Education Stimulus

Race to the Top and the Status of Education Innovation

Emilie Deans — Thu, 12 Nov 2009 16:45:00 -0500

The U.S. Chamber of Commerce, with Center for American Progress and Rick Hess of the American Enterprise Institute, on Monday released the report "Leaders and Laggards: A State-by-State Report Card on Educational Innovation." The report evaluates states based on several indicators of innovation including school management, finance, and technology and identifies significant shortcomings in nearly all categories. In fact, most states received Cs and Ds with a few exceptions that earned As and Bs in one or two categories. In all, it paints an underwhelming picture of the status of education innovation in the United States public education system.

The National Journal on Wednesday released a brief video about the report and challenges states face in using federal stimulus funds for innovative purposes. The video examines states' use of the State Fiscal Stabilization Fund (SFSF), which was mostly used to save jobs, and draws lessons from that experience to illuminate expectations for the upcoming Race to the Top (RttT) competitive grant program. In the video, Ed Money Watch's Jennifer Cohen commented on what we can expect from states and districts for RttT.

"There are some states who have already said, ‘We're just not going to do the Race to the Top,'" Cohen said, citing states' financial concerns about the program's reform goals. "They've said ‘We can't guarantee that after a couple of years that we'll be able to continue these programs' or - in a lot of cases - whether they even have the capacity to start them to begin with."

We will be watching closely to see how states proceed after the U.S. Department of Education (ED) releases the finalized RttT priorities and application later today. While some states have spent the past few months scrambling to make themselves eligible for the competitive grant program, others have decided not to apply. We're also eager to see how closely ED sticks to its previously identified reform goals, and which states are ultimately awarded the grants.

The full video can be viewed below:

Department of Education Releases Phase 2 State Fiscal Stabilization Fund Application

Jennifer Cohen — Tue, 10 Nov 2009 21:47:00 -0500

Yesterday the Department of Education released the finalized applications for Phase 2 of the State Fiscal Stabilization Fund (SFSF). The SFSF, a major component of the American Recovery and Reinvestment Act (ARRA), provides $48.6 billion in federal funds to states so that they can fill gaps in their education budgets. States that successfully complete the Phase 2 application process will receive the remaining 33 percent of their SFSF monies (unless the state was eligible to receive more than 67 percent during Phase 1). Much like the Phase 1 applications, the Phase 2 applications require state governors to sign off on a series of promises surrounding four areas of reform outlined in the ARRA. The Phase 2 promises center on the collection and public availability of data and information on each state's progress towards the reform areas.

The Phase 2 application that states must submit to the U.S. Department of Education outlines various data or information of interest pertaining to each of the four reform areas and requires governors to state whether they currently collect this data and whether it is currently publically accessible. If a state does not collect the data or make it publically accessible, governors must outline a plan and timeline for collecting the data and making it publically accessibly on the internet by September 30^th, 2011. In some cases, the application also cites existing data and asks each governor to verify whether that data is correct.

The number of indicators required for each reform area varies. The application describes seven indicators pertaining to improving teacher distribution, three indicators pertaining to improving the collection and use of data, and twelve indicators for both improving standards and assessments and supporting struggling schools.

While some of the indicators appear somewhat basic, such as the number of academic courses taught by highly qualified teachers, other indicators require states to collect and make public very complex information. For example, under improving teacher distribution, the application asks whether states currently collect and make available data on the number and percent of principals rated at each performance level under the principal rating system. This data is likely unavailable in the majority of states because principal rating systems are often locally controlled and not reported at the state level.

The application also asks states whether they collect and report the number and percentage of high school graduates who enroll in and complete at least one year's worth of college credit. This data is also unlikely to be available in most states because few have the ability to track students as they graduate high school and enter higher education, let alone whether they complete a year's worth of credit once they get there. No doubt, this data could provide much needed information on the status of college readiness in America. Unfortunately, the applications do not require states to implement the means to collect and publish this data. Instead, it only requires states to develop such means.

With respect to supporting struggling schools, the application asks states whether they collect and report data on the number and identity of low-achieving high schools that are eligible for, but do not receive, federal Title I funds. This data would illuminate the degree to which Title I funds primarily support elementary schools at the expense of struggling high schools in every state. Because Title I distributions to schools are decided at the district, rather than the state, level, this data is unlikely to be currently available in most states.

