The ESSER Fiscal Cliff: Expiring Federal Relief for Schools and Potential Tax Increases

May 29, 2024 9:41AM

In the coming months, county commissioners will be taking up school board budgets. These discussions and votes are an annual occurrence, though this year’s discussion may have a different tone than years past. Billions of federal relief dollars are set to expire in September 2024 coupled with the state witnessing declining enrollments and increased staff, there will be a decision to rightsize budgets or potential tax increases to replace relief funding.

The Elementary and Secondary School Emergency Relief (ESSER) funds have to be spent or obligated this fall, and with the pandemic behind us and no new federal relief funds coming to public schools, county commissioners and school boards will have difficult decisions to make this budget season. In Beacon’s 2022 report, Federal Funding Fallout, we uncovered how school districts were spending ESSER funds on retractable bleachers, administrator travel, and bonuses and stipends, among other non-student-centric items. In Beacon’s newest policy brief, The ESSER Fiscal Cliff, districts have still budgeted or spent relief funds on these questionable items, but an equally large concern is the growth of long-term expenses in staffing being funded by short-term dollars.

In the last few years, public school enrollment nationally has been stagnant, followed by a large decline at the beginning of the pandemic, and it has yet to reach pre-pandemic levels. Staffing on the other hand, has grown despite the enrollment declines. This is happening in Tennessee, where teachers, principals, and other instructional and certificated staff have seen nearly a 14 percent growth in just a few years while there are thousands of fewer students in classrooms now than before the pandemic.

This policy brief serves as information regarding where some of this mammoth amount of funding has gone. School districts in Tennessee were given over $4 billion additional dollars from the ESSER program. With these dollars coming to an end and declining enrollments, county commissioners and state lawmakers have the responsibility to ask the hard questions when districts come asking for the state and local taxpayer to increase their funding.