ESSER is Expiring: How Schools Can Find Financial Certainty

Assembling a school district’s budget requires several moving parts, from expenditure analysis to stakeholder approval. However, in today’s volatile funding environment, it has become more challenging than ever for school districts to allocate funds to essential areas and achieve financial certainty.

With the expiration of pandemic-era Elementary and Secondary School Emergency Relief (ESSER) funds and potential federal and state funding cuts, districts are being forced to stretch state and local resources even further. The ripple effects are being felt nationwide, as education leaders confront a perfect storm of rising costs, staffing challenges and mounting expectations.

In this article, we’ll discuss today’s pressing financial challenges in education as ESSER expires and how schools can strategically close budget gaps.

The Rising Cost of Financial Uncertainty for Schools

According to the American Association of School Administrators, personnel costs, which include salaries and benefits, make up roughly 80 to 85% of a school district’s budget.1 Even small fluctuations in staffing, whether due to illness, personal leave or other absences can have an outsized impact on a school’s financial health, especially if a staff member is out for an extended period.

This issue becomes exacerbated as absenteeism continues to rise. According to a report from The Brookings Institution, daily teacher absence in the state of Nevada, for example, rose from 5% pre-pandemic to 17% post-pandemic.2 States that report teacher absenteeism have seen similar increases in recent years. As a result, school across the U.S. are forced to turn to substitute teacher spending, causing costs to soar amid persistent shortages and higher wage demands. The human toll of absenteeism is equally significant. As vacancies remain unfilled, other staff members absorb extra duties, leading to widespread burnout and increased turnover. This causes a feedback loop to form; when educators are absent more frequently, student absenteeism tends to rise as well, triggering funding penalties tied to student attendance. A Gallup study found that 44% of K-12 teachers polled say they feel burned out very often or always. This contributes to absenteeism and teachers leaving the profession.3

Meanwhile, the post-pandemic workforce shift has intensified the challenge. Many teachers are leaving the profession for roles offering better pay, less stress and more flexibility while fewer new educators are entering the sector. For superintendents and school boards, maintaining operational and academic stability under these conditions is becoming a daily struggle for many districts.

How School Districts Can Effectively Manage Costs

In this environment, some districts are rethinking how they manage one of their most inevitable uncertainties: staff absence costs. Traditionally, those expenses have been self-insured, absorbed directly into already-strained budgets and ineffectively managed.

However, a growing number of districts are exploring a new approach successfully used for decades by many European schools: a risk transfer model that allows them to offset the financial impact of absences through insurance coverage. Alliant Public Entity offers a dedicated insurance product, modeled after this risk transfer concept, that enables districts to shift staff absence costs off their balance sheets, replacing financial volatility with predictable reimbursements.

Our comprehensive offering helps stabilize budgets and prevent difficult trade-offs, such as cutting programs, depleting general funds or increasing class sizes caused by staff absence overspends. This approach also gives district leaders a clearer picture of workforce trends. By consolidating absence data, providing analytical outputs and automating reimbursement processes, districts can better analyze patterns, make informed staffing decisions and protect instructional time.

Achieving Financial Resilience in Today’s Volatile Public Sector As financial unpredictability has become the norm, it can be challenging for many schools to sustain their mission and protect what matters most: educating the next generation. Alliant Public Entity is committed to helping educational institutions achieve stable budgets and reach their risk management objectives, empowering schools to safeguard the future of public education.

To learn more about our insurance offerings designed to address today’s pressing financial challenges for educational institutions, reach out to a specialist from Alliant Public Entity today.

Alliant note and disclaimer: This document is designed to provide general information and guidance. Please note that prior to implementation your legal counsel should review all details or policy information. Alliant Insurance Services does not provide legal advice or legal opinions. If a legal opinion is needed, please seek the services of your own legal advisor or ask Alliant Insurance Services for a referral. This document is provided on an “as is” basis without any warranty of any kind. Alliant Insurance Services disclaims any liability for any loss or damage from reliance on this document.

[1] American Association of School Administrators School Budgets 101 https://www.aasa.org/docs/default-source/resources/reports/school-budgets-101.pdf

[2] The Brookings Institution (2025) State data shows K-12 teacher absences surged post-pandemic https://www.brookings.edu/articles/state-data-shows-k-12-teacher-absences-surged-post-pandemic/

[3] Gallup (K-12 Employee Burnout Statistics). K-12 Workers Have Highest Burnout Rate in U.S. https://news.gallup.com/poll/393500/workers-highest-burnout-rate.aspx