Season 2, Episode 18: Behind the federal dollars flowing to schools

Foreign.

Hey, Diane, it's good to see you. And I'm up here in Massachusetts, so I'll say happy Patriots Day, which for those that don't do, don't know. It celebrates the first shots of the American Revolutionary War at Lexington and Concord. And being in Lexington, this is a big deal here, Diane, but it is the second straight year that it is all virtual. We're not allowed to convene, of course, to celebrate it. But that said, it's good to see you for the fourth straight week doing the show.

I'm really excited to be here as well. It feels like quite a gift that we've been together for so many weeks in a row. It's always great to talk with you, Michael. And during this month, we've been able to talk to a bunch of other really interesting, fascinating people. And today is no different. So I'm excited for another conversation with an expert today.

Yeah, likewise. And obviously we started noticing that a number of topics started recurring in our conversations and so we set aside these weeks to do a deeper dive into them. Just as a reminder for those listening, two weeks ago we had a rich conversation with the co founders of Transcend Education, Alon and Jeff, around designing schools. And then last week we welcomed John Bailey to talk about some key lessons from the pandemic and what they mean going forward.

And today we get to dig into school finance, which to some may not sound like a sexy topic, but it's an incredibly important one because it's literally the dollars and cents of how schools pay for the resources to deliver on their mission for their students and their community.

And I think we have the perfect person today on the show, perhaps the foremost expert in school finance. Hopefully she'll agree with that one. But Marguerite Rosa, and I've known Marguerite for over a decade now and I'm always endlessly fascinated by what I learned from her. She's the author of the terrific book Educational Economics, Where Do School Funds Go? And a professor at Geor University and the director of the genomics lab there, a research center focused on exploring and modeling education, finance, policy and practice. And Marguerite, welcome. Thanks for being with us.

Well, thank you for having me. I'm excited to be here.

Terrific. So, so first questions. We want to get some facts out there about what school funding post pandemic is going to look like. And so this may be a bit of a lightning round for me and, you know, if that's at all possible because I know it's a complicated topic, but we have a lot we want to Ask you. And we'd love to, by helping our listeners just make sense of all the new money that they're probably hearing that's coming in for education right now from the federal level. You know, we know that there's the elementary and secondary School Emergency Relief Fund that's pouring literally billions of dollars into schools. But break it down for us what that looks like, how it's being distributed and what else has been allocated.

Sure. So I'm first going to just chime in to say that I take issue with the statement that finance is not a sexy topic because I have yet to meet someone who does not like money. So we're going to.

Good point.

It's fun. Yeah. So I will say that on average in the U.S. in public sources, K12 schools, we spend $14,000 per pupil. And some places are lower. Idaho, Nevada, Utah, places like that are lower, sometimes more like eight, $9,000 a student. And the New England area and some of the big cities like D.C. are much, much higher than that. So. But most of that money doesn't come from the federal government. It comes from state and local sources. And that matter, federal picture right now is changing really dramatically. So in a normal year, only like $640 or so of student comes from federal sources in title and idea. But then Covid hit and there were three really rapid new grants for schools from the federal government. The first was CARES act and that was smaller. It was $200 something dollars per pupil. It brought money to pay for PPE and computers and so on. And then at the very end of the year, the calendar year, sort of late December, there was something called sirsa. And this is where the federal government does not follow my advice to name things, good names, like what in the world, crsa, CRRSA or whatever it is, some bunch of letters strung together. And that one brought a little over $1,000 a student in extra money for schools. And then when the new administration took hold, the Biden plan, otherwise known as arp, which again, bad naming, brings about two and a half thousand dollars per student. But the numbers really vary by district. So some districts are getting a lot more than that, over $10,000 a student, and some are getting none. So the numbers really will vary and they depend on the district. And these were three really quick allocations. They're very flexible. You can do almost anything. And what was the ask? The ask in the most recent one was please open your schools. Not you're required to open your schools, but we're hoping you'll open your Schools also, we know kids are behind. Also here's some money. So they were kind of. We know schools need money to try to meet the needs of this moment, whatever your needs are. And here's the money to do that with tons of flexibility.

Wow. So talk to us then about why this was done. It seems from my reading that there was some original rationale under an assumption that states and districts, similar to the previous recession that we'd gone through back in 08 or 0709 time period, that they would have less money. But that doesn't seem to have really borne out in the way people expected. So what was the original rationale and how has it shifted?

