Driven by Data

Budget Considerations from COVID-19

Much is unknown about the impact or the duration of the COVID-19 crisis. In coordination with the D.C. Deputy Mayor for Education’s Contingency Education Budget Planning Response Work Group, EdOps led the development of potential revenue and expense implications the pandemic may have on local education agency (LEA) budgets. LEAs are encouraged to apply these considerations to their contexts.

{Updated 5/20/20}

REVENUES:

  • Universal Per Student Funding Formula (UPSFF). The Mayor’s budget proposal was released on May 18th and recommended a 3% increase to the UPSFF funding for FY21. The Mayor’s proposal will go to the D.C. Council for their final approval expected in July.
  • Enrollment. Families may change their housing situation in response to this crisis, resulting in schools needing to recruit new students and families to enroll in SY20-21. More students may meet at-risk criteria than prior to the crisis. In addition, students previously enrolled in independent schools may enroll in public schools as a result of changing economic circumstances.
  • Charter Facilities Per Pupil Funding. The mayor has proposed to maintain the 2.2% increase in Per Pupil Facilities funding for FY21 that was previously set. 
  • Coronavirus Aid, Relief, and Economic Security (CARES Act). Office of the State Superintendent of Education) OSSE guidance on the CARES funding and each LEA’s allocation has been released to LEAs. The allocations are approximately 80% of Title 1 funding, as expected. The grant period runs from 3/13/20 to 9/30/22 and applications will be available in EGMS. The allowable uses of funding are broad, and include activities allowable under the following federal programs: Elementary and Secondary Education Act (ESEA), Individuals with Disabilities Act (IDEA), McKinney Vento Homeless Education Act, Carl D. Perkins Act, Adult Education and Family Literacy Act (AEFLA), as well as additional costs prompted by COVID-19 (e.g., sanitation supplies).
  • Payroll Protection Program (PPP) Small Business Administration (SBA) Loans. LEAs may explore forgivable, low-interest loans of up to 2.5x average monthly payroll expenses by application through the LEA’s bank. While these loans will start as liabilities on the LEA’s balance sheet, they will convert into grant revenue if forgiven.
  • Federal Grants. It is unknown how federal appropriations may be affected in the next federal fiscal year.
  • Medicaid. Schools may face reduced billable services due to remote delivery. However, reimbursement rates for Medicaid have increased from 70% to 76.2%, until the last day of the quarter of the public health emergency, which may result in more funding for reimbursable expenses.
  • Meal Program. There are two primary drivers of total reimbursement rates for the meal program: 1) reimbursement amount and 2) Community Eligibility Provision (CEP) rate (for those enrolled). For reimbursements, LEAs may not expect information until mid-summer. LEAs may plan for flat rates. Regarding CEP, OSSE typically provides LEAs with a rate in early  April; however, OSSE has delayed that this year and said information is forthcoming. LEAs should track the CEP rate closely, as it could influence funding for the next three years. 
  • Interest Income. LEAs with cash reserves invested in the market should expect lower revenue from such accounts as market interest rates remain low.
  • Philanthropy. LEAs should look closely at their fundraising expectations and sources and consider how they may be affected as a result of COVID-19.
  • Student Fees. LEAs should consider the effect of current or future closures on fees collected for field trips, before and after care fees, and paid meals sales. 

COSTS:

