Here’s Why Some States Are Facing a Steeper ESSER Funding Cliff in 2024

As school districts race to counteract the effects of the pandemic on students, one particular challenge looms large: On September 30, 2024, COVID relief funding for public K-12 education will officially expire. 

While there are still plenty of ways to spend these ESSER dollars strategically and with long-term sustainability in mind, some states have a more complex challenge ahead of them. 

We looked at three significant factors that will affect how the ESSER cliff is felt by each state: 

• ESSER funds account for anywhere between 4%-17% of total revenue in states. States at the higher end of this spectrum face an unprecedented drop in revenue. 
• States like Arkansas and Florida that have many districts serving higher concentrations of students living in poverty are going to be hit harder with the ESSER cliff. 
• And states like Mississippi and Louisiana, where the vast majority of the state’s students are being served in those higher-poverty districts will be hit even harder. 

We also considered the intersection of these three factors to determine what this means for each state. 

Use the links above if you’d like to read more about a particular factor or skip ahead the see which states will be most heavily impacted by the loss of ESSER funds. 

Factor 1: ESSER Funds vs. Total State Education Funds 

Percentage of ESSER as total education revenue by state 

Factor 2. How Many Districts Serve Students Living in Poverty?

When the federal government distributed COVID relief funding for K-12 education, states received funds based on the formula that determined ESEA Title I funding. The states, in turn, distributed those funds to districts using that same formula. 

What does this mean for the upcoming cliff? While ESSER represented 4-17% of each state’s total revenue, the variance was even wider from district to district: Some districts received no ESSER funds at all, while the highest-need districts saw increases of 40% or more. 

In some states, poverty—one significant indicator of student need—is concentrated in just a handful of districts. Those districts received a massive amount of ESSER funding, while other districts in the state received much less. This means that state education agencies can target a few key districts when it comes to offering support and guidance for spending remaining ESSER funds and planning for sustainability. 

States where many of their districts are serving significant proportions of students living in poverty face a tougher challenge: ESSER dollars were more widely distributed, so as the spending deadline approaches, these states will need to find ways to support all these districts. 

Percentage of districts serving high concentrations of students living in poverty 

Factor 3. How Many Students are in a Higher-Need District?

Even in a state where a low percentage of districts serve students living in poverty, it’s possible that those districts represent a relatively large percentage of students overall. (Higher-need districts might have larger enrollment numbers than districts in more affluent areas of the state.) 

Consider New York. Though relatively few districts in the state serve students living in poverty, the city of New York alone serves an enormous number of the state’s students overall. The state of New York, then, has a low percentage of higher-need districts (“factor 2” above), but a high percentage of students attending school in a higher-need district. 

For these states, regardless of whether the need is widely distributed, they have higher need overall: many students who are in need of ESSER-funded initiatives and many students who stand to feel the effect most keenly when ESSER funding goes away. 

Percentage of total students being served in a higher-need district 

Percentage is based on the total number of students in each state and the number of students attending school in districts with more than 20% of students living in poverty (source: US Census Bureau SAIPE School District Estimates for 2021).ⁱ 

Which States Face the Most Complex Challenge? 

But what happens to states that rate high in all three of these factors? 1) ESSER represents a high percentage of overall education dollars, 2) many of their districts serve a significant number of students living in poverty, and 3) many of their students are attending school in one of those high-need districts. 

 

15 states fall into this group and are facing a very difficult challenge in 2024.

Other Factors

While the factors above will significantly influence how sharply the ESSER funding cliff is felt, the overall picture is, of course, complex. Here are just a few other considerations: 

1. These numbers are based on pre-COVID budgets. Some states have increased K-12 education funding since the beginning of the pandemic (such as the $37 billion increase in California’s Proposition 98) and will face a slightly lower drop-off than anticipated. 
2. The variation from 4%-17% across the states is based on the assumption that states spent their ESSER funds evenly across all four years—which is unlikely. States that spent more towards the end of ESSER may feel the loss of revenue even more. 
3. Many high-need districts are facing severe enrollment decline—and enrollment typically plays a large part in funding formulas. ESSER may have temporarily mitigated what would have otherwise been significant revenue loss in some districts. This means that districts with enrollment decline may face an even steeper cliff than anticipated. 
4. Some states have “carry-forward” policies, which would allow districts to use ESSER funds now on certain expenses and carry forward general operating funds that can be used after the ESSER deadline. Some policies are more limited than others, but additional flexibility in some states may mean that the expiration of funds is less keenly felt.

What's Next?

Districts in every state are beginning to plan for life after ESSER. Even in “lower-risk” states, there are districts that received major funding. For example, Denver and St. Paul could face significant fiscal cliffs when ESSER expires. 

And so, while some states should put even more effort into supporting districts in sustainability efforts, there are districts across the country that could use help as the deadline approaches. 

Districts will need to consider what initiatives they want to continue post-ESSER and what tradeoffs they will make in order to keep paying for them. (It’s not too late to do an “ESSER Halftime Review” in order to collect data, understand the impact of ESSER initiatives so far, and plan your next steps!) 

And as for states, there are a number of steps each state can take to help support districts as September 2024 draws nearer. 

See How States Can Help Districts Navigate ESSER Funding Cliffs

 

ⁱ National average poverty rate is estimated at 20% in SAIPE 2021, and was used to benchmark districts with above average poverty. Note: This measure is lower than other common measures of economic disadvantage (such as FRL or CEP) because it is a strict measure at exactly the poverty line. SAIPE figures are used in administering federal funds to local districts.