Item 125, Paragraph B.30, of the Chapter 725 budget for the 2024-2026 biennium requires school divisions to report to the Virginia Department of Education on the use of their federal Elementary and Secondary School Emergency Relief Fund (ESSER) formula funds since 2020 and Item 137 C.47.c of the Special Session I, 2024, on their use of the state ALL IN VA initiative $418 million funds they received in fiscal year (FY) 2024 with a focus on tackling learning loss. The Virginia Department of Education must provide a report of this information to the Governor and Chairs of the House Appropriations and Senate Finance and Appropriations Committees by October 1, 2024, 2025, and 2026. This report meets the requirements for the October 1, 2025, reporting.

The Chapter 725 reporting requirement specifically states:

Each school division shall report to the Department of Education information on the use of funds appropriated in fiscal year 2024 for the Flexible Funding Supplement and on the use of pass-through federal Elementary and Secondary School Emergency Relief funds used since 2020. Such reporting shall specify amounts obligated and expensed based on reporting categories as prescribed by the Department of Education. School divisions also shall report how funds address performance gains or losses related to reading and mathematics and support preparation and implementation of the Virginia Literacy Act. The Department of Education shall compile this information and submit it to the Governor and the Chairs of the House Appropriations and Senate Finance and Appropriations Committee no later than October 1, 2024, 2025, and 2026.

The Virginia Department of Education (VDOE) surveyed school divisions during July and August 2025 to collect data needed to fulfill this reporting requirement. School divisions reported obligation and expenditure data for the period ending June 30, 2025. VDOE compiled the survey data for this report due to the Governor and General Assembly by October 1, 2025. A subsequent survey will be repeated for the October 1, 2026, requirement, covering the FY 2026 reporting period.

Federal ESSER formula funds are paid to school divisions on a reimbursement basis by VDOE. Use of ESSER I, II, and III formula funds ended on September 30, 2022, 2023, and 2024, respectively, with final reimbursements closed out to school divisions by the following January. For purposes of this report, “expenditure" of ESSER III formula funds means both funds spent by school divisions that have reimbursed by VDOE and those spent by divisions pending reimbursement by VDOE. The majority of obligated and expended ESSER formula funds Categories reported with the largest total obligations and expenditures 44% went towards other COVID response, 27% towards capital improvements, 9% towards staff recruitment/retention incentives, 7% towards high-quality tutoring, and 5% towards summer school programs.

It should be noted that following close of the ESSER III on September 30, 2024, 23 divisions applied and were approved by the U.S. Department of Education for late liquidation, extending liquidation period to March 28, 2026. As of August 29, 2025, seven divisions had a combined available balance of $3,905,679.64 (out of an allocation of $1.9 billion for ESSER III funding). The remaining funds are primarily reserved for ongoing construction/ HVAC projects and contracted services that are in the final stages of completion. ESSER III reimbursement requests were submitted by school divisions daily to VDOE in the final weeks leading up to the close of ESSER III resulting in zero balances for the majority of school divisions.

The state ALL IN VA $418 million fund allocations were fully dispersed to school divisions in the fall of 2023 upon submitting their spending plan to VDOE. These funds may be used by divisions during FYs 2024, 2025, and 2026. As of the June 30, 2025, collection period, school divisions reported $283.5 million were expended, 67% of which went to high-intensity tutoring, 22% to Virginia Literacy Act implementation, 8% to chronic absenteeism, and 2% to operational and infrastructure support. An additional $107.2 million is obligated, totaling $391 million of the $418 million allocation.