The rationale depends on who you talk to. So there's not a clear one size fits all rationale. It did look like at the early inning beginning of COVID that districts were going to be in a financial pickle. And that's because we thought that states were really going to crumble under the economic lockdowns and then states wouldn't have enough money to give to their schools. Some states, that's true. So I'm thinking of places like Hawaii, which really went a year with very little tourism, and tourism is kind of the main driver of their economy. And certainly then the state's budget or the state revenues, which then funds the schools in other states. No, they kind of had a banner year economically. And that may be states that are more dependent on tech industries and things like that, with states somewhere in between. So initially the idea was we don't want states to cut money to school, so we're going to give states some money. But since that didn't really play out everywhere, the next big agenda was we know that kids are. Have a lot of learning loss and we're going to give money to try to remedy that. And some said we haven't been able to open. Some states a lot on the west coast had not opened and the money was, could you please open. So there was a little bit of everything in there. And it's not, I think, you know, there's not a clear agenda for the money, which is. Which is one of the criticisms what you're describing.

I was just going to jump in, Michael, and say what you're describing really tracks my experience as someone leading a school network in both California and Washington state where we truly believed. I mean, I don't. It's hard to remember back then, but we truly believed we were going to see significant cuts from the state due to an economic recession that everyone was predicting was going to come on quite quickly. And when we began to realize that wasn't happening and we weren't experiencing those state cuts simultaneously, we were experiencing the high cost of, of doing school in the COVID era. And so those early monies that you're talking about, we have truly spent on PP&E and air purifiers and redoing our H Vac and a whole host of things that are quite expensive in order to support schooling in this era.

Well, so interestingly though, schools that didn't open, that were closed even up till this week, started putting money into just having reserves. They were underspending. So for the schools that opened, we noticed that many of them did spend down their reserves. They were overspending on substitutes. Like all the things you mentioned, there were really some additional costs of being open. Not all schools opened, though. Many contained, maintained. The longer they were remote, the more they built up in surpluses. So that just added to the really uneven effects of this pandemic on school budgets.

Marguerite, on that point, do you expect that once those schools are open that you'll see them to spend down sort of ex post facto on some of these items? Or do you think, you know, reserve, we'll see what happens. And then I guess the corollary is because of all those dollars. What about public expectations? I was, I was with a group of educators that this, this weekend that, you know, you've taught in the past as well in Nevada out of Education foundation there. And one person said, you know, there's all this money coming in. I kind of feel like one and a half billion dollars to Clark county or something like that. If we don't get this right this time, the public's going to have difficulty, you know, continuing to write these large checks when we really need it. What's your sense of expectations, if you will, around, around the dollars because of that shifting rationale?

I'm going to do the first one first, but you know, will do this. Are the districts that are going to open now, are they going to see this backlog of expenses that are just going to go out the door? I actually, I don'. And the reason is that open, being open in this, these last 12 months was its own cost. Right? We, we did things where we said people who came in contact with somebody with COVID had to be on a 14 day quarantine. Well, teachers who are opening now are mostly vaccinated and the 14 day quarantines don't apply. The 14 day quarantines were very expensive for school Districts, they had to hire a lot of substitute teachers and they were doing a lot of mitigation to try to reduce settings and things like that that we no longer have to do because we weren't open then. We're open now and now is different than that. So I'm not sure we're going to churn through the cache in the same way in the next 12 months for those that were in remote only mode that are now opening. As for the expectations, I would like to, I've heard that line a lot that people really got to get this right and they have to have a lot to show for it. I'm also worried that we don't know what it is we want them to show for it. That we haven't said we need to get kids back up on test scores or we haven't said we need to make sure that kids don't drop out of high school or that they go to college at the rates that we want or that they can participate in our economy or that people come back to public education, which maybe they will, maybe they won't. We haven't said the it that we need them to show for. So I don't think, to be honest, that that first of all, I'm not sure that people are that worried about it. I think that those of us who are in kind of the larger sphere and have an appreciation for just how much money this is and realize that this is the biggest ever one time federal investment in public education in this country. I'm not sure that there's, you know, that people aren't sort of going to shrug their shoulders on, oh, you wrote a contract for that after school program and we used up the money or we did a basic pay raise for our teachers and we used up the money or we bought a bunch of new stuff or we renovated the gym because we knew that was a one time expense. All right. Going forward, you know, I'm not sure that there is that we're really the expectations are crystallizing to something meaningful that's relevant in the equation. Sadly, yeah, no.