  • Personnel – Staffing. Ahead of likely revenue declines, LEAs may consider changing the timing or language within offer letters that have not already been distributed. For example, schools may delay new hire offers, may freeze the hiring of certain positions, or may choose to make salaries in offer letters contingent on the increase in per pupil funding ($X amount in the event of 0% increase in funding and $X amount for each additional % increase in per pupil funding). Should any staff resign, LEAs should consider whether to backfill positions.
  • Personnel – Increases. LEAs may consider whether to offer cost of living increases or whether to freeze steps (if applicable) for returning employees. LEAs may also consider whether to pause on promotions or additional compensation, such as grade level team lead stipends, etc.
  • Personnel – Families First Coronavirus Response Act. Schools with fewer than 500 employees will need to provide two weeks of paid leave for employees with COVID-19 or caring for family members with the virus. Additionally, schools will need to provide 12 weeks of job-protected leave to staff members caring for a child whose school or care provider is closed due to COVID-19. During that time, schools will need to pay two-thirds of the wages of employees (not to exceed $200 per day and $10,000 in aggregate).
  • Personnel – Floating/Substitute Staff. LEAs may see additional costs related to providing substitute teachers to cover for staff on leave. 
  • Personnel – Benefits. Health insurance costs may rise in FY22 as a result of the costs of the pandemic. While FY21 rates are less likely to be affected, LEAs should consider multi-year budgetary impacts this pandemic has put on the healthcare system. LEAs may also consider their benefits offerings and look for opportunities to reduce costs or offer different options for employees.
  • Extended School Year. LEAs should begin projecting costs for beginning SY20-21 early or extending it longer into summer 2021.Consider 10- or 11-month personnel costs that may increase, along with potential needs for part-time staffing. Additionally, consider what non-personnel costs, such as food services, security, and other contracts, may need to increase to support extending the school year. 
  • Technology. Many schools have invested and will continue to invest in better technology (devices, connectivity, IT support) for their students to facilitate distance learning. Schools may also need to replace any technology that was distributed to families and either lost or damaged. Schools may need to invest in additional technology ahead of potential closures in SY20-21, should the pandemic continue. 
  • Distance Learning curriculum, PD, and platforms. Schools may need to continue to invest in developing or purchasing curriculum to support distance learning, professional development, and video/distance learning platforms as the pandemic continues.
  • Special Education Services. Schools should consider how to ensure students with disabilities are able to receive required supports during closure(s). LEAs should consider  whether to allocate additional resources to support students with disabilities during and following closure(s). 
  • Student Services. LEAs may invest in additional mental health services or build employees’ skills in delivering trauma-informed supports for students.
  • Assessments. Given that assessments were cancelled in FY20, LEAs should consider whether/how to adjust SY20-21 assessments (e.g. invest in new tools) to understand students’ academic needs following closure. 
  • City services. Services provided by the City, such as crossing guards, nurses, and School Resource Officers, may be reduced with a lower overall city budget.  LEAs may need to supplement these services.
  • Business Insurance. Schools who face litigation as a result of services not provided during school closure may see their business insurance rates increase starting in FY21, or more likely, FY22. 
  • Postage/Shipping. Schools may see higher postage and shipping costs to support distance learning.
  • Interest Expense. LEAs with floating debt may see lower interest expense as interest market rates remain low. LEAs taking on new debt may also benefit from lower market interest rates.

OTHER CONSIDERATIONS:

  • Unneeded planned expenditures. When schools are closed, LEAs may expect cost savings in a number of areas. Any net savings realized in FY20 can serve as cash reserves entering into FY21. For example: 
    • Utilities
    • building maintenance costs
    • janitorial and other contracted building services
    • substitute staffing
    • field trip and student events expenses
    • professional development training and events
    • prolonged staff vacancies, 
    • lower meal services if not serving SSO meals, 
    • lower after-care expenses, etc., 
  • Contracts and Invoices. During a school closure, LEAs should review contract agreements and invoices carefully to make sure that services and goods have been rendered before paying such invoices. Revisit internal controls to ensure that the right staff can confirm such goods and services were delivered or rendered. If goods or services were not provided, contact vendors.

This post contributed by the Contingency Education Budget Planning Response Work Group Members:

  • Kevin Wenzel, Deputy Mayor for Education Office, Project Lead
  • Shelley Hughes, EdOps
  • Dane Anderson, KIPP DC PCS
  • Vanessa Carlo-Miranda, E.L. Haynes PCS
  • Ken Cherry, Friendship PCS
  • Drew Snyder, DC PCSB
  • Jessica Swanson, DC Public Schools