Working Paper: NBER ID: w29470
Authors: Nora E. Gordon; Sarah J. Reber
Abstract: Congress responded to the COVID pandemic’s disruptions to instruction with unprecedented federal aid for school districts. While this relief has been widely characterized as a major windfall for K-12 education, per-pupil amounts vary considerably across districts, as will the costs districts face for COVID mitigation and recovery. In this paper, we conduct simulations to understand the potential distribution of net effects of the pandemic and federal aid on the finances of local school districts in the next several years. In our baseline scenario, we assume one-time adjustment costs of $500 per pupil plus additional costs of $1,000 per student in poverty and $500 per student not in poverty per year for four years. Federal aid was distributed proportional to the longstanding Title I program, which sends more money per pupil to higher poverty districts. Low-poverty districts are therefore projected to face some budgetary shortfalls, while many higher poverty districts are projected to have excess funds, which they could direct towards long-standing challenges. While our findings depend on key assumptions about the COVID-related costs, we find significant district-level variation in simulated net fiscal impacts, in part but not completely due to poverty rates, across all the scenarios we consider.
Keywords: No keywords provided
JEL Codes: H52; H75
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Federal COVID relief funds (H84) | Higher-poverty districts receive more funding per pupil (I24) |
| Higher-poverty districts receive more funding per pupil (I24) | Sufficient ESSER aid to cover estimated COVID-related costs (H84) |
| Sufficient ESSER aid to cover estimated COVID-related costs (H84) | High-poverty districts receive sufficient aid (I24) |
| Federal COVID relief funds (H84) | District fiscal health (H69) |
| Low-poverty districts (I32) | Projected budgetary shortfalls exceeding $200 per pupil (H72) |
| Low-poverty districts (I32) | Experience shortfalls greater than $500 per pupil per year (I21) |
| Poverty rates (I32) | Disparity in fiscal impacts across districts (H73) |