Stockton Unified has either spent or earmarked nearly all of the hundreds of millions of dollars in COVID-19 relief funding it’s received from the federal government over the past three years.

The district has just about $32 million left to be designated for various district needs.

On Tuesday, the SUSD governing board held a study session to look at how the district has used the more than $250 million in Secondary School and Relief, known as ESSER, funding the district has been allocated since 2020.

The money, given out in three rounds, was distributed to school districts “to address students’ academic, social, emotional, and mental health as well as any opportunity gaps that existed before and were worsened by the COVID pandemic,” according to a staff presentation. 

Key objectives the district set for how the money should be spent include mitigating learning loss, health and safety and addressing lost learning time, as well as one-time purchases that facilitate focusing on children, families and community. 

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How the money was spent

The first two rounds of ESSER funds — totaling about $85 million — have already been fully expended. The money was spent on things like enrichment learning, cleaning supplies, personal protective equipment, student nutrition, instructional materials and technology, the district’s Summer Learning Academy and staffing. 

It was this last category for SUSD that drew criticism from government watchdogs.

Both the San Joaquin County Office of Education and the San Joaquin County Civil Grand Jury warned the district about the potential budgeting hazards that come with funding ongoing district expenses, such as salary and benefits, with one-time funding.

District leadership has been working over the last eight months to right Stockton Unified’s financial ship. SUSD has faced myriad issues in the last few years, including two scathing Civil Grand Jury reports, one of which gave the district “A failing Grade in Public Trust,” risk of potential insolvency due to budget mismanagement, five interim and permanent superintendents, infighting among governing board trustees, and a state audit investigation that found evidence of illegal activity in the district’s financial dealings. 

But the district governing board has become more compliant and willing to work with outside oversight organizations since December, likely brought on by the shift in board politics following last year’s election.

Last month, district officials told trustees that about $15.5 million would need to use the third round of ESSER money to fund the equivalent of about 148 full-time positions that the district is responsible for through the 2023-2024 school year. The board would then need to decide what will happen with those positions or how they will be funded going forward. Staff also say that some of the positions are vacant, but union contracts require that they be filled. 

The district also eliminated some positions funded with federal COVID-19 relief dollars earlier this year.

Positions funded by ESSER include district leadership, such as the directors of constituent services, facilities/operations and planning, transportation, and curriculum and professional development, as well as an assistant principal. 

SUSD received more than $156 million in the third round of ESSER funding. According to district staff reports, just a small fraction of that was spent in the last school year. More than $151 million was rolled over to the current school year and will go to various district projects, such as instructional materials, facility improvements, assessments and expanded learning, as well as learning loss and staffing.

Staff also provided trustees with an alternate funding plan for the positions supported by ESSER once the federal money expires next year, most of which will come out of the district’s general fund. 

“For those positions, Dr. Rodriguez and myself are committed to maintain (them),” interim Chief Business Official Joann Juarez told trustees Tuesday.

All the funds must be spent by the end of September 2024. 

The district also came under fire for earlier using ESSER money from the first two funding cycles to purchase ultraviolet light air purification units in a deal that state investigators described as flawed if not illegal. The expenditure —  more than $6.6 million — was ultimately deemed unallowable.

However, district leadership employed some financial maneuvering okayed by the California Department of Education that saw the problematic contract with IAQ Distributions, Inc. moved from the COVID-19 relief funding to the district’s general fund. The district would have essentially lost out on $12 million, the initial $6 million to the IAQ contract and an additional $6 million in returning the funds. 

“Business Services is working (the county’s Office of Education) to identify expenditures that are allowed from the general fund, and we will be moving it to ESSER so we’re allowed to capture back those funds,” Juarez said.

The district is also seeking legal action against IAQ. 

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The district’s next steps

The remaining $32 million of ESSER funds that have not yet been designated or spent will be assigned to district needs following a position control evaluation. The County Office of Education informed the district in October that its budget was unreliable partly due to the fact that there had not been proper reporting and maintaining of the number of staff positions and vacancies. 

Some of the big ticket expenditures set to be funded by ESSER money will also need to be approved by the state and district’s governing board.

The district will also continually monitor planned spending through next year to provide support, accountability and make sure that the district doesn’t lose out on any funding. 

“We’re going to see where everybody’s at with their funding,” Juarez said, adding that any funds that aren’t being spent where they were originally designated will be reallocated back out to general fund expenditures. “I do not want to give any funds back.” 

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