The Funding Crisis Behind Teacher Layoffs

The past few years have not been easy on many American schools. Large infusions of federal funding helped alleviate pandemic-era pains—but that money is drying up.

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A Steep Fiscal Cliff

Summer break is on the horizon, but many schools are already bracing themselves for what next year will look like. It isn’t a pretty picture: By the time classes resume in the fall, budget reductions and teacher layoffs will be under way in some districts.

Across the country, the cuts have already started. District officials in Arlington, Texas, announced plans to remove 275 positions at the end of this school year. Dozens of teachers in Providence, Rhode Island, are getting laid off. Other districts are letting attrition do its work: Many schools are simply not replacing teachers who retire or quit, which is creating its own disruptions for students, Marguerite Roza, the director of the Edunomics Lab and a research professor at Georgetown University, told me. We may soon see schools shutting down altogether, she added; already, Seattle school officials are proposing to close about 23 elementary schools by the 2025–26 school year.

These seismic disruptions to classrooms come as a perfect storm sweeps through many American schools. Inflation, falling school enrollments, and recent state-tax cuts are all exacerbated by the imminent expiration of a huge tranche of COVID-era federal funds, known as the Elementary and Secondary School Emergency Relief (ESSER), which is set to end in September. Issued in three installments—$13 billion in the CARES Act in March 2020, $54 billion in the December 2020 stimulus package, and $122 billion more in the American Rescue Plan Act in March 2021—the ESSER funds made up the largest-ever single federal investment in public education, as students were beginning to fall behind in their reading and math skills, and test scores started to drop. Lower-income students were prioritized for funding; by the fall of 2022, annual federal spending per student had more than doubled in some high-poverty districts.

This infusion of federal cash allowed schools to boost salaries (at a time when many districts struggled to find staff), make improvements to facilities, and hire support staff such as nurses and social workers who could help students during a mental- and public-health crisis. Districts always knew that the money was temporary, so many focused on adding short-term programs and positions with the understanding that, come September 2024, they would be back to relying on state and local governments for the bulk of their funding.

Still, some schools used the federal funds to hire full-time teachers without a clear sense of how they would pay their salaries long-term. That went against most expert advice, my colleague Adam Harris told me, “but in some places it was simply unavoidable,” he explained. “The looming layoffs were always top of mind, but some districts were understaffed to begin with, and so hiring additional teachers or staff was a part of being able to properly serve students.” He noted that districts were hoping to find other funding sources for their new full-time roles; that may still be possible in some areas, but schools with more low-income students are looking down a steep fiscal cliff. (Because they received a bigger share of federal funding compared with more affluent districts, they will feel the difference more once the extra money is gone.)

The ESSER guidelines stipulate that schools cannot carry over funding to future years (unless they apply for and receive an extension), so school districts will need to finalize plans for the remaining funds soon—or lose them entirely. But budgeting will likely be tough: After struggling to find staff during the height of the pandemic—and, in many cases, paying premiums to recruit and retain teachers—districts are scrambling to shrink their costs. Though most of them are better prepared to handle the budget shortfall today than they were a year ago, Adam explained, they still face brutal choices. Even the districts that aren’t considering layoffs will have to weigh which programs are important enough to keep. Do they cut mental-health resources? Summer enrichment courses? Food pantries for low-income students? “Those became important services that students and staff relied on,” Adam said, “and students may be worse off without them.”

It has been a “very messy few years financially for school districts,” Roza told me. Though some federal money will still be sloshing around this fall, it won’t last. And we may see an even larger wave of cuts the following school year. The big question, Roza said, is whether schools are going in with clear eyes this budget season. “If we’re making disruptive cuts now because we didn’t plan ahead, then that’s the bigger tragedy.”

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Stephanie Bai contributed to this newsletter.

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