Hold Harmless for Whom? The Impact of COVID Era Policies on School Funding, Teachers, and Students

This study evaluates the fiscal and academic consequences of New York City’s hold harmless policy during COVID-19, which aimed to stabilize school expenditures amid unexpected enrollment declines by restoring schools’ funding up to initial levels. We examine how school racial composition predicts whether or when schools receive hold harmless “treatment” and assess the impact of hold harmless on financial resources, staffing, and student outcomes, exploring heterogeneity by timing of policy announcement. Although schools with higher White student shares were no more likely than those with higher Hispanic or Black shares to receive hold harmless funds, schools with higher Black shares that did receive them saw larger per-pupil allocations due to deeper enrollment losses. Overall, hold harmless schools experienced significant increases in per-pupil spending, and reduced pupil-teacher ratio and class size, while maintaining the size of the teaching workforce. We find hold harmless had no effect on attendance or chronic absenteeism in 2021 or 2022, but improved both in 2023, when it was announced earlier. Although funds often rolled over to later years, we find no corresponding gains in student outcomes. Overall, the policy effectively preserved school-level spending and staffing – as intended – with some improvements in student outcomes when announced early.