While the State Fiscal Stabilization Fund Phase 2 application will likely compel many states to collect and publically report important data that are currently unavailable like those described above, it does not require governors to get down to the nitty gritty of how they will actually further the four reform areas. In fact, governors have almost no control over how the State Fiscal Stabilization Funds are used at the local level and must hope that school district administrators try to use the funds in the most reform-focused ways possible. Without specific plans on how each state will improve teacher distribution, data collection and use, standards and assessments, and support for struggling schools it is unclear how states will bring any of these goals to fruition under the State Fiscal Stabilization Fund.

Comparing Department of Education and Recipient Reported Stimulus Data

Jennifer Cohen — Thu, 05 Nov 2009 20:40:00 -0500

When Congress passed the American Recovery and Reinvestment Act (ARRA), they included extensive data reporting requirements so that the public could closely track expenditures. Now that the recipient reported data on expenditures is publically available, tracking education funds should be easy. But as we discussed earlier this week, data reported by school districts and institutions of higher education is lacking in comprehensive information and is difficult to decipher. Unfortunately, state-level recipient reported data does not match previously available Department of Education (ED) reported data for many states, further undermining the value of the data. If the point of the data collection process was to provide accessible data on the progress of the stimulus, this data falls short of that goal.

ARRA recipients reported the total amount of federal stimulus funds they had received as of September 30^th, 2009 for all stimulus programs (except Pell Grants). This data can be compared to data ED reported on the amount of funds disbursed for the same programs. To do this comparison, we aggregated the recipient reported data on total ARRA funds received by state and compared it to ED's reports on funds it disbursed after subtracting any disbursements related to Pell Grants. We found a fair number of discrepancies between the recipient and agency reported data.

Of the 50 states, Puerto Rico, and the District of Columbia, only 27 states or territories reported grant amounts received that were anywhere near the amount that ED reported it had disbursed. The majority of these states reported slightly higher amounts of funds received than the ED agency reported data.

Of the 25 states or territories that reported data that differed from data that ED reported by more than 5 percent, 20 reported receiving higher amounts. For example, the District of Columbia reported that it had received $3.6 million in federal stimulus grants as of September 30^th. However, the ED reported data suggests that only $271,095 had been disbursed to DC as of that date, a discrepancy of 92.5 percent. Similarly, there is a discrepancy of 87.6 percent and 67.6 percent between Alaska's and Delaware's recipient and ED reported data, respectively.

Five states reported lower amounts of federal stimulus funds received than the ED reported data suggests. For example, Kansas reported that it received $42.2 million less than the ED agency reported $203.2 million, a 25.4 percent difference. North Carolina also reported that it had received $391.2 million, $61.9 million less than ED reported it had disbursed.

Without further information on how the states reported the amount they had received, it is impossible to understand why the recipient reported data differs from the agency reported data so greatly. However, these discrepancies call into question the value and validity of the recipient reported data in general. It seems that the states were either ill equipped to collect this data in such a short time span or the school districts and institutions or higher education are doing a poor job of tracking the funds as they come in. Either way, these data suggest that the current recipient reported data system will require significant refinement to become completely useful.

Complete data for all 50 states, Puerto Rico and DC is available here.

Recipient Reported Education Stimulus Data a Challenge to Decipher

Jennifer Cohen — Tue, 03 Nov 2009 21:41:00 -0500

Last Friday, the first round of recipient reported Recovery Act grant and loan data was made available on the Recovery.gov website. Much like the previously released federal contract data, this wave of data lacks the comprehensive information needed to truly determine how the funds are being spent and from what source. The data are both difficult to decipher and include several instances of human error.

While working with the data we discovered several issues that make the data difficult to understand. For example, less than half of all education-related data are tagged with the funding agency name "Department of Education." Other possible funding agencies include "Federal Student Aid," "Impact Aid Programs," "Office of Elementary and Secondary Education," "Office of Higher Education Programs," "Office of Special Education and Rehabilitative Services," "Office of Postsecondary Education," and "Office of Vocational and Adult Education."

Additionally, data that should be education-related are tagged with TAS codes that are not for education programs. As we've discussed before, the Treasury Accounting Symbol (TAS) is used to identify funding sources in each record. Of the 15 TAS codes in the education-related data, only nine of those codes pertain to education programs. The remaining six appear to be the result of erroneously entered codes. These erroneous codes account for 17 education-related records.