So it's helpful to get that perspective, I guess. Another question for me which I'll also frame as a twofer, which is on the one end I'd love you to prognosticate, do you expect my more dollars like this to come in over the next, say 12 months? We know, you know, Biden had a proposed budget recently with the title $1 jumping significantly. But we also know that a president's proposed budget rarely survives the Legislative process. But the second piece, I guess, is. So that's prognosticating from you. I guess the second piece I'd love to hear from you is how would you have designed this influx of cash? Because, you know, the way you described it, I mean, this is several thousand dollars on top of that $14,000 average base. That's a significant investment. How would you have designed such a program?

Yeah, those are a lot of questions all at once, but I will say that.

And I'm trying to make way for Diane after.

I know. Okay, well, you can even imagine a district saying, what did you want me to show for this? In terms of showing for something for it? I spent it on COVID testing. Like, I'm sorry, the kids aren't better off than they were before. What did you think we spent it on, you know, swabbing kids nasal passages or something like that. So that. That's part of what's missed mixed up in here. The Biden budget. Biden budget is notoriously bigger. It's got more federal money in it. I would say we're at a moment right now where Federal money for K12 is super popular. And we know this in part, even in the last administration, when the administration tried to propose even a flat Title 1 budget, Congress said, nope, here's more money for Title I. And that was sort of across both political lines. So I think Federal money for K12 is kind of popular right now, and we might see more of that unless there's sort of this swing back where, you know, imagine the pendulum swinging, where people are going, oh, my gosh, we are spending so much money, we don't have much to show for it. And people start worrying about the national debt again. And that would be newer. You're already starting to see rumblings of it, especially as the new infrastructure plan gets proposed. But I do think that Title one is popular. And so I kind of predict right now that we're going to start seeing more money come in the form of Title 1 to schools going forward. So I would say that. And the last part of this, like, how should it be structured? I wish I had a crystal ball and I could tell you exactly how I think, but I do. The problem with this money is it's so multidimensional, solving so many problems. And we want districts to think, you know, and schools to think big with it. Right. And do these transformative things, but they're not. They're in the middle of a crisis, trying to think, like, how do I get families to come back to School. And what do I do about my teachers that I gave permission to stay home from? And what do I do about, you know, the, the lunchroom and things like that? They're not thinking big, they're solving about, they're thinking about their own problems they have. And their problems are, are just, just showing themselves right now. We don't know how far kids are behind in most places. We don't even know what it means to try to graduate from high school when you, you, you only got like half of algebra and really didn't learn anything in geometry. I mean, are we going to have to send these kids all the way back and start over on some of these courses? And at the same time, are kids going to tolerate that? Are they going to show up for the tutoring? There's still so many unknowns in, in addressing the problem. So what I would have wish we had done had been a little bit clearer about the outcomes. And I think we had time. I, I don't think because of the money that was approved last December, most of it hasn't even, or is just barely showing up in schools. We had some time and we could have asked for a little bit, a bit more clarity in response. We need kids to learn how to read and learn their basic math skills. So could we have focused the money on addressing those issues at the high school level? The curriculum feels very out of date now. I mean, the kids are not learning data analysis and probability and statistics and economics and things like that that seem really important for them in jobs going forward. They're not learning that. And maybe we could have just said, fine, I know you were an algebra 2 trig. You barely learned anything. Let's scrap that. And we'll count as math classes, a stats class and a data analysis class, a computer science class and plug these in and moved kids away so we could have both solved their problems and set them up for a potentially a better future going forward. And I'm not sure that we did that. I think we, we really made this money for the predominantly go out to school districts. That doesn't leave a lot of room for innovation. And school districts are tough organizational units to innovate in a crisis. But we had a lot of other units that were able to innovate and we could have made some of that money flexible for these other units to build different kinds of programs that might have been, or more offerings that might have been pave the way for how the big infrastructure could have evolved over time.

