Step-by-step process for building COVID-grant budgets
If you are like many school leaders right now, you are both excited to access all the COVID stimulus available, but also a little anxious about how best to utilize this funding. You are hoping the funds will help you (1) maintain your program in the near-term with all of the demands of a pandemic environment while also (2) maintaining financial sustainability after the funds wind down. You are not alone and we are here to help you think about a plan for allocating these resources.
This blog post will give an overview of the funding available and a step-by-step process for building COVID grant budgets.
Available COVID-related Federal Grants
Process to Build Multi-Year Grant Budgets
To strategically use this grant funding, you’ll need to determine whether it will represent additional funding over previous years or if it will serve to cover gaps in local revenue. Start with making a comprehensive list of all expenses you expect to incur as a result of operating during, and in the aftermath of, COVID-19. Use the list you’ve created to allocate those expenses to your grants, beginning with the grant with the most restrictive requirements.
Note: unlike a typical annual budgeting exercise, you’ll want to think about these grant allocations over multiple years.
STEP 1: Determine your state, local, and non-COVID-federal funding environment, and whether you expect other sources of funding to decrease, increase, or stay the same.
If local funding has dropped off (or is expected to drop off) significantly: keep in mind that most of your federal stimulus dollars will support the maintenance of your current program in the absence of local dollars. The vast majority of your grant budget will be for positions and expenses already planned and budgeted to avoid any disruption in your program from lowered state/local funds. The federal funds will be used to maintain school operations.
If local funding has remained flat or slightly increased: much of the federal stimulus will continue to maintain your existing program which has likely required altered roles and responsibilities of your staff. However, due to maintenance of local funds, these funds will also allow for additional interventions and programs that would not have been possible without the funding. A good target might be something like ~80% for current operations and ~20% for additional remediation measures. This means that, if your expenses don’t increase commensurate with the added federal funding, your cash increase may be higher than in previous years. Given the uncertainty of when the economy will return to normal, this may be strategically advantageous, particularly if you are starting from a low cash or high net debt position already.
If non-COVID-related federal funding is expected to decrease: if you suffered a drop in enrollment in SY20/21, there is a possibility that your recurring federal grants (e.g. IDEA, ESEA) will decrease in SY21/22. Consider using the COVID-related funds to first fund any expenditures that would have been previously supported by recurring federal grants.
STEP 2: Create a comprehensive list of all costs you expect to incur as a result of needing to operate through COVID, and categorize those into “buckets” into the three categories below.
This list of all the potential uses will be helpful in the next step where we allocate to specific grants. Put things in your bucket that are (1) easiest to predict and (2) represent large expenditures. You do not want to spend the next few years of your life following strict federal procurement rules (see Appendix 2) for re-stocking masks and hand sanitizer, so choose big and easy to predict expenses like staff salaries. Follow the order below to make a comprehensive budget “bucket.”
Bucket A: Who do you need to operate in a pandemic?
First, which staff are enabling this effort? Starting with staff makes sense: it’s always a school’s biggest expense and most important budget item. Staffing allows for the smoothest and most predictable annual spending trends. Federal procurement requirements are also most straightforward for salaries. Estimate the proportion of the position's annual salary tied to COVID response. Like for other federal grants (see Appendix 1), portions of a salary related to the grant-program (in this case, COVID-related supports) can be allocated.
Of your current staff positions, who enables:
Measuring and addressing learning loss
Student support services
Social-emotional support
Academic supports and interventions
Operating a facility for CDC guidelines
Enabling online learning for hybrid model or quarantine
What additions to your staff roster and salaries will you need to operate in a pandemic? Examples include:
Director/Manager of COVID Operations - may need to hire someone just for the next couple of years to support with safe operations, communications, and complicated learning models
COVID stipends - one time stipends for staff to compensate for the hardship of essential work during a pandemic
Additional aids/teaching staff - to lower class sizes
Nurses - may want to hire additional nurse support with a higher need for testing, screening, etc.
Substitutes on staff - schools may pay substitutes on a salaried basis to be available on demand assuming more teaching absences due to exposure/quarantine
Summer school salaries - to mitigate learning loss
Extended school year or Saturday school salaries - additional pay for 10 month staff in the event of a longer school year to mitigate learning loss
Tutoring stipends of salaries - to mitigate learning loss
Increased janitorial salaries - additional staff for thorough cleaning
Increased operations staff - to allow for safe and distanced arrival/dismissal and meal distribution
Which programs or efforts that you began as a result of closures do you wish to continue even as you reopen? Examples include:
Parent engagement in learning
Virtual learning capabilities
Enhanced cleaning
Smaller class sizes or pods
Bucket B: Which additional contracted or outsourced support will you need to operate?
