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A regular update from the Edunomics Lab at Georgetown’s McCourt School. 
By Chad Aldeman
A perfect storm is brewing for K-12 school district finances
 
It’s the best of times for school finances. Flush with federal relief cash and a generous bump in state revenues, districts across the country have just inked 22-23 budgets that reflect more growth in spending than any time in the past.
 
And yet it’s the worst of times for school finances. The financial outlook has never looked gloomier. The $3-4B a month that districts are spending in relief funds will end right about the time a recession will likely be squeezing state revenues. 
 
Inflation hit a 40-year high this week, and not surprisingly, teachers and staff are negotiating larger raises, obligating many districts to higher labor costs for years to come. Enrollment forecasts warn that many districts will have to downsize operations to serve fewer students going forward. 
Marguerite has been calling this combination of factors a tsunami, or a perfect storm of financial conditions. 
 
The likely result is that district leaders – having spent the last few years spending new dollars – will soon be turning their attention to where to trim, slice, or shrink. If history is any guide, already rancorous school board meetings will get even more tense. (Note: we’re running a virtual finance workshop just for school board members in September.)
 
Meanwhile, most districts still need to focus financial decisions on getting students back on track. To help, our team created a calculator to estimate the learning gaps in each of 8,000 districts and what it will cost to remedy them. 
As we describe in The 74, the hardest-hit places will be those that stayed remote longest and were already lower performing. Where districts don’t address gaps, the effects on students will last a lifetime. In some places, we’re already seeing higher placements in special education programs, further compounding costs for districts. 
 
We’re here to help. For those interested in building the strategic financial skills to weigh costs and consider tradeoffs, our Certificate in Ed Finance has two fall options: Oct. 12-13 in Washington, DC, or Oct. 25-26 in Cleveland. Get details here.
 
In other hot news: 
Of the $190B in ESSER 3 funds, our dashboard shows that no state has spent more than 20% of their funds, and most are well under 10% (that’s across 46 states). As Katie Silberstein told Chalkbeat Indiana, there’s no typical way that the nation’s 14,000 school districts have chosen to spend their money so far. Some have prioritized salaries, while others have extended the school day or year. The big question is: Are your investments working?
 
“There’s no bandwidth or money to fix everything, everywhere, all at once.” 
So say Marguerite and daughter Ellie Roza. The two looked at Washington State’s reading scores to show how leaders can use data to move beyond one-size-fits-all strategies and instead target their federal ESSER funds to where they’re needed most. 
 
A personal note As I describe in a new piece at The 74, I noticed earlier this year that my son had picked up a bad reading habit. When he came to a word he didn’t recognize, he would guess rather than sounding it out. 
So I decided to launch Read Not Guess, a free newsletter designed to help busy parents establish positive reading habits from the beginning—before bad habits have time to take root. 
If you’re interested, you can visit ReadNotGuess.org to learn more or email me directly with questions or feedback.
As always, please don’t hesitate to reach out with insights or suggestions: Chad.Aldeman@georgetown.edu
Connect with us on Twitter:
@ChadAldeman, @MargueriteRoza, @EdunomicsLab
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Edunomics Lab is a Georgetown University research center exploring and modeling complex education finance decisions to inform education policy and practice.
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