Marie, you've shared a whole bunch of really interesting things that Michael and I talk about often. One of them being just this lack of clarity on purpose. And one of the problems we have in education is we don't get clear on the purpose of it and we don't get a consensus on that. And so what people are aiming towards and what they're actually designing for gets. Has no rudder. Essentially. We don't know what we're going after. But the second piece that you're just talking about is what I'm experiencing in conversation with school leaders. And quite frankly, just in trying to run a network which is the people who would be the people who have to figure out what we're going to do differently are literally right now trying to get buildings open to deal with the pandemic that's been going on for a year and to fight all the fires you've been talking about. That just the operations right now takes every ounce of energy and brain power that people have. And so the space to really be innovative isn't there. The human resources to be innovative really isn't there. And then you couple that with this money as a one time bit of money. And so what I'd love to talk with you from your sort of finance expertise. You know, the last thing I think we want to do is add, you know, compensation to a salary schedule right now with one time monies that are going to be gone and dried up in a couple of years. Can you sort of give us some guidelines about like when you have one time money like this, what are the smart things to be spending it on and what are the things we should not be spending it on? Any thoughts on that?

Yeah, we've. That's exactly right. I mean the money could actually do harm if it. If in two years from now districts have to figure out how to, you know, to right. Size their budgets without the money and that it ends up being a bunch of layoffs. Those are very disruptive for school districts if we go three or four years without pay raises at all because we put all our money into some pay raise back when the moment when people didn't need it as much. And those kinds of things could be harmful if we rack up pension bills that we can't afford because we made commitments that were pensionable during this time. So we're very clear that districts should be thinking about whether something is a recurring class. If you lower class sizes across the board, that ends up feeling recurring because if you hire a bunch of new full time staff or give a base pay raise, those things are recurring but there is an opportunity to break out of that kind of thinking and even by labor that's not recurring. So we have a whole bunch of people who work a partial year so they work nine months. We could buy some more time for those who are willing and then want to work in the summer and maybe do things differently. We could pay incremental amounts for people who want to take on more workload. So if you want to, if you're a spectacular reading teacher and we think you can manage more students, we could pay you more to take on more or take on tutoring roles. And that will be a subset of the population, but that will change the way we think about pay going forward, which I think could be the big learning from this time. So those, those things we think are for sure, you know, use your stipend. Flexibility we've seen Hawaii is another. I'll use them as example. I keep hoping they'll invite me out there since I talk about them all the time. But they're offering a flat rate per hour for teachers. I think it's $35 an hour for teachers to teach summer school in the summer. And that's in contrast with, I think it's Baltimore county where they're paying the average teacher salary rate to take on 15 more minutes in the school day. So if you stop doing that two years, everyone is going to feel like they got a pay cut. But you're also using their current salary rate, which in a way means you're driving more money to some schools where you have higher salaried teachers and reinforcing inequity. So I do think the temporary nature of this money does allow us to think differently about the money and that could be a source of innovation right there.

Yeah, I agree with you. And one of it's interesting. A couple of the big ideas that are floating around right now are certainly summer school, which you have just mentioned, but also this idea. A lot of people are enamored with the idea of tutors and they want to hire big tutoring cores and then also mental health supports for students. And so one of my worries is, great if every school district and school system in the country is in the market for tutors and mental health professionals. I'm not sure we have just, you know, an excess of people sitting around that everyone can collectively hire. And to your point, what happens in a couple of years? Or is that just sort of potentially those are short term fixes. But do you have thoughts on those big ideas and how people should think about those in Relationship to the money.

Yeah, I think we should be, we should be cautious because we could go all in on a tutoring plan and the kids won't show up. I mean, that's very likely a possibility. And anybody who's had, you know, kids in tutoring at all, you know, it can be a grind for them and they could be resistant to that and not necessarily be willing to do it, in which case it may not work. We really need that other side of the cooperation. I think we need that other side of this. The idea that the only way to help students is to hire other people to help students, I think is also a very limiting way to think about this money. There are ideas like this thing called co production, which is an innovation, an innovative idea where the, you, you give money to the beneficiary as, as part of solving the problem. So you might contemplate saying, you know, if you have high school kids, for every unit that you complete in this online program, online self tutoring thing, you get a certain kind of payment. And you might find that, that, that doesn't require any new labor other than the technology. And now you're actually putting money right into families versus hiring another workforce that then gets laid off or dissipates in a year or two. So I think we will see the labor shortages there and the capacity implications of trying to bring on a large amount of labor for people who are already stretched thin is another issue to think about as well.

