Ptacek: End of Pandemic Relief Possibly Setting Up Financial Cliff For State

By Benjamin Cox on September 23, 2023 at 7:34am

Illinois schools received nearly $7.9 billion in federal pandemic relief program funding over the last two years. The funds for the second allotment will cease going out next week, with the final installment slated to end next year.

Elementary & Secondary School Emergency Relief, otherwise known as ESSER funds, were sent out to the state’s school districts in three traunches.

The second traunch’s allocation deadline is September 30th. ESSER’s third traunch will have the same deadline next year. All ESSER spending will have to be finished by 2025. The federal government has not said if states that lag behind in spending the funds will be granted an extension or if that money will be clawed back.

Jacksonville School District 117 Superintendent Steve Ptacek warns that the state may be nearing a financial cliff once time runs out on ESSER funding: “We’ve received a heads up not just for school districts but state government, the Illinois State Board of Education that when September 24th hits, ESSER funds are done. They have to be spent by that date. All of the money that the state and federal government pumped in to municipalities, and governments, and school districts during the Covid period that when that’s gone, there’s going to potentially be an alarming number of government entities not just school districts, but in the state, that have been spending that money on what I would call ‘reoccurring expenses,’ which are programs or salaries that are in an annual budget and repeated, will have financial problems. We have held true to the concept that you do not use one-time revenue for reoccurring expenses. Knowing that the ESSER funds, even though they were going to be in place for 2-3 years, we still viewed them as one-time revenue streams that were not going to be repeated.”

Ptacek credits the first two traunches of ESSER and portions of the third traunch with help in completing the Washington and Eisenhower school building renovation projects. The remaining amounts have been spent on wireless technology, summer enrichment programs and teacher stipends, updating school curriculum, and updating some janitorial supplies and tools along with the costs accrued for Covid-19 protection and testing.

Ptacek says District 117 has wisely positioned itself financially for making these one-time, temporary expenditures that will have long-term effects. He says he’s worried about those districts and government entities who will possibly reach a financial cliff for using ESSER on reoccurring expenses and what it will mean for annual funding from the state, which accounts for about 25% of District 117’s annual revenue: “The situation that I’m worried about is that the state EBF funding, the state aid that the state gives school districts, that it might take a hit as the state agency and the state government itself starts hitting its own fiscal cliff when it comes to not having that money anymore to pay for its annual reoccurring expenses. We are starting to get a little concerned that the EBF funding formula might not be fully met next year and for a couple years afterwards as state agencies are hitting this fiscal cliff that’s going to happen starting next September.”

Ptacek worries that the state may go through a period of what has been called proration, where the state may under fund the annual education formula by a percentage and then district’s will get a percentage of that allocation based upon their annual funding formula among other criteria. State budget crisis starting in 2009, saw a period of proration of annual education funding run through 2017 when the new EBF formula was passed by the General Assembly.

Ptacek says that massive cuts to state funding for schools would have to really get bad for District 117 to be forced to make cuts due to the sizable fund balance the district has built up over the last 4 years.

He says it may create a perfect storm for some smaller districts to open up dialog about consolidation due to the shortage in funding and the current teacher shortage. Ptacek says District 117 is able to weather the incoming storm, whatever that financial storm may look like in the near term.