Federal interpretation of CARES Act funds for schools stirs debate

The federal CARES Act, passed by Congress in late March, included $13.5 billion for the Elementary and Secondary School Emergency Relief (ESSER) Fund, of which Texas is expected to receive $1.286 billion, and another $3 billion for the Governor’s Emergency Education Relief (GEER) Fund, of which Texas is expected to receive approximately $307 million.

States are required to allocate at least 90% of the funds to local school districts based on each district’s share of funds received under part A of Title I of the Elementary and Secondary Education Act (ESEA) in fiscal year 2019. An entity receiving funds under the Education Stabilization Fund is required, to the greatest extent practicable, to continue to pay its employees and contractors during the period of any disruptions or closures related to coronavirus.

However, controversy has emerged around U.S. Secretary of Education Betsy DeVos’ interpretation of a provision in the CARES Act requiring school districts receiving these funds to provide equitable services to private schools in the same manner as provided under Title I of the ESEA.

Non-binding guidance released by the U.S. Department of Education on ESSER Funds and GEER directs school districts to determine how much CARES Act money to spend on services for private school students based on total enrollment in private schools, rather than on student poverty levels. Some groups have charged that this method of calculation means that wealthy children in private schools are counted and used to generate the equitable services share of ESSER for their private schools at the direct expense of low-income children remaining in public schools. The Texas Education Agency recently released a CARES Act Equitable Services FAQ (5/28/20) that states TEA intends to follow DeVos’s interpretation of the CARES Act provision:

“Unlike Title I, Part A, equitable services under the CARES Act programs are not based on residence in a participating Title I public school attendance area and are also not limited only to low-achieving students and their teachers.”

TEA’s guidance further provides:

A school district must use the total allocation it receives under each CARES Act program (GEER and/or ESSER) to determine the proportional share available for equitable services before reserving any funds for other purposes.

In determining the proportional share of CARES Act funding that school district must spend on providing equitable services to participating private nonprofit schools (PNP), a school district must use total enrollment data in participating PNP schools compared to enrollment in public schools in the school district to determine the proportional share.

TEA also issued guidance on CARES Act Funding and Expense Reimbursement for purposes of ESSER funds, including how ESSER funds, in particular, can be spent:

• Since there is no supplement, not supplant rule for these funds, a school district can just select an appropriate amount of costs previously paid with the general fund and transfer them to ESSER, freeing up previously spent general funds. TEA also noted that “another option is to look at uses in the coming months that would have otherwise been paid with other fund sources and are allowable costs under ESSER and charge those expenses to the ESSER grant (fund code 266).
• Regarding how receipt of ESSER funds impact Foundation School Program funding, school districts will receive their full FSP entitlement as earned through the first 2/3 of the school year before school closures. In addition, districts will receive additional FSP hold harmless funding delivered via ADA/minutes adjustments to mitigate the financial impact of school closure. This additional hold harmless will be offset by the ESSER formula funding.

Read more on allowable ESSER expenditures