Fascinating. I've looked at a bunch of smaller programs like that where the investment is made into the student's future and it's sort of these college career pathway sort of funds that they can work towards. It's almost like micro investing, I think, that we do in a lot of places. So really interesting ideas to show, I think, support for the students that we care about you, we're invested in you, we're working towards something that's meaningful for you, and we're going to put some resources behind that which could be really powerful in this moment in time. I'm hopeful some people will think about that. To that end, what about using these resources to actually get some people to think about these things? Michael and I certainly spent a lot of time and a couple of weeks ago we talked with the folks at Transcend about sometimes when you're trying to do something innovative, you need to just carve out some people who just have some dedicated time to really do some redesign and some rethinking. Have you seen any thought going to or ideas around those types of Resources that could be helpful. We've got some districts getting literally like billions of dollars, and yet when we talk to. They don't have a plan.

They don't.

That's a lot of money. Who can help that? How do we do that?

Well, so that last time, and last time, I mean, the last federal recession where some federal money came out, there was money for i3, and there's some deliberate attempts. Even Race to the Top for its whole, you know, storied history or whatever, had this. This requirement that states sit down and come up with a plan kind of thing. So we're not really seeing that this time directly from the funding, the federal source. We. And, and you're right, districts are absolutely overwhelmed. So the minute the news sort of hit that the Biden plan went through, our email was lighting up here with people from districts. One of them said, I used to manage a budget this size and it's just grown to this much capital H period, capital E period, capital L period, capital P period. She was sort of like just so overwhelmed. And they're overwhelmed by even the financial mechanics of processing their third additional chunk of money in a year. When they normally do one budget, they will have done four in 12 months. And that if you. That was just overwhelming to them. And they should set some money aside for innovation. But districts aren't set up to do that. And you can imagine why. Let's say you're a city school district and they said, what, you gave some money over to this innovation group over here when we have these kids who can barely read, like, get back on your task. They were also negotiating in the public space with their labor partners. They are. There are school boards. Districts get a lot of flack for carving off some money to do something like innovation. So I'm not actually predicting that we'll see a lot of it. If we saw districts go in together, maybe with pooling some money for some innovation, that might work. That said, the state agencies do have their own massive chunk of money, and 10% of the federal money is actually theirs to get to use. They've got to use some slices for summer learning and some enrichment, but they still get like a 5% of it that is really flexible. And it would be smart for state agencies to use some of that to innovate to fund some of these innovations to try to solve their problems statewide. I think that would be where the money could be done for that. But that would be convincing state agencies to do that.

Yeah, but possibility there. And I've seen some early, potentially Promising things. For example, I think Texas is actually playing a really interesting role in this regard as a sort of curator and a convener of districts around the state, exposing them, giving them access to different innovative ideas, helping them not have to go and source them all themselves, but actually giving them exposure, giving them some space for design and things like that. Yeah, that's an interesting relationship there. That could play out nicely to different people's strengths and resources and opportunities if it works well.

Wow.

Michael wasn't kidding when he said lightning round. I'm trying to think. I mean I guess you've shared so much already. Any just sort of last thoughts that we haven't covered of like what would you. Anything that is brilliant that district should be doing that we haven't talked about or really a huge. No, no. That they should absolutely be avoiding any sort of. Of those extremes before we.

I think my, my last, my last big thought on this is that most school districts are saying I'm a school district, you know, we have 10,000, 20,000, 50,000 kids. Whatever it is, I've got to decide how to spend this money. I think that skips one possibility. You could take that money and give it also to principals and say to the principals, here's some or you know, portion of the money. This is for you to work with your, your students to meet the needs of your kids and do, you know, make sure you can do a lot of, you can do a lot of things with it. You can actually give the money to families. People will say no, you're not allowed to do that. And that's not true. You are allowed to give the money to families. You can ask for something in return. You can give it to your staff and ask for something in return. You can set up programs. But I think at that level of the school we would see a lot of the usual stuff. But we might see some real pockets of innovation where really thoughtful school leaders look around and say wait, this is up to me to figure out how to best meet my students needs. Well, you know, then in my school we're not doing summer school because I never thought any of my kids would show up anyway. Instead we're going to do fill in the blank or what my family needs are these. And I think that that level of kind of a little bit more micro thinking is something that a district could do that many of them haven't considered as even a possibility yet. And I recommend that. And then I do think it makes sense to let the schools carry over their unspent money. For a few years because. Because you're teaching them in this process how to build their own skills around money, what value it is, and what return it has for students. And you can't do that by over putting too many strings on it.

