As a result of the COVID-19 pandemic, most schools closed in March 2020, with many beginning the transition to online learning. School districts faced many challenges in this new environment. Some school districts cut back on the introduction of new material and some school districts modified their school calendar. Given these closures, BEA examined the standard input-cost estimation methodologies (NIPA Handbook Chapter-9PDF) to determine if they adequately measured real state and local education services during this period.
Based on this analysis, four areas were adjusted beginning with the first quarter of 2020:
- Real compensation of primary and secondary education employees was adjusted down to reflect a reduction in instruction time during the school closures. School employees continued to be paid and largely continued to work during the school closures, but in the case of teachers, initially their work shifted to planning and preparing for the remote learning environment introduced to replace classroom instruction. BEA does not typically adjust compensation for reasons other than changes in employment; however, given that many students missed significant instruction time during the school closures and that compensation accounts for about 75 percent of the cost of producing education services, BEA adjusted real compensation down. This adjustment was based on information on state-by-state closure dates, enrollment, and, where it was available, information about the start of remote learning programs and school districts that modified their school calendar. Current-dollar compensation was not adjusted, so this adjustment results in an increase in the price index for compensation.
- Consumption expenditures for nondurable goods were adjusted down to reflect the cutback in bus transportation and the related need for motor vehicle fuel. The adjustment was made using information about the number of school days missed in March 2020 and subsequent periods.
- Consumption expenditures for nondurable goods and sales to other sectors were adjusted down by offsetting amounts to reflect lower purchases of food as a result of the cutback in school cafeteria meals. The adjustment to sales to other sectors equals the adjustment for public-sector school meals in BEA's estimates of personal consumption expenditures, which was based on the number of school days missed in March and subsequent periods. The purchases of intermediate goods and services used to provide free lunches and breakfasts were not reduced as these programs largely continued during the closures.
- Consumption expenditures for intermediate goods and services and sales to other sectors were adjusted down by offsetting amounts to reflect the reduction in meals and dormitory services following the closure of public college and university campuses. The adjustment to sales to other sectors is based on BEA's estimates of personal consumption expenditures for these categories, which was based on information about private and public campus closures.