Federal funds gave NC school employees more than $1B in bonuses. Now the money's gone

North Carolina schools spent almost 20% of the state’s $6.2 billion federal education stimulus package on recruitment and retention bonuses during a hurting education job market.

The $1.2 billion in bonuses comprised some of the biggest expenditures of the stimulus dollars, which were doled out to school systems nationwide through the Elementary and Secondary School Emergency Relief Fund, or ESSER, as they grappled with changes brought on by the Covid-19 pandemic.

Those dollars had to be spent by Sept. 30, 2024, and aren’t around any longer.

Bonuses are an age-old tool to help recruit and retain workers in any profession. The federal dollars were crucial to helping incentivize teachers, bus drivers and others to stay in their jobs as schools struggled with higher-than-usual vacancies for those positions, particularly as schools emerged from lockdowns and returned to daily in-person learning.

But now, those bonuses — mostly one-time cash infusions — have either disappeared or are being filled temporarily with local dollars. And school systems are searching for ways to keep such incentives going to manage recruiting and retention.

Teacher turnover rose significantly from March 2022 to March 2023, a year after the vast majority of employee bonuses were given out. Almost 10,400 teachers quit during that time — almost 45% more than during the previous 12 months.

But new data from the North Carolina School Superintendents’ Association shows a decline in vacancies in some areas but continued problems in other areas, such as bus driving and special education teaching.

Some counties are now paying to continue bonuses, while others are ending or shrinking their bonuses.

Franklin County commissioners agreed to foot the bill for employee bonuses. Bonuses can range from $500 to $4,500, based on experience. It cost the county $2.5 million last year for 927 employees. In an employee survey, three-quarters of respondents said the longevity bonus greatly affected their choice to remain employed with the district. That’s what the district tried to sell commissioners on, Superintendent Rhonda Schuhler said. “This is something that we think we’re going to need to maintain long-term,” she told WRAL News.

Now the district hopes it will support ongoing recruitment and retention efforts.

“Districts that aren’t able to put those financial incentives in place are going to potentially lose those employees to other districts,” Schuhler said. “We’re competing for limited candidates to fill those positions.”

Carol Kump, a Franklin County first-grade teacher, said losing the longevity bonus would have prompted her and others to wonder if they could find the same or higher pay elsewhere.

Keeping the bonus, she said, “was really important because it meant we got to continue without basically a pay cut.”

But the loss of federal funding still shrunk some other bonuses. For example, the district chose to halve — from $4,000 to $2,000 — retention bonuses for hard-to-fill math teaching positions.

Kump’s notion that losing the longevity bonus could feel like a pay cut may ring true for a lot of school employees set to lose their bonuses, said Lam Pham, an education policy professor at North Carolina State University who is studying the effect of bonuses on teacher retention. Some teachers may not realize their bonuses were coming from temporary federal dollars and may have thought they were regular bonuses, he said.

“We've talked to a number of teachers who, to be honest, weren't [certain about] how much they were getting, or where the funds were coming from, or if they were getting bonuses,” Pham said.

For the past few years, school employees have enjoyed a dizzying array of bonuses, with counties providing bonuses using stimulus funds, the state providing other bonuses using stimulus funds, the state already providing performance bonuses using state funds, and many counties already providing regular bonuses using local funds for years as a supplement to state salaries and wages. Some of the new bonuses provided by counties may have even come from local funds, depending on the county.

If teachers don’t know where their bonus came from, Pham said, they may not know how to factor it into their employment decisions.

“The theory behind these incentives is that a teacher or whoever is eligible for the bonus will be motivated to stay in their job, or come to their job, or potentially work harder at their job. These are theories, right?” Pham said. “But in order to be motivated, you have to know that this is the goal that I'm working towards, and the fact that often teachers don't know really dilutes the potential positive impact of these bonuses.”

Some school employees told WRAL News they would work harder if they thought they could get a performance or perfect attendance-based bonus, although the effort could end up fruitless if just one thing went wrong, like their own child falling ill and needing to stay home with a parent.

Guilford County Schools offered $1,000 monthly performance and perfect attendance bonuses to bus drivers, along with several other sign-on retention bonuses for other employees. Those bonuses are largely gone now. But the school system still lacks dozens of drivers. Such structures, however, could cause employees to work when they’re sick or skip important appointments.

The need for the bonuses comes down to pay that is simply too low, Guilford officials say. Starting pay for bus drivers in Guilford is $16.38 per hour, a relatively low rate for an urban district. But state lawmakers need to allocate more money for school employees to more comfortably afford everyday costs, said Jusmar Maness, chief academic officer at Guilford County Schools.

Lawmakers in 2021 voted to increase bus driver pay from $11 per hour to $15 per hour by 2023 but haven’t revisited the issue since.

Guilford hasn’t just cut back on bonuses. Like many other school systems, it has reduced academic programming that leaders credit with helping kids learn more and faster in recent years. Guilford is cutting back on summer school and intensive tutoring, which will now only be offered at its lower-income schools that are repurposing other recurring federal funds to pay for the tutoring.

Other boosts to pay

The state has raised pay for school employees in recent budgets, including the bus driver pay bump and higher salaries for early-career teachers. Later career teachers have often noted they’ve been mostly left out of the pay increases because state lawmakers have designed teacher pay to stall after 15 years and have given the smallest raises to the most experienced teachers.

But early career teachers are making thousands more than they used to, with pay raises and annual step increases, though North Carolina still ranks toward the bottom among U.S. states in beginning teacher pay.

Wake, Durham and other counties have also increased local supplements to teacher pay, though they may total just a couple hundred more dollars per year than before for each teacher.

Wake school board members have said they want to do more, despite providing raises that have cost tens of millions of dollars in recent years.

For school leaders who want to do more, the temporary nature of the federal stimulus dollars made bonuses a more attractive option for boosting the bottom line of schools’ frontline workers.

That’s been especially critical as the cost of living has risen, Pham said.

“The problem is we have a limited budget in education in North Carolina, as we do everywhere else, and so bonuses are a way to help address some of those issues,” he said.

If schools had had more years to spend the money, Pham said, they could have focused on more people-intensive efforts, such as tutoring, additional teachers or additional social workers. Instead, many of those efforts have ended, by requirement, while students work to catch up after falling behind during the learn-from-home lockdowns of the pandemic.

Many wish-list items depended on abundant labor that didn’t, or couldn’t, really materialize.

“And so being able to spend these funds very quickly is a difficult task, especially if you really want to be intentional and use it in a way that's effective,” Pham said.

Pham and a partner at the University of North Carolina are studying the effect of teacher bonuses approved by state lawmakers in 2021, including bonuses for principals.

“It's hard to really be able to see an impact because we don't know what would have happened if teachers hadn't received these bonuses,” he said.

The end of the federal bonus programs will be the most informative for researchers, Pham said. “If we see a major increase in turnover when ESSER funds end, that will be one signal that these bonuses have had an effect,” he said.