I love that idea. One of the things that summer will be upon us before we know it. And all of these people think that this summer is going to get magically used to do all of this magical stuff that we've been missing for a year. And quite frankly, you can't plan a magical summer when you can't even imagine what summer is going to look like. We're not really sure what we'll be able to do or not. And with no time to do it. And so I love the sort of pause idea. Take a little bit of time, do a better job. Don't just waste it. Don't rush into the urgency that we're feeling. I know. I feel as a school leader in the moment. And so I think playing a little bit more of the long game is great advice. I appreciate it. And on the topic of advice, Marguerite, every week, Michael and I end the podcast with just a few words about what we're reading, what we're listening, what we're watching. We would love to hear what's on your playlist right now. So curious if you're willing to jump in and join us on this tradition.

I am, and I'm worried people will almost roll their eyes. I am reading Ben Dreier's book. It's called Dreyer's English. I don't know if you've heard this. It's Dreyer's English, an utterly correct guide to clarity and style, which seems ridiculous to be reading that. But it's so funny. I mean, you. You could not imagine that a grammar book would make you laugh all the time. I have that sitting right next to my Jerry Seinfeld book, and I find them equally humorous. And I really like Jerry Seinfeld, so I recommend that one. And it. Not only that, as you're reading, you know, you're picking up some interesting things. But that's my. Those are the two sitting right next to my bed right now.

Well, that feels tempting to me. I am on a fiction kick, but I don't know, you might steer me off there. In addition to reading this week, I made time for two interesting documentaries. The first is the Year Earth Changed, and it's a very different view of the pandemic. It's from the perspective of the animals on the planet, many of whom have flourished during this past year of sort of restrained human behavior. I thought it was beautiful and uplifting and gently provocative. And so a fun watch came out this past weekend, and the second has been around for a bit. I've been nudged by lots of people to watch it. I finally got to my octopus teacher. Michael's laughing at me right now.

I can't imagine why it took you a while to get to it with a title like that, Michael.

I must say I have been resistant to watch it for what turned out to be some pretty superficial reasons, including the title. But when I finally opened myself up to it, I actually discovered a really compelling story. It's beautifully filmed. I learned that we learned stuff about octopus that we never had learned before because of sort of these innovative ways and this man's personal journey. And so there's some real provocations there for personality, personal reflection that I enjoyed.

No, no, I love it. And I'm just giving you a hard time, but Marguerite mentioned Jerry Seinfeld. I'll go off on just a quick tangent, because my wife and I, she picked out a drama for us to watch on Saturday night that she thought was a comedy. And at the end of it, it was super heavy. And she was like, I just wanted a comedy. And so we ended up watching about, like, 30 minutes of Jerry Seinfeld doing Stand up, which. Which made us both feel a lot better. But what I had planned to say was that I'm currently reading through Benjamin Franklin's autobiography. Diane, you're probably rolling your eyes because, you know, it's in preparation for me reading Walter Isaacson's biography of Franklin, which will be my last of Isaacson's book to get through. But look, it's an important book in its own right about virtue and leading a good life, but there's actually an education hook around it, or there's a few, but one that I just wanted to call out, which is he talks about how he attended one year of schooling in which they tried to teach him Latin, and it just.

Just.

It didn't stick at all. And then later on in his life, he's an adult. He teaches himself French, Italian and Spanish. And then only then was he able to dive in to Latin and do far better than the first time around. He has a bunch of reflections on why that is, but I think what he's really observing is what we all know, which is that not only do people learn at different paces, but despite what schools largely pretend otherwise, we also learn through different pathways. And so I thought it was a good hook for us finishing this podcast. Huge thanks, Marguerite, for joining us. Shedding a ton of light.

Thanks for having me.

Yeah, you shed a ton of light on a lot of issues. And I'm, I'm. I know our listeners will be better for it. And I will say thank you also to our listeners for joining us on Class Disrupted. We'll see you next time.