While helpful to a certain extent, the TAS code does not always identify specific programs. For example, the TAS code for the State Fiscal Stabilization Fund does not distinguish between Education Stabilization and Government Services Funds. Similarly, the School Improvement TAS code does not distinguish between McKinney Vento Homeless Education and Education Technology grant funds. This further information is included in the qualitative variables in the data which are impossible to categorize systematically, making it difficult to determine exactly what funding sources each record is referring to.

Significant information is missing in the sub recipient data as well (in this case, school districts or institutions of higher education are considered sub recipients). None of the sub recipient data contain information on funding agency or TAS codes, making it impossible to determine the funding sources or programs referenced in any of the sub recipient data. (We hope to receive this data with all the proper information in the near future.)

However, using the prime recipient data, we were able to extrapolate data on jobs created or saved and funds awarded, received, and expended by TAS code and by state. For example, the data we have show that a total of $58.8 billion in education related stimulus funds have been awarded. Of that amount, $14.2 billion has been received and $14.0 billion has been expended. Nearly 398,000 jobs were created or saved by the stimulus.

The amount of received funds that have been expended varies widely by state, as does the number of jobs saved. For example, Alaska has expended only 2.2 percent of its received funds, while Connecticut has expended 188.0 percent of its received funds. It is possible for a state to expend funds before they have received them because some states receive federal funds on a reimbursement basis after the expenditures have been made. It is very likely that Connecticut, and the 16 other states that have expended more than 100 percent of their received funds are on reimbursement plans for the education funds. Wyoming reported that it saved 15 jobs through the education stimulus funds, while California claims to have saved nearly 81,000.

The percent of funds expended also varies widely by program. For example, the data suggests that 108.7 percent of the received School Improvement funds have been expended while only 38.2 percent of the received Impact Aid funds have been expended. More than 100 percent of received Higher Education Program, Special Education, Title I, and School Improvement funds have been expended. The data also suggest that State Fiscal Stabilization Funds were used to save more than 316,000 jobs and special education funds were used to save more than 35,500.

It is clear that stimulus fund recipient reported data, while valuable for understanding how funds effect education and the economy, are being collected in a flawed manner. The data lack comprehensive information on funding sources, and problems with sub recipient data make it impossible to determine what is happening with the funds in school districts and institutions of higher education. Further, human error in data reporting is skewing findings. Hopefully, the Department of Education will work out these kinks as reporting continues. If not, state and local efforts to report this information may be fruitless in the end.

Complete data on recipient reported data by state and by TAS code are available here and here.

ARRA Reporting Soon to Include School-Level State and Local Expenditures

Jennifer Cohen — Tue, 27 Oct 2009 21:17:00 -0400

State education agencies across the country just completed the first round of reporting for the American Recovery and Reinvestment Act (ARRA) programs, an onerous and massive undertaking. Unfortunately, the quarterly reporting process is not likely to get any easier for states from here - on December 1^st, 2009 the Department of Education (ED) will require districts to report local and state expenditures at school-level for the 2008-09 school year, the first time such data has ever been required for any program. Rather than tracking federal funds like the majority of ARRA reporting, the school-level data will show baseline state and local funding at schools in districts that receive federal Title I Part A funds. As a result, this data could help determine whether districts and schools are using federal funds to supplement, rather than supplant, state and local funding.

Draft Department of Education guidance for the new school-level reporting indicates that any districts receiving Title I Part A funds will have to report school by school expenditures for the 2008-09 school year on:

All personnel salaries including instructional and support staff;
Personnel salaries for instructional staff only;
Personnel salaries for teachers only; and
Non-personnel expenditures.

Districts and state education agencies fear that these new requirements will present overwhelming burdens for staff. Given the current state of district accounting systems, this reaction isn't surprising. Few accounting systems in use break out salary expenditures by school and even fewer can calculate non-personnel expenditures by school. In fact, many school districts can only calculate school-level salary expenditures by multiplying the number of full time equivalent employees employed at each school by the average staff salary in the district. Non-personnel expenditures are even more complicated because most districts purchase materials and services on a district-wide basis, rather than school-by-school.

