Outside Shiwi Ts'ana Elementary School in Zuni, New Mexico, stand tall mesas with flat tops and steep sides that glow golden as the sun sets. This magnificent view will be enjoyed by more students and staff when an outdoor learning space is completed late this summer.

"We live in a high desert, but we have a lot of beautiful views," said Martin Romine, finance director for Zuni Public Schools. "We want to get our kids outside and connected to nature." The $1.2 million outdoor learning space project will build tiered seating with Wi-Fi next to the school playground, making it easy for students to move between classes and during breaks. Construction will begin immediately after the school year ends and is expected to be completed before the fall semester.

Like Shiwi Ts'ana Elementary, schools across the country are anticipating a wave of facility upgrades funded by federal money this summer. The timing coincides with a loosening of the project backlog and fewer students and staff on campus during the summer, making construction logistically easier.

Although Congress approved pandemic-related Elementary and Secondary School Emergency Relief (ESSER) funds in 2020 and 2021, planning and executing construction projects takes months or even years. Supply chain issues and labor shortages have added challenges for school districts that must use the funds by federally mandated deadlines, depending on the three rounds of ESSER grants. The last and largest round, $121.9 billion, known as ESSER III, has an obligation deadline of September 30, 2024, and an expenditure deadline of January 28, 2025.

"We want to change the way kids look at school and increase their excitement about coming to school because we're doing things we've never done before."

— Martin Romine, Finance Director, Zuni Public Schools

In Zuni, the district also plans to start a $1.3 million middle school outdoor learning area project this summer, including a pond that collects rainwater and raised teaching platforms. Romine said it will be an ideal place for classes, lunches, and after-school activities.

"The money has been very beneficial and allowed us to do projects we never thought we could do," Romine said. "We want to change the way kids look at school and increase their excitement about coming to school because we're doing things we've never done before."

Facility needs that predate the pandemic

Nationwide, schools are using some of their COVID-19 recovery funds for facility improvements, including replacing windows and doors, upgrading heating and cooling systems, building new roofs, modernizing classroom lighting, and enhancing security.

According to data services company Burbio, in the ESSER III spending plans of about 6,500 school districts, 23.9% (about $92 billion) is allocated to facilities and operations. As of March, Burbio's research shows that repairing or replacing HVAC systems and ventilation equipment was the most common project, followed by facility improvements to prevent disease.

Healthy air circulation became a priority for facility projects as schools tried to reduce COVID transmission and attract students and staff back to campus after months of remote learning. But in reality, many school administrators knew for years before the pandemic that their HVAC systems needed replacement or repair. According to a 2020 report by the U.S. Government Accountability Office (GAO), an estimated 41% of school districts need to update or replace HVAC systems in at least half of their schools, representing about 36,000 schools nationwide.

Many school and district leaders say there has never been such a large-scale need for facility improvements coinciding with an unprecedented influx of flexible federal funds.

"I think the additional funding has been fantastic for our districts," said Trisha Schock, executive director of administrative services at North Central ESD 171 in Wenatchee, Washington, which provides education-related services to 29 public school districts, as well as a tribal school, a charter school, and several private schools.

In addition to capital improvement funds, ESSER funds have supported increased staffing, academic interventions, social-emotional outreach, enhanced curriculum, student meals, and more, Schock said. "So many positive things have been accomplished," Schock said.

In Dearborn, Michigan, the school system will continue this summer to add air conditioning to eight, possibly nine, schools. Construction has already begun, with workers installing ductwork classroom by classroom while students temporarily relocate to other spaces in the building. According to the district's website, through phased planning, the district hopes to complete most of the work during the summer.

About one-third of the district's schools have air conditioning. The ESSER-supported project is the district's first large-scale effort to add air conditioning to older buildings. After a November 2019 bond proposal to upgrade school facilities failed by a few hundred votes, ESSER funds allowed the district to move forward with some projects, said David Mustonen, director of communications and marketing for Dearborn Public Schools.

A 2022 study by the Association of School Business Officials International (ASBO) on ESSER spending practices highlighted administrators' expectations that building improvements will make schools safer and more conducive to active student learning. A Louisiana district administrator told ASBO: "Our old buildings were repaired, HVAC units were replaced, and all schools received LED lighting to provide the best learning environment."

Construction obstacles

However, the enthusiasm and optimism of school communities about using billions of dollars in federal funds to improve infrastructure have been dampened by reality in many places. Pandemic-related supply chain issues have caused delays in equipment and materials, extending construction timelines. For example, Elleka Yost, ASBO's director of advocacy, said various HVAC, window, door, and roof replacement projects have seen delays of 10 to 15 months.

"Unexpected delays due to supply chain issues and labor shortages in the construction industry are a major concern for districts seeking to use funds for such purposes," Yost said.

The Warden School District in Washington state began an HVAC and chiller replacement project in February 2022, originally scheduled for completion in August 2022. But as of early April, neither was finished. According to information Schock received from the district, the contractor faced multiple delays in products, equipment, and staffing.

