Cedar Rapids School District Allocates COVID Relief Funds for Operational Expenses

Iowa’s Governor blames Cedar Rapids schools’ budget crisis on misuse of COVID funds, as the district faces possible closures due to an $11 million deficit.

Governor Kim Reynolds has pointed to the Cedar Rapids School District’s use of one-time COVID-19 relief funding as a primary factor in its current budget crisis, which could result in the closure of up to seven schools. The district is scheduled to vote Monday on a series of budget cuts, though decisions on school closures have been temporarily delayed.

“If you look at Cedar Rapids for example, first of all, I would look at the budget and see if they used any one-time funding for ongoing expenses,” Reynolds said. “That’s been consistent in a lot of the schools that are now facing shortfalls is they took COVID dollars and hired more teachers and that was one-time money, it wasn’t ongoing.”

The Cedar Rapids School District received approximately $50 million in Elementary and Secondary School Emergency Relief (ESSER) funds during the pandemic. According to information on the district’s website, these federal dollars were allocated to various initiatives including expanded summer school programs, extended early childhood programming, and the creation of magnet schools.

However, the district’s Chief Financial Officer Karla Hogan recently acknowledged that the expiration of ESSER funding has compounded existing financial challenges. “The combination of ESSER funding and declining enrollment has created a challenging financial landscape for school districts across the U.S., many in Iowa, making it increasingly difficult to balance budgets effectively,” Hogan stated.

In a more direct admission to The Gazette last month, Hogan confirmed that the district had indeed used the temporary federal funding for permanent expenses. “We weren’t prioritizing where we were spending our money. We were using ESSER primarily to cover our operational costs and our everyday expenses,” she told the newspaper.

This financial strategy has placed the district in a precarious position. As enrollment numbers continue to decline—a trend accelerated by the state’s expansion of school choice options including charter schools and Education Savings Accounts for private school tuition—the district finds itself with an $11 million budget shortfall and fewer options to address it.

The situation in Cedar Rapids mirrors a national pattern seen in many school districts that used pandemic relief funds to patch budget holes rather than for one-time investments or temporary programs that could be discontinued when the funding expired. Education finance experts have warned that this “fiscal cliff” would eventually arrive as federal support ended, requiring difficult budgetary decisions.

The Cedar Rapids School District has primarily attributed its financial woes to rapidly declining enrollment, particularly in the wake of Iowa’s expanded school choice initiatives. These programs, championed by Governor Reynolds, have created additional competition for public schools by providing families with alternatives like charter schools and private school vouchers.

However, the governor’s assertion that the misuse of one-time funding for ongoing expenses contributed significantly to the district’s current predicament appears accurate based on the district’s own admissions.

The scenario playing out in Cedar Rapids highlights the complex financial challenges facing public education systems nationwide as they navigate the post-pandemic landscape. Districts must contend with both the end of unprecedented federal support and evolving educational marketplaces that increasingly emphasize parental choice and alternative schooling options.

As the Cedar Rapids School District prepares to make difficult decisions about its future, the situation serves as a cautionary tale about fiscal planning and the dangers of using temporary funding streams for permanent expenditures in public education.