The larger and more predictable the contract, the easier it is to add the contract to the budget.
Professional development
Contracted instruction - related to mitigating and measuring learning loss
Cleaning services - the increased portion specific to COVID operations
Transportation - a safe way to help students or staff avoid public spaces and transport
Childcare - for staff with children without school or childcare
COVID Testing - regular testing for staff and/or students
Remote learning platforms
Bucket C: Do you require facilities upgrades like HVAC, outdoor spaces, replacing old carpets, etc.?
Note: specific rules associated with federal facilities projects must follow Davis-Bacon so be sure that the contractor is familiar with and following those regulations. An example of a “Bucket List” is below:
STEP 3: Now that you have your budget “buckets,” begin allocating them grant by grant, beginning with the most restrictive grants first.
1. Create a list of all of your COVID-related grants (refer to chart above as a starting point) and add a column for the allocation ($), the timeline of the grant, and whether the funding is more or less restrictive. Typically, CARES ESSER funds are least restrictive as the allowable uses are broad and supplement not supplant rules are not in effect (for most regions of the US). Example below:
2. Assess the budgets of other local grants, private grants, and ESEA, IDEA, etc. to ensure that you are not double allocating any expenses already associated with other grants. Estimate if you need to supplement any decreases in these grants with COVID-related to continue existing school priorities.
3. Consider if you want to evenly spread out the funds over the grant years or take as much up front as you can. Typically, more consistent financials are helpful in planning and for any reporting to stakeholders (large annual swings in net income can raise questions). However, you may have good reason to draw down the funds as quickly as you can, especially if you are largely tagging existing expenses and need to build your cash balance.
4. Allocate your most restrictive and most immediate grants first. In the example above that’s a local grant that needs to be spent down in the next few months and has specific requirements. For this grant, allocate as much as possible for FY21 activities already spent or planned (start with Bucket A). Example below for a local grant is used to aid testing and pick-up/drop-off protocols:
5. Allocate your more restrictive and more immediate grants next. In the example above that’s the CARES Equivalent funding this school received. Allocate any additional FY21 activities already spent or planned in Bucket A. If you still need an additional allocation for the grant after FY21, continue into later years with the same Bucket A items. Example below:
6. Allocate your less restrictive and less immediate grants next in timeline order to be sure you can spend down in a consistent manner. In the example above that’s the first CARES-ESSER grant. Use the remaining FY21 funds and then allocate to CARES-ESSER II and finally CARES-ESSER III.
Note: we did not end up allocating any Bucket C activities to the grants. This does not mean that we will not upgrade the playground, it just means that we will likely use local or private funds for that upgrade to avoid onerous federal procurement regulations (see Appendix 2).
Congratulations! You’ve allocated all of your grants ensuring both the quickest drawdown as possible as well as relatively smooth federal revenue for the next few years while we operate through the pandemic and economic slowdown.
Appendix 1: Common federal grants and allowable staff costs
CARES ESSER I: staff who can make a direct connection to address the impact COVID has had and continues to have on schools and students
CARES ESSER II: staff who can make a direct connection to safely reopening schools as soon as possible and to mitigate and recover student learning lost as a result of the pandemic and associated school closures
SOAR AQ: staff who can make a direct connection to improving academic outcomes of the students
SOAR EC: staff who can make a direct connection to improving academic outcomes of PK3 and PK4 year olds
CARES Equivalent (DC included in SOAR AC/EC grant): depending on your region, can be used for any staff allowable for CARES ESSER funding, which is most federal grants (Title, IDEA, SOAR, etc.)
Title I: staff who can make a direct connection to improving academic performance of low-income students
Title II: staff who can make a direct connection to increasing the number of “highly qualified” teachers and principals (professional development, coaching, recruiting, etc.)
Title III: staff who can make a direct connection to helping limited English proficiency students learn English
Title IV: staff who can make a direct connection to a number of “extra” programs and initiatives in student support and academic enrichment
Title V: staff who can make a direct connection for planning, program design, and initial implementation of a new or expanding charter school
IDEA: Staff who can make a direct connection to supporting children with disabilities
IDEA CEIS: Staff who can make a direct connection to supporting children before they are identified as needing special services due to a disability
Appendix 2: Non-personnel requirements:
If you do need to budget for non-personnel costs, please see attached a Federal Grants Compliance checklist with all the steps you will need to follow to ensure compliance with federal procurement requirements. Most importantly, key documents need to be dated, signed, and stored BEFORE a purchase can be made. Purchases under $10K would be easiest.
I bet you are looking at this document and thinking salaries sound good!
[This post contributed by Shelley Hughes, Finance Team Director.]