Districts will have to work double-time to produce the data required for the December 1^st reporting, and state agencies will have to implement quality assurance systems to make sure the data are good. At the district level this could include implementing entirely new accounting systems or hiring consultants to mine last year's expenditure data for the information needed. At the state level this likely means putting even more work on the plates of overwhelmed employees. Regardless, the rapidly approaching deadline and lack of finalized guidance from ED has state and local officials nervous.

But the value of this new data cannot be overstated - it's availability has important implications for the reauthorization of the Elementary and Secondary Education Act (currently known as the No Child Left Behind Act). This data could be used to strengthen the "supplement not supplant" provision of Title I by determining baseline funding from state and local sources among Title I and non-Title I schools in Title I districts. While even funding distributions among schools would suggest that federal funds are being used to provide additional services for disadvantaged students, disproportionate distributions can be used to identify districts that use federal funds to replace state and local funds in schools with large disadvantaged populations.

Further, the availability of school-level teacher salary data could be used to strengthen the "comparability" provision of Title I which requires districts to spend equal amounts on instructional staff salaries in Title I and non-Title I schools. Rather than use full time equivalent average salaries or student-teacher ratios to approximate school-level expenditures, as districts are currently allowed to do, districts could use actual spending on teacher salaries in each school to demonstrate comparability.

While reporting school-level expenditures will be an onerous task for school districts and states, it will provide an important source of information on education spending as long as the guidance is published quickly and clearly. Ed Money Watch will continue to follow these new reporting requirements as guidance is finalized.

What the First Round of Recipient Reported Stimulus Data Tells Us: Not Much

Jennifer Cohen — Thu, 22 Oct 2009 19:30:00 -0400

Late last week the federal government released the first round of data on economic stimulus spending through the new website Recovery.gov. This preliminary data, which is reported by stimulus funds recipients, included data only for federal contracts as opposed to grant and loan programs. Very few education contracts have been awarded thus far because the majority of education stimulus funds go directly through local education agencies and institutions of higher education. However, the data does include information on 16 contracts made through Department of Education programs. Unfortunately, this data is not detailed enough to provide comprehensive information on how the funds are being spent and from what source, suggesting that future waves of stimulus recipient reported data may not be as useful as we had hoped.

These 16 contracts amount to more than $27.7 million in stimulus funding distributed by 11 states including Alaska, Kansas, Massachusetts, Minnesota, Nebraska, Oregon, Pennsylvania, Tennessee, Virginia, Washington, and Wisconsin. Thus far, the contracting organizations have received $1.9 million (6.9 percent) of the total funds. According to the data reported, these funds have either saved or created 162 jobs. (A table containing this information is available here.)

The vast majority of the contracted funds - $24 million - will be distributed through the Student Aid Administration stimulus funds in Nebraska, Pennsylvania, Virginia, and Wisconsin. These funds will go to service federal guaranteed loans provided to students in each of those states. Nearly $2.5 million in Title I funds will be distributed to a non-public education entity in Salem, Massachusetts to provide additional services to disadvantaged students in private schools.

The remaining $1.2 million will be distributed to various organizations for higher education, impact aid construction, State Fiscal Stabilization Fund (SFSF), and school improvement uses. In some cases, the data collected on these contracts provides useful and comprehensive information on how the funds will be spent. For example, the Benton County Board of Education in Tennessee will receive $451,600 in SFSF to retain 11 teacher jobs. Fort Leavenworth Unified School District in Kansas will receive $404,595 in Impact Aid Construction Funds to renovate the roof and interior of its gym and auditorium.

In other cases, however, the reported data provides little to no information on the source of the funds or what they will be used for. For example, Siemens Building Technologies will receive three separate grants totaling $116,812 for services they will provide at the Chemekata Community College in Oregon. The Treasury Accounting Symbol attached to these grants indicates that they are for a higher education program supported with economic stimulus funding but does not specify which higher education program. The only other information provided for each grant is a building name or number on the Community College campus.

Data collected on two school improvement program contracts are equally unclear. These two contracts, also with Siemens Building Technologies, from the Lake Washington School District in Washington State total $211,000. While the Treasury Accounting Symbol attached to these grants does not specify which school improvement program these funds are from, the brief descriptions ("Upgrades at 3 schools" and "Support Services Center") imply that they may be for Enhancing Education through Technology Grants (ED Tech). In the absence of further detail, however, we cannot be sure if that is indeed the case.

