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After an asbestos abatement at Ortega Middle School was complete, they were able to install a quality HVAC air control system, replace the old carpet with new flooring material and upgrade the lighting so it is brighter, as well as comforting. This is one of the new hallways. The previous school years, students and teachers had to endure some temperatures that were at times in the upper 80s, without air conditioning. Monday, Sept. 25, 2023. (John McEvoy, Special to The Colorado Sun)

High above the fields of Alamosa this past summer, kids steered a drone and peered at the aerial views it captured, learning not just how to fly the device but also how to use it to solve math problems. In the rural stretch of southern Colorado, that means analyzing a circle of hay recorded by the drone and calculating its dimensions.

Summer school, at least in Alamosa, was suddenly cool.

Alamosa School District RE-11J rounded out its summer school program with more hands-on activities thanks to federal stimulus dollars that help students learn in more creative ways. But once those funds run out by the fall of next year, the district of 2,055 students wonders whether it will be able to keep teaching kids over the summer months in ways that ignite excitement for learning.

Eliminating summer school could be one of the drastic measures districts find themselves taking, or at least weighing, in the near future. School districts across the country are speeding toward a fiscal cliff with budgets facing a potential bottleneck next year, constrained by a convergence of factors. Among them: the end of federal COVID relief dollars next September, declining enrollment in many districts — which often means those districts receive less state funding — and inflation adding to districts’ expenses.

One national expert frames the 2024-25 school year as “the bloodletting.”

“It’s the kind of cut that can’t go unnoticed,” said Marguerite Roza, a research professor and director of Georgetown University’s Edunomics Lab, a research center that focuses on education finance and works to inform education policy. “I really think we haven’t had a large-scale seismic shrinking of the system like this before.”

And it will pin many districts into difficult decisions, Roza noted. Some districts may lay off staff members, such as librarians and school counselors, while others might contemplate axing extracurricular activities like mock trial or Advanced Placement classes, she said. Some districts may also enact hiring freezes, consider closing schools or increase class sizes.

The most precipitous change on the horizon, Roza said, is the sunsetting of federal dollars deployed to school districts to help them steer through the uncertainties and disruptions of the pandemic. That money, distributed to districts in three rounds under the Elementary and Secondary School Emergency Relief Fund, or ESSER, will all be gone by within a year. Districts must spend money they received through the third installment by September 2024, and districts will feel the void once those funds are depleted, Roza said.

“In many districts, that money has become the kind of new normal in district (budgets),” she said. “We go three years with some ESSER money in there, then it feels like a budget cut if it’s gone, even though they’ve always known it was temporary.”

Mathematics teacher Mrs. Lucero hands out an assignment to the students in her class at Ortega Middle School, Monday, Sept. 25, 2023. With the new HVAC system, students and teachers will be much more comfortable than in prior years when they had to endure sometimes sweltering heat without air conditioning. Alamosa School District RE-11J used federal COVID stimulus funds to help improve air quality and air conditioning in the majority of its schools. Districts across the state and country are grappling with a fiscal cliff, in part, because that federal funding sunsets in September 2024. (John McEvoy, Special to The Colorado Sun)

The average district has relied on ESSER funding to prop up its budget by about 8%, she said, “so to lose 8% of its budget once is a big deal.”

And about half of ESSER funding nationally has been earmarked for labor expenses, Roza said.

“So if you’re thinking about that being 4% of your kind of recurring labor budget, then you can imagine districts don’t really know how to cut 4% in a year,” she said. “It becomes a little bit more problematic.”

Mark Sass, executive director of Teach Plus Colorado, worries about the impacts to both educators and students as districts adjust to fewer dollars in their coffers. Should districts trim their staff, he said the state could reverse the progress it has made in bringing more teachers of color into classrooms over the past handful of years. 

Sass, whose organization trains teachers to help shape policy, also has concerns that schools “may miss out on an opportunity here to rethink how we deploy and use labor within school districts.”