In the Zuni school district, which has 1,100 students, Romine worries about the progress of another ESSER-funded project. A pool building that has been closed for 12 years will receive new HVAC and dehumidification units. Although the pool and diving boards are in good condition, the facility cannot be used without proper air and ventilation systems. Many in this rural community hope the $1 million project will be completed because, once finished, it will be the only pool for local residents and students.

"This project worries me now because if the design drawings take six months, we'll face a very tight deadline to purchase and install all equipment before the funds expire," Romine said.

Another ESSER contract to replace chillers at Zuni High School was signed in January 2022, but is currently only 85% complete, with the contractor waiting for needed parts. Another project, replacing the HVAC system at Twin Buttes Cyber Academy, costing $1.7 million, was completed last fall. Romine said the district had planned the upgrades before the pandemic, so it was able to start quickly when ESSER funds were allocated.

"Unexpected delays due to supply chain issues and labor shortages in the construction industry are a major concern for districts seeking to use funds for such purposes."

— Elleka Yost, Director of Advocacy, ASBO

In addition to project delays, inflation has driven up material costs. Inflation caused Dearborn Public Schools to increase its total budget for adding air conditioning to some schools and adding classrooms to an elementary school from $52 million by $12 million. Yost said rising project costs have forced districts to phase work, such as repairing roofs in sections rather than all at once.

In some areas, districts have experienced delays and cost increases due to competition with other district projects or non-school projects. As districts nationwide became eligible to start construction projects, neighboring districts followed suit. Small and rural districts have the most difficulty finding bidders for their projects. In fact, Yost said some districts received no bids at all for their projects.

Although contractor demand has slowed, making it easier for districts to find companies to work with, Yost said labor shortages are now more severe. Without qualified workers, work cannot be completed even if funds and supplies are available, she said.

In some places, there is internal debate about whether construction is the best use of these one-time federal funds, especially given the urgent need for academic and social-emotional support and additional instructional staff. Yost said school construction should be seen as "part of a strategy to improve student learning," rather than pitting academics against facility upgrades.

More guidance needed on delayed liquidation

Nevertheless, school administrators are closely monitoring construction budgets and schedules while focusing on a specific date—September 30, 2024, the obligation deadline for ESSER III funds, the date by which districts must commit to projects. The expenditure deadline (the date by which districts must pay for supplies and contracts) is January 28, 2025.

For the second round of funds, ESSER II, the obligation deadline was September 30, 2023, and the liquidation deadline was January 28, 2024. The obligation and expenditure deadlines for ESSER I were September 30, 2022, and January 28, 2023, respectively, which have passed.

To help New York school districts plan and complete construction projects before federal deadlines, the State Board of Regents required districts to submit applications for ESSER-supported projects by dates earlier than the federal deadlines. According to a January 23 memorandum, the Board required districts to submit ESSER II construction project applications by March 1 and ESSER III applications by October 1.

The U.S. Department of Education has proposed giving districts additional time (up to 14 months) to spend ESSER funds, known as "delayed liquidation." This is the spending flexibility many administrators had pleaded for when they began planning fund allocations. But local and national education experts say guidance has been slow and unclear. The Department issued specific guidance for ESSER I, released on September 29, 2022, the day before the obligation deadline. At that time, about 96% of ESSER I funds had been spent.

Only seven states and the District of Columbia applied for and received expenditure extensions for ESSER I. These requests represented a delay of $6.6 million—only about 0.05% of the total $13.2 billion allocated.

Last week, the Department of Education released more details on the delayed liquidation process for ESSER II. Regarding liquidation extensions for ESSER III (the American Rescue Plan), the guidance only states: "The Department strongly encourages states and local educational agencies (LEAs) and other subrecipients to urgently obligate and liquidate ARP Act funds for activities that support students' academic recovery and mental health."

Yost said that while ASBO appreciates that districts now have the opportunity to apply for ESSER II delayed liquidation, from a practical standpoint, it is unclear how many districts can take advantage of it before the September 2023 obligation deadline. "It's only four months away," she said.

Yost said ASBO members have strong interest in applying for expenditure extensions for the larger ESSER III grants, but many are reluctant to risk noncompliance due to a lack of clear guidance on how to apply or no guarantee that their construction projects will be approved before the deadline.

Schock agreed: "I think the obligation requirement will be a key issue for districts in the future, because if they can't complete it due to circumstances beyond their control, that will be a concern."

Given the long-term planning of construction projects and the impending end of pandemic recovery funds, Yost said districts need guidance now if they hope to rely on ESSER III expenditure extensions. "We've been frustrated on our end," Yost said. ASBO advises members to meet obligations on the original schedule, even if it means some construction projects must be canceled and funds reallocated to programs with shorter obligation and expenditure cycles.

"It's not financially prudent, so we have to assume flexibility won't be available," Yost said.