A Freeze in July

As a former tutor at a Tennessee Boys & Girls Club, a recent headline caught my eye: the Boys & Girls Club, along with other after-school programs, is facing a funding freeze after the Department of Education decided to hold back around $6 billion across the country for review.

Missouri anticipated around $80 million from these frozen programs. The Department of Education's budget summary suggests the funding for many of these frozen programs will be consolidated and given as a lump sum under the K-12 Simplified Funding Program.

This fund seems to be designed like a block grant, as it would allow states to spend money on previously allowable activities (such as after-school programs) but with fewer administrative regulations. This model is not unprecedented, as Temporary Assistance for Needy Families (TANF) is currently funded using a block grant, and there have been discussions about switching Medicaid to a block grant structure as well.

The department's actions could signal that federal funding to states may continue to decrease, and there may be fewer strings attached to federal funding. That would mean that states, including Missouri, will have to decide which programs that rely on federal funding will be sustained, and to what extent.

Evaluating Deeper Budget Decisions

Missouri likely will need to make some hard budget decisions in the coming years. Prior to COVID, federal dollars comprised about 14 percent of Missouri's total revenue for K-12 education. In 2021-22, an additional $1 billion in federal dollars ballooned that percentage to 28. In 2022-23, the federal share fell slightly to 25 percent. In my colleague Elias Tsapelas' paper "Saving Federalism," he notes that the Department of Elementary and Secondary Education's (DESE) inflation-adjusted federal spending was roughly 45% higher in fiscal year 2022 than fiscal year 2011.

This extra money is fizzling out as the pandemic spending evaporates and the Trump Administration continues to evaluate longstanding programs and rules. The changes at the federal level should incentivize Missouri to rightsize the budget by eliminating unnecessary or unhelpful spending. Establishing a Missouri Office of Government Efficiency would be a good initial step.

Beyond that, Missouri will need to take a more proactive approach to funding specific education programs. Should we increase funding for after-school programs at the expense of a program to improve teacher effectiveness? Before the recent federal policy shift, Missouri was largely guided in these decisions by what we could get federal money for. Now, DESE and school districts will need to set their priorities.

Here's to hoping Missouri can rise to the challenge and prioritize programs with the greatest potential to benefit students.