Districts, he said, cling to “an antiquated system that sees each teacher, each person in the building as performing the same, doing the same work without differentiating at all.” If staff cuts are made across the board, he anticipates districts “could really lose some highly effective folks if you don’t really look at perhaps differentiating the pay a little bit.”

Those who remain employed would still suffer, Sass said, with fewer support staff members to lean on, adding more pressure and responsibility to teachers to the point that some could leave.

Students will also be worse off, he added, whether their schools no longer employ critical staff members like counselors and deans who have become a regular part of their school days, or they slash after-school activities such as sports and tutoring.

“That’ll have a really hard impact on these students who we’re still trying to get back up, still trying to support after the pandemic,” Sass said.

Colorado school districts have long been eyeing a possible fiscal cliff

The nonprofit Colorado School Finance Project has coached school districts statewide for more than a year on strategic approaches to budgeting in preparation for ESSER funds to evaporate, executive director Tracie Rainey said.

The organization tracks how much ESSER funding districts received and sends monthly reports to districts about where they stand with their current spending and the amount of stimulus dollars remaining, Rainey said. Additionally, three field managers from the nonprofit have regularly touched base with superintendents and chief financial officers across the state to help them minimize financial troubles.

Districts still have time to plan how they’ll use the rest of their funds and create a “smoothing effect” as ESSER dollars dwindle, Rainey said.

She added that it’s important to remember that each round of federal stimulus funding for school districts carried different purposes. The first wave of funding addressed the immediate crisis of the pandemic, the second round aimed at helping districts regain stability and the final round focused on helping kids recover from lost lessons and time.

Students relax outside on a sunny Monday morning, Sept. 25, 2023, before lunch break on the new turf that was installed for the volleyball courts. The upgrade was made possible by matching funds toward a Building Excellent Schools Today grant. Alamosa School District Re-11J used federal COVID stimulus dollars toward matching the grant. The last round of federal stimulus funding deployed to school districts must be spent within a year. That could create financial hardships for some districts that have heavily relied on those dollars in their budgets. (John McEvoy, Special to The Colorado Sun)

Rainey still worries about the prospect of districts meeting a fiscal cliff, but that concern is tempered by a few facts: Many districts have long been preparing for stormy financial waters next year and Colorado did not net as big a share of ESSER funds as other states.

Plus, Colorado’s economy continues to be robust, what Rainey describes as “one of the stronger economic engines across the country.”

However, the state has a few unique challenges with its approach to school finance.

Even though state sales tax and income tax are generating significant revenue, schools can’t tap into all that revenue because of the Taxpayer’s Bill of Rights, a 1992 constitutional amendment approved by Colorado voters that caps governmental growth each year based on population increases and the rate of inflation. Any money collected over the cap has to be refunded, but the legislature has broad discretion over how the refunds are issued. 

Colorado is also still hampered by the budget stabilization factor, also known as the negative factor, a tool adopted during the Great Recession that allows the General Assembly to allocate less money to schools each year than they are owed. For the current school year alone, the debt exceeds $141 million.

The inside of the Colorado Capitol’s dome. (Jesse Paul, The Colorado Sun)

A cumulative debt of more than $10 billion continues to hang over the state. Even once the debt is paid off, Colorado’s school funding levels will mirror funding levels in 1988-89 after adjusting for inflation, Rainey said.

A more common challenge shared by districts across the state and country is declining enrollment. State enrollment data from last year showed that more than half of Colorado school districts — 94 of the state’s 178 districts — saw student counts drop. Those districts must cope with the additional stress of a hit to their share of state funding since the amount of money received from the state is largely determined by the number of students they educate. Yet, one mechanism in Colorado’s school funding formula shields districts from a severe funding loss. A five-year averaging provision, which calculates funding for a district based on average enrollment over five years, helps curb the financial blow.

