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The Bottom Line

    Three FAQs About ESSER Funds

    ESSER funds are on the way thanks to the American Rescue Plan Act. Do you have a vision for your district for the next year and beyond?

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    ESSER funds are on the way thanks to the American Rescue Plan Act. Districts are busy brainstorming the best use of these funds and how to plan sustainably and strategically.  Do you have a vision for your district for the next year and beyond? Learn more about how to strategically budget your ESSER dollars and read answers to some common questions we've heard district leaders ask. 


    ESSER III funds provided by the American Rescue Plan Act are the third round of funds to be released during the COVID-19 pandemic. Let's take a quick look at the packages and the distribution of funds (or watch our EdFinTok breaking down the amounts in under sixty seconds!):


    K-12 stimulus packages and funding per-pupil


    Q1: Will state and local governments "reduce" regular funding?


    Supplanting occurs when the state or local government reduces state or local funds because federal funds are available. Typically with Title I or other federal dollars, there is a stringent mandate that federal dollars cannot supplant or replace state and local funds—they have to be supplemental. States can use these dollars to supplant, but they still have to uphold the maintenance of effort provision. What is the maintenance of effort provision? According to NCSL, “states must maintain spending on both K-12 and higher education in FY 2022 and FY 2023 at least at the proportional levels relative to a state’s overall spending, averaged over FY 2018, FY 2019, and FY 2020.”


    The Secretary of Education can waive the maintenance of effort provision. The only way districts can apply for a waiver for this provision is to show financial hardship at the state and local level of funding. To demonstrate hardship, districts have to prove that any deductions made to education budgets mirror the entire state or local funding decrease.


    Q2: What can districts spend ESSER funds on?


    The distribution of funds goes to state education agencies that must allocate 90% of dollars directly to local education agencies (LEA), known as a public board of education, or districts using the Title I formula.


    1. Evidenced-Based Learning Loss Interventions (20%)


    Due to the implementation of virtual learning during the COVID-19 pandemic, learning loss has been a big topic of discussion and school districts are implementing plans to address this issue. Once the district or LEA receives the dollars, 20% of those dollars must be reserved and spent on evidence-based learning loss interventions.


    These activities include:

    • Summer learning 
    • Extended day 
    • After school programs
    • Extended year


    The ESSER funds need to ensure interventions in response to socio-emotional needs and address the disproportionate impact on the Title I subgroups, including English Language Learners (ELL), free and reduced-price lunch (FRPL) programs, special education, homeless, and foster groups.


    2. Other Programs and Interventions (80%)


    The remaining 80% of dollars are more flexible and can be used for the items below.


    • Any Title I, Individuals with Disabilities Education Act (IDEA), Career and Technical Education (CTE), Adult Literacy authorized activities: Items or services for students who are targeted by those programs.
    • Buildings, facilities, sanitation: Any items and services that improve sanitation, cleanliness, and safety of the building. 
    • Mental health/ SEL: Items or services that relate to mental health and socio-emotional learning including extra nurses, counselors, and social workers. 
    • Virtual learning/mixed modalities: Continuing to support virtual academies for hybrid programs, especially if incorporated permanently or semi-permanently.
    • Emergency response preparedness: Partnership programs with the health department, meal sites, COVID-19 vaccine sites, or COVID-19 testing centers. 
    • Interagency planning/communication: Any coordination with the local health department or the state and governor's office.
    • Education Technology: Items that aid in regular and substantive educational interaction between students and their classroom instructors. See Education Technology provision: (2001.e.2.K).


    Q3: What are some best practices for managing ESSER funds?


    Here are a few other tips to consider as you administer ESSER dollars:

    • Equitably allocate dollars by student subgroups: Keep equity in mind while planning your resources and target subgroups.
    • Align your funding plan to approved funding activities to simplify reporting: This will allow your district to easily associate funds with ESSER use requirements which makes internal reporting easier to manage.
    • Track ESSER I, II, and III Funds separately with a detailed accounting of expenditures: It is a requirement for funds to be tracked and reported by grant with a detailed accounting of expenditures. Keeping up with this reporting in real-time will save time for your district in the long-run. 
    • Don't assume hold harmless will be extended next year: When planning and creating multi-year budget plans, create a hold harmless reservation pool in case your state implements hold harmless again.


    Know your timeline:

    • ESSER I: Obligate by 9/30/2021; Tydings amendment extends obligation period to 9/30/2022

    • ESSER II: Obligate by 9/30/2022; Tydings amendment extends obligation period to 9/30/2023

    • ESSER III: Obligate by 9/30/2023; Tydings amendment extends obligation period to 9/30/2024

    • There is an additional 120 days after the obligation period to actually spend funds, so as long as funds are encumbered by the obligation period


    Allovue works with districts and state departments of education across the country to allocate, budget, and manage spending. Allovue's software suite integrates seamlessly with existing accounting systems to make sure every dollar works for every student. Allovue also provides additional services such as chart of accounts and funding formula revisions.