California Schools Received Billions During COVID-19, Facing Budget Shortfall

California’s schools are now facing a period of financial restraint following years of receiving extensive amounts of money, which could potentially hinder students’ ongoing recovery from the pandemic.

The culmination of various factors, including the cessation of federal COVID relief funds totaling billions of dollars, a decrease in enrollment, salary increases for staff, extensive hiring, and unvarying state funding, will likely result in significant budget deficits over the next few months, with low-income districts bearing the brunt of the impact.

“The financial challenges will differ among districts,” stated Marguerite Roza, the director of the Edunomics Lab at Georgetown University. “Districts that received the highest amounts of COVID relief funds, particularly those with a larger number of low-income students, are expected to face the most considerable reductions.”

In Governor Gavin Newsom’s budget proposal unveiled in January, the focus remained mostly on preserving critical school programs like transitional kindergarten, universal school meals, community schools, and after-school initiatives. To compensate for an anticipated multi-billion-dollar shortfall, he suggested tapping into reserves and postponing certain expenses.

The precise figures are in flux, with the Legislative Analyst’s Office indicating that the shortfall might exceed Newsom’s projections, warranting inevitable budget cuts. Newsom is set to present a revised budget in May, and the Legislature has until June 15 to ratify the final budget.

Concurrently, federal COVID relief funding for schools is scheduled to terminate in September. Through the Elementary and Secondary School Emergency Relief grants, California schools benefited from $23.4 billion to cover various expenses such as air purifiers and after-school tutoring.

This funding was allocated based on the number of low-income students in each district, resulting in higher allocations for districts with a larger low-income student population, which implies that these districts will encounter the most significant reductions once the funding runs out.

“The districts that received the highest amounts of COVID relief funds, particularly those with a larger number of low-income students, are expected to face the most considerable reductions.”


Initially, schools primarily utilized the funding for one-time expenses during the pandemic, such as purchasing tablets and Wi-Fi hotspots for remote students. However, post-reopening, the focus shifted to ongoing programs aimed at assisting students academically and aiding their recovery from the mental health challenges of remote learning, possibly involving the provision of tutoring, extended school days, or summer and after-school initiatives.

San Bernardino City Unified allocated $8 million from its $230 million COVID relief allocation to enhance its after-school program, enabling the district to offer complimentary after-school activities, tutoring, transport, and mental health support at all schools.

Retaining Student Engagement

Mia Cooper near her home in Highland on Feb. 26. (Elisa Ferrari/CalMatters)

Mia Cooper, a parent with three children attending San Bernardino City Unified, emphasized the value of their after-school program, describing it as a crucial element that motivates them to attend school.

Aside from receiving educational assistance, the children participate in activities like ballet, acting lessons, science museum field trips, robotics classes, folklórico dance performances, and various other engaging events.

One of Cooper’s daughters struggled emotionally during the pandemic, but the after-school program facilitated her reconnection with friends and reignited her passion for school. Cooper emphasized the essential nature of preserving the program if it contributes to positive outcomes for students.

“The children were exposed to diverse activities and cultural experiences,” she remarked. “If a program benefits the children and results in positive outcomes, we should maintain it to retain that spark in children’s eyes.”

A Financial Challenge for Some Districts

According to Roza, some districts risk exacerbating their financial predicament due to their allocation of COVID relief funds. Districts that utilized one-time funds for ongoing expenses like hiring new staff, offering raises, or incentives could face substantial challenges. Post-pandemic, there was a 2% increase in school staff nationwide despite a 2% decline in enrollment, as reported by the Edunomics Lab at Georgetown.

Moreover, teacher salaries have witnessed an upsurge. Several districts with declining enrollment, including San Francisco, Oakland, San Diego, and Los Angeles, have recently agreed to substantial raises and bonuses for teachers.

While the fiscal outlook is not dire compared to the 2008 recession, Julien Lafortune from the Public Policy Institute of California emphasized that the situation remains challenging. California has witnessed a significant increase in school funding since the 2008 recession, lifting it above the national average. Despite this, financial vulnerabilities persist, albeit to a lesser extent.

“It’s not like the Great Recession, but I think the challenges are greater now. A lot of the academic progress we made was erased by the pandemic.”


However, Lafortune emphasized that these budget reductions might detrimentally affect students, particularly those disproportionately impacted by the pandemic, such as low-income, Black, and Latino students based on research findings. These groups faced numerous challenges during school closures, including economic hardship, inadequate technology access, and limited parental support for remote learning.

“Although not equivalent to the Great Recession, the current obstacles are substantial,” Lafortune stated. “The strides made in academics were significantly diminished due to the pandemic.”

Roza expressed concerns that the debates surrounding impending budget cuts might overshadow the focus on academic recovery. While school closures and teacher layoffs elicit strong reactions, she emphasized the importance of prioritizing services that directly benefit students, like math tutoring and literacy programs.

“Certain districts may prioritize staff retention over students’ needs,” Roza cautioned.

These decisions could lead to contentious divisions at the administrative level, potentially resulting in high turnover rates among school administrators and board members unwilling to make unpopular decisions. Some districts might resist making necessary cuts, risking insolvency or state intervention.

Strategic Planning in Fresno

Fresno Unified faces a challenging scenario due to declining enrollment and a considerable reduction in relief funds. The district, with 70,000 students, was granted over $787 million in state and federal relief, one of the highest funding allocations in California.

Nevertheless, the district prudently built reserves, utilized state grants where feasible, and restrained ongoing staff expenses. The bulk of the funds was devoted to training teachers in math and literacy, extending the school day, enhancing the summer program, and providing mental health support through social workers and counselors.

Investments have yielded positive outcomes, as math proficiency among students rose by nearly 3 percentage points last year in Fresno, outpacing the state average. Additionally, chronic absenteeism drastically declined from 51% in 2022 to 35% in the following year.

Siblings Alec, Samantha, and Honey Cooper near their home in Highland on Feb. 26. (Elisa Ferrari/CalMatters)

Despite the projected cuts, Fresno Unified intends to focus its reductions primarily at the district office level rather than directly impacting schools initially, shared Patrick Jensen, the district’s chief financial officer.

“We can anticipate challenges ahead, but we are prepared to navigate through the storm,” Jensen remarked.

Similarly, San Bernardino City Unified, among the state’s most impoverished districts, garnered $230 million in relief funding for its 46,000 students. Despite the anticipation of financial strain post-funding expiration, the district has devised strategies to reallocate state block grants to sustain relief-funded programs and maintain vigilance over fiscal management, according to Associate Superintendent Terry Comnick.

While still bracing for potential cuts, the district will evaluate program effectiveness and scrutinize allocations. In addition to the successful after-school initiative, a resident guest teacher program demonstrated positive outcomes, where substitute teachers offered personalized support to students lagging academically.

Thus far, the district aims to retain both programs for the foreseeable future, Comnick assured.

“Though termed a cliff, symbolizing the sudden end of funds, we are hopeful for a smooth transition,” Comnick added.

This story was originally reported by CalMatters

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