U.S. public schools are girding for a major financial blow in the next academic year, when the record $190 billion in federal aid they received during the pandemic will expire and leave them with sparser resources to halt a massive exodus of teachers and reverse learning loss.
Districts across the country have used the funds on everything from one-time capital expenditures such as improved ventilation to expenses including higher wages that will elevate costs for years after the aid runs out.
It won’t be easy for state governments to fill in the budget holes, with many expected to see softer tax collections.
New York City estimates it will run up against a $700 million shortfall in September 2024, by which point the funds must be earmarked. Chicago schools are staring down a cliff of about $628 million for 2026. The pain could also be acute in smaller districts, including those with high proportions of students living in poverty.
Many school systems are starting now to draft budgets that reflect next year’s grim reality: Districts on average will have to cut costs by some $1,200 per student, with budget gaps in the 2024-2025 academic year expected to exceed those during the recession that ended in 2009, according to a Georgetown University analysis.
As a result, districts may be under pressure to reduce staff, close schools or rethink their programming.
“If you are responding to a shock, you have to cut lots and lots of things, or raise taxes really aggressively, all at once. That’s super painful,” said David Schleicher, professor at Yale Law School, who focuses on state and local finances.
‘Looking for an Exit’
Roughly half of the federal aid went to wages, meaning that the end of the stimulus dollars will exacerbate what is already one of school districts’ most pressing problems: Attracting and retaining educators.
The average 2021-2022 teacher salary of $66,397 was the lowest on an inflation-adjusted basis since the 1985-1986 school year, according to the National Center for Education Statistics.
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