereby putting off annual efforts to rein in escalating costs or right-size operating budgets after years of enrollment declines. In these cases, ESSER is treated like any other revenue source (covering lots of labor expenses) rather than the one-time money it is.

ESSER fueled a large jump in vendor contracts, and with it a burden on districts to ensure these dollars deliver value.

In states that delineate spending on contracts, some 20-30% of ESSER is going out the district door for purchased services, curriculum, supplies, one-time-projects, technology upgrades, and more. If these numbers hold, ESSER will have brought $40-60 billion in new public money for vendors (nearly doubling the prior levels). The upside? Districts can add temporary capacity while avoiding recurring obligations, especially important when dealing with one-time funds.

But there are challenges – namely that contracts bring vulnerability to financial missteps. Making sure contracts deliver value for students requires writing smart contracts and ensuring rigorous approvals. With so many contracts coming at once often with newer vendors, we worry about poorly written agreements or sidestepped approval processes. For vendors, the boom and likely bust (when ESSER ends) will be destabilizing, and probably result in fewer players in the field. Either way, blame for any poorly spent funds will land on the leaders who approved these expenses.

Amidst mixed messages on what ESSER was for, districts are spending steadily on facilities.

Despite warnings from the feds against taking on new construction or extensive renovations, some 20% of ESSER 3 has been invested in facilities (and the percentages are rising as more projects get completed). Early on, headlines raised hackles about relief funds going to sports facilities. But more investments appear to be paying for HVAC systems and general facilities repair. Assuming districts scoped and timed their facilities projects right so costs don’t stretch after ESSER money runs out, such investments won’t worsen the fiscal cliff.

What facilities investments aren’t doing, however, is resolving gaps in learning which are at the heart of what most see as the purpose of relief funds. It’s likely that disconnect that’s fueled some of the scrutiny surrounding facilities.

We’re learning very little about what matters most: Are investments helping students?

It’s not just about where the ESSER money is going. Have summer school programs improved reading proficiency? Is the fleet of newly hired counselors delivering improvements in attendance or mental health? Did a heavy investment in more teacher planning time work to improve math scores?

Only a tiny fraction of districts and states are using data to chart the effects of ESSER investments on students. Notable exceptions include states like Tennessee, which asked districts to predict the effects of their investments and then publicly examined its test scores to explore whether investments are delivering. Connecticut launched a research collaborative to study whether ESSER investments are working, finding, for example, that a pandemic-era home visit program boosted attendance. We need more of this.

One final lesson stands out on the ESSER experiment: Each district makes its own choices.

While we’ve painted some big-picture trends here, different districts have gone in very different directions on spending. And the experiment’s not over yet. There is still much to watch about how districts adjust when ESSER is gone, and how students fare over the long haul. But perhaps most notably, the experiment is a reminder of the critical role district leaders play in how US education funds are spent and in determining how much value those funds bring to students.

Katherine Silberstein is Strategic Projects Lead at Edunomics Lab. Marguerite Roza is Director of Edunomics Lab and Research Professor at Georgetown University, where she leads the Certificate in Education Finance.