Without a doubt, the reporting requirements attached to the stimulus funds represent a major shift in how federal agencies track the expenditure of federal funds on the ground. But this first round of data suggests that the information being collected lacks the detail necessary to really track what the funds are being spent on. In many cases, the Treasury Account Symbols used in the data do not provide information on specific funding sources. Similarly, the level of detail in the recipient provided fields often lack detail on actual projects receiving funds. Hopefully these limitations will not completely undermine what could have otherwise been an invaluable tool for evaluating the success of the stimulus.

Educational Effect of the Stimulus, Through Rose-Tinted Glasses

Emilie Deans — Tue, 20 Oct 2009 15:51:00 -0400

The White House Domestic Policy Council (DPC) with the U.S. Department of Education (ED) this week released the report "Educational Impact of the American Recovery and Reinvestment Act." The report paints a rosy picture of the effect of American Recovery and Reinvestment Act (ARRA) funds on state education spending and reform.

ARRA funds have no doubt helped states make ends meet during the economic downturn. But our work (here and here) suggests that, despite a positive impact on education spending, the full effects of ARRA remain to be seen due to the slow rate at which states have disbursed funds to school districts.

Avoiding Shortfalls
According to the report by DPC and ED, the State Fiscal Stabilization Fund (SFSF), a new program created by the ARRA, helped states avoid significant funding cuts for K-12 teachers, principals, and support staff, as well as higher education personnel. As of September 30^th, $35.4 billion of the $48.6 billion SFSF appropriation had been made available to states. According to the report, states were able to restore nearly 100 percent of the 2008-09 budget gaps and a significant portion of the current 2009-10 budget shortfalls using the SFSF funding. The report also claims that the speedy availability of the SFSF allowed states to provide reliable budget numbers to districts for planning purposes.

The table below shows how much of selected state's final education budgets can be attributed to SFSF dollars. It's clear that in these states, the SFSF has significantly aided states in avoiding serious budget shortfalls.

The DPC and ED analysis of states' preliminary quarterly reports suggests that 250,000[1] education jobs, including teachers, administrators, and support staff, were retained or created thanks to ARRA funds. These jobs were created or retained in rural, urban, and suburban areas of the country,[2] saving students from the detrimental effects of increased class sizes.

However, even though nearly 70 percent of ARRA funds have been made available to the states for spending, a very small percentage has actually been disbursed by the states to school districts. While states like California and Indiana had disbursed over 60 percent of their obligated funds by October 9^th, 2009, Alaska, the District of Columbia, and Delaware had each disbursed less than 6 percent of their funds. Thus, it is unlikely that the ARRA funds have had much effect on education spending in these states.

A complete table of obligated versus disbursed ARRA funds by state is available here.

The report also suggests that the speedy availability of the ARRA funds has allowed states to give school districts reliable budget figures with which to create spending plans for the current and upcoming school years. However, according to local news reports, some states and school districts are feeling just the opposite.

Reform
The DPC/ED report also finds ARRA funds are being used by districts for reforms aligned with the Obama Administration's four priorities:

Rigorous college- and career-ready standards and high-quality assessments that are valid and reliable for all students;
Pre-K to college and career data systems that track progress and foster continuous improvement;
Improvements in teacher effectiveness and in the equitable distribution of qualified teachers for all students; and
Intensive support and effective interventions for the lowest-performing schools.

Citing reports from the media and direct accounts from districts, the DPC and ED go on to describe reform efforts in districts across the country that align with one or more of these priorities.

However, the anecdotal nature of these reports highlights an opportunity the Obama Administration missed. While there are, no doubt, serious reform efforts happening in several school districts across the country, there is no system by which they can report their efforts or findings to ED. Many states have implemented reporting requirements of their own, but they are not subject to the transparency requirements of the other federal reporting efforts in place which focus primarily on expenditures. Some states do not require this highly detailed reporting from school districts at all.

Additionally, the Administration has missed an opportunity to help school districts learn from each other as they undertake reform efforts. Given the lack of hard data on what works in school reform, ARRA-funded reform efforts could have produced a wealth of data on which approaches show promise - and which ones do not - an invaluable outcome for ARRA funds.

