COVID-19 School Re-openings and It’s Impact on the Financial Sector : StockMarket


Overview

In order to mitigate the spread of COVID-19, governments in 188 different countries have implemented school closures. For the United States specifically, every state and territory ordered or recommended school closures—affecting upwards of 55 million students across the country. Wary of the achievement gap that could spur from prolonged closures, the Centers for Disease Control & Prevention (CDC) has recently released guidelines for reopening schools. Moreover, Governor Andrew Cuomo of New York recently announced that schools can decide to open so long as they are in a region where the average rate of positive coronavirus tests is below 5 percent over a two-week period. 

Efficacy of School Reopening: Lessons from Other Nations

Extended school closures impact students in a variety of ways: it fosters learning loss, weakens social and emotional skills, entrenches abuse in unstable homes, and can lead to a decline in nutritional health. Cognizant of the importance of in-person instruction, multiple countries have already set guidelines to reopen their schools:

Denmark

  • In Denmark, students were to stay 2 meters apart wherever possible, were grouped into “bubbles” of 12, and were required to wash their hands every two hours but not to wear masks. 

Germany

  • In Germany, their government cut class sizes in half, had one-way hallways, staggered breaks, masks for teachers and free twice-weekly Covid-19 tests for students and teachers.

Taiwan

  • In Taiwan, students returned to school and were required to go through temperature checks at school entries and to wear face masks. Additionally, Taiwan left school reopening to a more localized decision to account for differing infection rates in the country.

In each of these nations, case and mortality counts continued to decline after reopening schools—a positive indication that school reopenings have been effectively implemented with a variety of guidelines.

Concerns With School Reopening

Although some governments were able to successfully reopen schools, other governments were not as successful. In Jerusalem, over 100 students and 15 staff members were infected after an outbreak occurred at a high school. To alleviate the spread of COVID-19 in schools, the CDC recommends more research on mitigation strategies (i.e. face masks, the use of cohorting, social distancing).

The Council of Chief State School Officers estimated that schools would need between $158.1 billion and $244.6 billion in additional funding to open safely. 

On top of the estimated 158.1 billion to 244.6 billion dollars school are estimated to need to open safely, considering that the United States has recently surpassed five million virus cases, school reopenings could pose a harm to children—especially considering that the response to COVID-19 has not been as effective as other nations that have reopened schools.

Financial Impacts

Stocks

Online educational institutions and virtual schools have seen increases in enrollment as a result of extended school closures. Publicly traded company K12—which currently owns 40% of the market—saw stocks rise 21%. Chegg, a popular service for study materials and tutors, has seen stocks rise 87% in the last year.

Costs to School Districts

The pandemic will cost states $555 billion over fiscal years 2020 to 2022. Seeing as school districts rely on state funding and local tax revenue that is likely to be cut because of rampant unemployment, it is likely that districts will have to resort to laying off employees or lessening the quality of education. This occurred during the Great Recession when the Clark County School District in Nevada laid off upwards of 500 employees in a single year.

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