As public education continues to weather upheaval from the pandemic, labor shortages — from bus drivers and custodians to substitute teachers — are the biggest concern facing many Pennsylvania school districts, according to a new report by state education groups.

But mounting costs for mandated services and expenses remain a challenge — and though billions in federal aid designated for Pennsylvania districts remain unspent, the onetime money is no panacea for persistent and worsening budget gaps, the report released Monday by the Pennsylvania Association of School Business Officials and others said.

The report came as Democratic lawmakers on Monday announced a proposal to boost state education funding by an unprecedented $3.75 billion, drawing from what they described as an expected historic state surplus as well as another pool of federal relief that hasn’t been spent by the state. (Last year, Gov. Tom Wolf and lawmakers approved a $416 million increase for public education.)

State Sen. Vincent Hughes, who represents part of Philadelphia and Montgomery Counties and is the Democratic chair of the Senate Appropriations Committee, called the proposal “a historic increase to meet a historic moment,” given the challenges facing the education system, and said that growing state revenue would make the spending both possible without tax increases and sustainable beyond this year. He said lawmakers had shared their figures with Wolf, who is scheduled to announce his budget plan Feb. 8.

Republican lawmakers, who have majorities in both houses, said Monday they opposed the proposal. Erica Clayton Wright, a spokesperson for Senate Republicans, called the plan “nothing more than a political maneuver to turn a one-time spend into a reoccurring funding stream.”

House Republicans spokesperson Jason Gottesman said the funding sources relied on by Democrats “are needed to ensure we keep pace with year-over-year budgetary growth and will be necessary to balance our state budget and guarantee critical areas of state government do not see a reduction in funding.”

Hughes said the Democratic plan would tap only $2.75 billion of a projected $6 billion to $7 billion surplus — which he said had built on last year’s surplus and was attributable to economic growth and strong tax collections.

While the state’s Independent Fiscal Office has projected operating deficits in the coming years, Hughes disputed aspects of those calculations.

An additional $1 billion would come from unspent state American Rescue Plan money that would be dedicated to remediating “toxic and broken schools.”

The bulk of the funding would go toward general aid to school districts, with $1.1 billion distributed to all 500 districts through the state’s funding formula, and $750 million to the 200 poorest — expanding an effort that began last year and targeted extra aid to 100 districts. The resource gap between Pennsylvania’s wealthiest and poorest districts is the subject of a landmark trial underway in Harrisburg, with plaintiff school districts arguing the state’s funding system is inadequate and inequitable and violates the constitution.

The Democratic plan would also designate $250 million to address school staffing challenges — an issue plaguing districts across Pennsylvania, according to the report from the school business officials association. Also releasing the report were the Pennsylvania Association of School Administrators and the Pennsylvania Association of Rural and Small Schools.

The report drew from surveys of different groups of administrators — school superintendents, chief financial officers, and operational specialists — and all three identified labor as the biggest issue. Ongoing challenges recruiting teachers combined with increased competition with the private sector for a range of positions are making it difficult to find and retain staff, the report said — also noting a mass retirement of baby boomers during the pandemic and women leaving the workforce.

In some cases, the report said, districts have hired staff at higher rates using federal relief money — with the caveat that the positions are only guaranteed until the aid runs out in 2024.

The report found that of the more than $6 billion in federal aid designated for Pennsylvania school districts, only $1.1 billion has been budgeted. Districts have to submit plans to the state for spending the money and receive it once approved.

Of the money spent so far, the top uses have been buying technology for students and implementing programs targeting learning loss — both identified by 92% of superintendents who responded to the survey, the report said. Next was maintaining or increasing staffing — 76% — followed by providing mental health services to students at 74%.

While some of the still-unspent federal money could be used by districts to fill vacancies, “most are not going to do that,” given the temporary nature of the funding, said Mark DiRocco, executive director of the school administrators’ association.

Meanwhile, the underlying gap between increases in state aid and mandated costs to districts continues to grow, the report said. After labor shortages, growth in charter school tuition costs — paid by districts based on the number of students enrolled in charters — was identified by superintendents and school business officials as their next biggest challenge. The report predicted districts would send $3 billion to charters next school year, up from $1.27 billion a decade ago — an increase it called “unsustainable.”

Other growing costs include special education services and payments into the state pension system. School district costs in those areas and charter schools grew by more than $6.5 billion over the last decade, the report said, while state aid reimbursing districts for those costs increased by just $2.8 billion.

If the state doesn’t make long-term changes to address those costs, “school districts’ reliance on local taxes will increase moving forward,” the report said.