Conclusion
Federal economic stimulus funds from ARRA have certainly helped states stabilize their education spending. Without these funds, states and school districts would have been forced to make deep cuts to their education budgets. However, the DPC and ED report released this week leaves out vital pieces of information that suggest that much more needs to happen in states and school districts before ARRA can be deemed a sweeping success.

[1] This number is based on initial and preliminary reports. It is subject to change when reports are finalized on October 30, 2009.

[2] Information on where jobs were saved has not been officially submitted to the Department of Education nor certified by the agency because ARRA regulations require only states, not districts, to collect and report data on the use of these federal funds.

Bringing the Research Back to Research-based Evidence

Jennifer Cohen — Thu, 15 Oct 2009 21:48:00 -0400

Since the No Child Left Behind Act (NCLB) first came on the scene in 2001, research-based evidence has become a major focus for federal, state, and local policymakers. Despite this, many Bush and Obama Administration policies were not strongly backed by such evidence. This haphazard attention to research evidence isn't unusual in the policymaking world according to a recent report by the Northwest Regional Education Laboratory (NWREL). In fact, the research-policy gap may be one of the most important factors keeping American academic achievement stagnant and one the Obama Administration will eventually have to come to terms with.

Complaints about this disconnect between research-based evidence and policy most recently came up in the wake of the Race to the Top and Investing in Innovation application guidance released by the U.S. Department of Education. Both documents outlined very clear priorities for reform efforts that were not always backed by concrete, indisputable evidence. Some, such as using student achievement data to evaluate and determine teacher compensation, are based on imperfect and uncertain science. Others, such as relying on charter management organizations to turn around failing schools, lack specificity and allow for significant variation in quality and outcomes.

At first glance, it seems like the Obama Administration identified the Race to the Top and Investing in Innovation priorities based on current fads or popularity with stakeholders close to the Administration rather than research-proven practices. While this may or may not be the case, the NWREL report suggests that many policymakers fall into this trap.

The NWREL report concludes that for many policymakers, research evidence is often superseded by politics, financial concerns, personal experiences, and media pressure. As a result, decisions tend to made based on these influences rather than evidence passed down from universities or other research organizations. At the same time, some policymakers regarded research as limited, untimely, impractical, and inaccessible. They were more likely to use research-based evidence when it was supplied in easy to read, non-technical language and was relevant to their local context.

The research that policymakers do use, according to the report, comes from a variety of sources in addition to traditional research journals and publications. These include conferences, popular publications, intermediary organizations, and peers. This should come as no surprise because traditional research publications tend to be written in complicated and technical language that is difficult to apply to everyday practice. Additionally, the quantitative research often employed today relies on confusing statistical methods that can produce evidence that seems insufficient to policymakers on the ground. In many cases, hard research is simply not as compelling as anecdotal evidence and gut instinct.

When viewing education research through a policymaker's point of view, it becomes clear why research-based evidence has taken a backseat to policy pushed by interest-groups, peers, and personal experiences. Information conveyed through these channels is easier to interpret than evidence gathered through lengthy studies and statistical methods. Stakeholder groups are much more likely to sell their ideas to policymakers than researchers caught in the nitty-gritty of their methods and the pressure to publish frequently. Bridging the gap between researchers and policymakers may be the greatest challenge in education today.

In the end, the Race to the Top and Investing in Innovation priorities may end up being a good thing. Grant recipients will represent the first major federally-funded efforts to implement practices like performance-based pay and charter management takeovers, providing invaluable opportunities to do the research and development that is still lacking in education. We truly can not know whether these interventions work without trying and testing them on some scale and they could end up being great successes.

But at some point, the Obama Administration will have to start putting its money where its mouth is and either back up its priorities with the proper evidence or provide the necessary funding to produce this evidence in the first place.

Much Ado About State Education Spending and the SFSF

Jennifer Cohen — Thu, 08 Oct 2009 20:34:00 -0400

In late September the Department of Education's (ED) Office of Inspector General released a report warning ED officials that many states may be using certain provisions of the State Fiscal Stabilization Fund (SFSF) in a manner that could prevent the realization of many of the education reform ideals Congress outlined in the SFSF. Specifically, the report warns that states could use the maintenance of effort provision (MOE) in the SFSF to significantly lower state education spending as a percentage of total spending. While education reform is an important outcome under the American Recovery and Reinvestment Act (ARRA), the legislation was primarily intended to address economic, not reform, needs. ED and the Obama Administration will eventually have to decide which is more important - keeping states from bankruptcy or supporting education reform.

