ESSER II Guidance From TPCSA

June 17, 2021

Dear Charter Colleagues, 

Starting June 4, 2021, charter schools in Texas may apply to receive their ESSER II Funds. Allocation amounts are here and the application is here. As explained, charters must use these funds for allowable activities to respond to the pandemic and to address student learning loss as a result of COVID-19. 

Importantly, TEA ESSER II funding guidance was recently changed and/or updated (please carefully read page 42-43, June 3, 2021 entries 4 and 5). These changes largely impact charter schools that were receiving an ADA hold harmless in 2020-2021. As a result, if your charter system is receiving an ADA hold harmless in 2020-2021, we strongly recommend careful modeling using TEA's steps, and caution, before allocating/budgeting ESSER II funds to ensure the charter does not budget or allocate more funding than is actually available. 

School finance is very complicated, and this is an attempt to explain what is happening at a very high-level. Many charter schools may have initially understood their ESSER II funding allocation to be "new funding" on top of their existing and anticipated regular foundation school program funding for the 2020-2021 school year. However, TEA's changed and/or updated ESSER II calculation (please carefully read page 42-43, June 3, 2021 entries 4 and 5) provides that for charters receiving the ADA hold harmless in 2020-202, ESSER II funding may not necessarily be “experienced” as "new funding" on-top of their existing and anticipated regular foundation school program funding for the 2020-2021 school year; instead, some or all of a charter's ESSER II funding may be included in the charter school's existing and anticipated regular foundation school program funding for the 2020-2021 school year to pay for a formula average daily attendance decline. Specifically, just as CARES ACT funding was used to finance an “ADA hold harmless” in the 2019-2020 school finance formulas, ESSER II is similarly being used to fund an “ADA hold harmless” in 2020-2021 school finance formulas. 

For example, if a charter school had a declining ADA during the 2020-2021 school year based on certain TEA projections, it will be “ held harmless” for the ADA decline. This means the charter will receive foundation school program funding, as if there were no actual decline in ADA. To help pay for this “ADA hold harmless” formula amount, Texas is using ESSER II funds (this is similar to what occurred with CARES ACT). These means, generally speaking, if you qualify for an ADA hold harmless in 2020-2021, you should anticipate most or all of the ESSER II funding will be used to finance the hold harmless. If you did not qualify, ESSER II may be experienced as “new” funding “on-top” of the existing and anticipated state 2021-2022 formula funding.

How a charter school will experience ESSER II funding (as new funding or not) will depend on the charter school's ADA hold harmless calculation. A typical scenario might be the following: In the charter school’s budget forecast for 2020-2021, the charter assumed there would be an “ADA hold harmless” paid for with state funds. However, depending on the amount of the charter school’s ESSER II amount and the value of the hold harmless amount, part or all of the ADA hold harmless amount will NOT be paid for with state funds, but with ESSER II funds. Charter schools that qualify for an ADA hold harmless adjustment will have this adjustment reduced to account for ESSER II funds.

TEA has provided a formula to help charter schools model ESSER II funding (please carefully read page 42-43, June 3, 2021 entries 4 and 5). Critically, charter schools “can attempt to model . . . [but] TEA will not be able to estimate . . . until after the agency incorporates PEIMS total Refined ADA adjusted for the ADA hold harmless into the Summary of Finances in September 2021."

No matter what, you are required to apply for ESSER II funding and explain the funding use. Further, TEA strongly encourages school systems to plan for how to use these one-time federal funds over the entire covered period. ESSER II funds must be spent by September 30, 2023. Funds can be spent only on activities allowed by federal law. If an activity is paid for by federal ESSER II funds, when that activity was previously paid for by local funds, then unspent local funds are freed up for the purpose of extending intervention support for students into future years. This strategy would seem especially wise for charters with large allocations of ESSER II dollars to facilitate a more comprehensive long-term approach to learning acceleration that will be necessary to support all Texas students affected by COVID-19, while also avoiding a local fiscal cliff caused by the expiration of federal funds in September 2023. As part of the ESSER II application process, and much like ESSER III process, superintendents must brief their boards on the one-time nature of these federal funds. School systems should not anticipate that ongoing replacement funds will be provided at either the federal or state level.