How Much Will States Receive Through the Education Stabilization Fund in the CARES Act?

The new bipartisan economic stimulus legislation — known as the CARES Act — contains significant new resources to help states address massive, immediate budget problems due to COVID-19, though states will almost certainly need more aid in coming months.

"One important form of the CARES Act’s aid for states is the Education Stabilization Fund, which provides them with $30.75 billion to support their K-12 and higher education systems in the coming months."

One important form of the CARES Act’s aid for states is the Education Stabilization Fund, which provides them with $30.75 billion to support their K-12 and higher education systems in the coming months. The amounts each state will receive vary significantly, based largely on the share of Title I and Pell Grant students that attend school in each state. We estimate that California will receive about $3.8 billion through the fund, including amounts allocated directly to the state’s colleges and universities. Wyoming, with many fewer students to serve, will receive $51 million. (See table.)

The fund contains three primary parts:

• $13.2 billion for K-12 schools. This amount will be distributed to states which will then pass it along to school districts. Each state’s allocation will be based on its share of funding under Title I, the federal government’s primary funding program for high-poverty schools.
• $14.0 billion for colleges and universities. Some 90 percent of this amount will be distributed directly to public and private colleges and universities based primarily on their share of Pell Grant recipients. Another 7.5 percent will go to Historically Black Colleges and Universities and other institutions primarily serving students of color. The Secretary of Education will distribute the remaining 2.5 percent to those institutions the Secretary determines have been particularly harmed by the virus and economic downturn.
• $3 billion in emergency relief that governors may use to distribute to the schools, colleges, and universities that the virus and downturn have particularly affected: 60 percent of it distributed to states based on their share of the national school-aged population (those aged 5-24), and the remaining 40 percent based on each state’s share of Title I students.

In addition, the fund includes $154 million for programs operated by the Bureau of Indian Education (BIE). These funds are crucially important to students in BIE schools, which educate about 45,000 American Indian and Alaska Native students on or near reservations, and to the communities that depend upon them. (At the same time, it’s worth noting that more than 90 percent of American Indian and Alaska Native students attend public schools that will benefit from the fund’s support for K-12 schools generally.)

The fund also includes a similar amount, “no more than” $154 million for the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands, to be distributed to these areas “on the basis of their respective needs as determined by” the Secretary of Education. Puerto Rico and the District of Columbia are considered states for the purposes of distributing the fund.

Given the economy’s extremely rapid decline and the extraordinary damage being done to state, tribal, and local budgets, federal policymakers will need to come back and provide more help to states and families affected by the crisis.