The Importance of Federal Funding for Education in Economic Downturns

The Great Recession left a mark on contemporary American history, illustrating the catastrophic impact of economic crashes on every facet of life from home, to business, to education. In 2009, then-President Barack Obama signed the American Recovery and Reinvestment Act (ARRA). The act injected up to $840 billion into the American economy, primarily to boost consumer spending and shock the economy back into action. Of that amount, $53.6 billion was spent on school districts and states to support teacher salaries and various programs in the education sector. Several billion dollars also went to facility upkeep, Pell Grants, and special education training and jobs.

The $53.6 billion expenditure became known as the State Fiscal Stabilization Fund (SFSF) and sought to keep the education industry afloat. And, although the SFSF did prevent the education sector from completely crashing, it was a short-term solution for a long-term problem.

Recall that the Great Recession directly links to the “subprime mortgage crisis” in which high-risk home loans saw a downturn in recouping rates. What was once a thriving housing industry in the U.S. became little more than a bubble, and when it popped, home values fell lower than the amounts listed on their loans. This descent led to a domino effect causing the Dow to plummet and the stock market to crash.

It’s essential to understand this in the context of education since state and local governments fund initiatives such as schools in several different ways, often including property taxes. Since property values fell, state and local governments’ budgets were slashed. With schools relying on local governments for over 40 percent of their annual budgets, they turned to state and federal support. Unfortunately, states were forced to cut funding in several areas, K–12 education included, and the SFSF became the last line of defense. The $53.6 billion budget only lasted for so long, though, and as Laura Camera of U.S. News writes, “That forced states to make up budget shortfalls with additional cuts, which disproportionately affected education.” Early childhood education programs and special education initiatives received the brunt of the cuts as their ARRA funding dried up rather quickly.

Keep in mind as well that financial assistance for education varies between states. So, although the U.S. as a nation climbed out of the recession, individual states still struggle to pick up the pieces. While K–12 education remains a priority, in many cases, it now represents a smaller portion of the state’s budget than before the Great Recession.

The COVID-19 Recession and Education

Flash forward to 2020. As schools went remote due to the coronavirus pandemic, with business closures and unemployment skyrocketing, stimulus bill funding became a reality. The most recent stimulus bill, known as the CARES Act, offers approximately $2 trillion in total across industries and facilities, with $30.7 billion going towards K–12 education and all of its facets — including ESL, disability, and remote support. With another bill underway, education leaders and organizations have called upon Congress to prioritize student well-being by allocating $25 billion to ESSA programs and $175 billion to the Education Stabilization Fund.

These organizations have also highlighted a growing necessity for broadband service and internet-ready devices. Remote learning has exacerbated the digital divide, causing some students from low-income communities to fall behind. Low attendance in digital classrooms and clogged broadband networks have made it challenging to provide quality education to as many students as possible. Although districts and communities are doing their best to provide long-range WiFi and devices on loan, not every town in American has the bandwidth to provide for each student. To adequately address the educational disparity in this year’s economic downturn, our schools need federal assistance now more than ever. This investment will not only help schools across the country better prepare for future closures due to health concerns, but it will also ensure that inequalities that already exist in the current structure of education get better, not worse. We know that every facet of our country will face changes from the impact of COVID-19. With the proper support and investment, we can promote changes to K-12 education that are different for the sake of being better.

This article also appears on HeathMorrisonSuperintendent.net.

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