Both Rainey and Roza urge school districts to soon begin the painful task of talking to teachers, families and communities about the agonizing decisions they have to make — well before May, when proposed district budgets are due to school boards with final budgets approved in June.

“There’ll be a tendency for districts to say, “Let’s deal with this next month. Let’s not upset the community right now. We’re just trying to start school nicely and smoothly here. Let’s not get people upset,’” Roza said. “And the problem is they might burn up a bunch of time avoiding having these difficult conversations.”

Roza recommends that between now and March districts broadcast “a range of options” that illuminate the possible tradeoffs of cutting staff, classes or programs; increasing class sizes; closing schools; or making other sacrifices. That allows school districts to gather “meaningful feedback” from their communities, she said.

Another essential step in exploring how to taper district spending involves analyzing data to better understand what investments and interventions are helping students make progress, she said

“We should agree on a couple of things that we want kids to walk out the door with,” Roza said, “and we should watch the data and know where we’re really succeeding and where we see some schools in distress.”

Sustaining a sophisticated summer school program without stimulus dollars

Luis Murillo, assistant superintendent in Alamosa School District RE-11J, said his district has been deep in the process of planning its budget for the past two years to avert a fiscal cliff next year.

He said he has “a low level of concern.”

Alamosa School District used some of its ESSER funding from the first and second rounds to hire support staff, including nurses and counselors and now pays those employees through its general fund. 

Part of the third bucket of ESSER funding was used to match a Building Excellent Schools Today grant from a state program that supports districts in constructing new schools and updating existing ones. The district worked to improve air quality and add air conditioning in four of its five school buildings as it worked to avoid the spread of COVID and also clear one of its buildings of asbestos.

Alamosa School District Assistant Superintendant Luis Murillo checks the upcoming fiscal year’s projected financials, Monday, Sept. 25, 2023. (John McEvoy, Special to The Colorado Sun)

Another chunk of ESSER III funding has been central to offering Alamosa students an enhanced summer school experience, complete with drones, robotics and cameras. The school district paid close to 50 teachers to educate kindergarten through high school students every day, targeting kids who were close to being proficient or partially proficient in subjects like English language arts and math. 

ESSER funds paid those expenses and will again allow the district to offer similar summer school classes next year. After that, it’s unclear what summer school will look like.

“I feel confident that we will have something, but it’s definitely not going to be at the level that we’ve been able to provide” with the help of the federal ESSER funding Murillo said.

Declining enrollment is compounding the district’s finances, particularly as enrollment last year dropped by 72 students, down to 2,116 students.

“That is pretty significant,” Murillo said. “We are running on tight budgets at all levels, at all faces, all departments, and then you pair that with the recent pay raises that we’ve provided our staff to retain and recruit high-quality staff. So we’re definitely seeing a strain across all of our departments to be just really more intentional about our spending.”

Luis Murillo, assistant superintendent in Alamosa School District Re-11J, gestures up toward the dingy old lighting in a hallway of Ortega Middle School, Monday, Sept. 25, 2023. The district has yet to replace the carpet with new flooring and upgrade the lighting. Principal Amy Ortega leads the way toward the new counselors’ offices. (John McEvoy, Special to The Colorado Sun)

Alamosa School District gave a 7% raise to all staff during the last year, on top of an 8% raise the year in order to be competitive with other districts in terms of compensation, Murillo said. The district won’t be able to offer those kinds of pay bumps again this year.

In the meantime, Alamosa School District is continuing to search for ways to trim expenses, including by getting rid of resources that overlap with one another or are becoming obsolete, such as an online platform it invested in at the height of the pandemic. 

The district also must try to devise a new way to fund summer school beyond next year, even if it’s not as cool as it was this summer.

“We will fight hard to still have some level of success,” Murillo said.

Erica Breunlin is an education writer for The Colorado Sun, where she has reported since 2019. Much of her work has traced the wide-ranging impacts of the pandemic on student learning and highlighted teachers' struggles with overwhelming workloads...