The SFSF is a $48.6 billion dollar fund created by the ARRA to help states fill education budget gaps in fiscal years 2009, 2010, and 2011. The MOE allows states to lower their state spending to fiscal year 2006 levels and use the SFSF dollars to fill in their budgets up to the higher of fiscal 2008 or 2009 levels. Additionally a MOE waiver allows states to spend less than fiscal year 2006 levels as long as education spending makes up the same percentage of total state spending as in the preceding fiscal year.

The Inspector General's report cites three examples of states that are using the MOE and the waiver option to reduce education spending while maintaining high levels of total state spending. In other words, the states are using funds which would normally go to education for other purposes and using SFSF dollars to make up the difference.

In Connecticut the Governor has used the MOE to lower state spending on education in 2010 to $1.6 billion (the 2006 level), 14.3 percent lower than before the passage of the ARRA. At the same time, total state spending has dropped by only 0.3 percent, indicating that education spending now accounts for a far smaller share of total state spending than previously indicated (from 10.0 percent to 8.6 percent).

Although Pennsylvania has not yet finalized its 2010 budget, talks between the legislature and the Governor suggest that the state may also opt to lower its contribution to education relative to its overall budget. Specifically, the legislature supports a plan that would decrease education funding by $418 million in 2010 and use SFSF to bring up the balance, disproportionately lowering state spending. In contrast, the Governor's plan would use both SFSF funds and the state's rainy day fund to bolster education spending above 2009 levels, a plan favored by ED.

In Massachusetts, the state has chosen to take advantage of the MOE for both K-12 and higher education funding. As a result, the state has lowered its K-12 funding to 2006 levels, a $412 million decrease from previously planned fiscal year 2009 funding.

At the same time, the state has declared that it is unable to fund higher education at 2006 levels in 2010 and has instead opted to utilize the waiver provision and demonstrate that it is maintaining education spending at the same proportion of total spending in 2010. This is possible because the state has already lowered 2009 spending by $412 using the MOE as described above.

All three of these examples cited by the report outline ways states can use the MOE and waiver to manipulate state education spending in their favor and produce greater savings, and there are likely others. This trend will surely undermine any reform efforts currently afoot at the state and local level and work in opposition to the SFSF's reform ideals. But the report may be focusing on the wrong goal of the SFSF. At its essence, the SFSF is about economic stabilization - reform appears to be secondary in both the legislative language and the actual implementation.

As we've discussed before, the tension between economic stimulus and education reform is not specific to the SFSF. It is present in all aspects of ARRA education funding including Title I and IDEA. But in the end the ARRA was a stimulus bill, not a reform bill. Even though many programs funded through the legislation involved some aspect of important and long-overdue reform, the primary goal of the ARRA was to stimulate the economy and prevent states from cutting services in the absence of revenue. This report emphasizes that it's difficult to both reform and stimulate in difficult economic times.

ED and the Obama Administration will likely continue to struggle with reconciling those two goals until they better distill their priorities.

ED Announces Draft Specifics on the Investing in Innovation Fund

Sara Mead — Wed, 07 Oct 2009 20:07:00 -0400

On Tuesday, The Department of Education (ED) released proposed priorities and selection criteria for the Investing in Innovation Fund (i3), a new $650 million pot of funds created by the American Recovery and Reinvestment Act (ARRA) to support the development and expansion of innovative models to improve student achievement and narrow achievement gaps.

Today's announcement confirms that i3 grants would be made in multiple "tiers" based on the presence of evidence of effectiveness for a particular innovation:

Scale-up grants will support innovations with the strongest evidence of effectiveness in scaling up to national, regional, or statewide implementation. These will be the largest i3 grants at as much as $50 million.
Validation grants will support innovations with moderate evidence of effectiveness to conduct further evaluation. Awards could be as much as $30 million.
Development grants will support the development and implementation of new, high-potential, relatively untested practices. These innovations should be supported by research indicating that their approach is promising. These grants will be the smallest grants, up to perhaps $5 million.

The Department also outlined four absolute priorities and four competitive priorities for the award of i3 grants in each of the three tiers. Absolute priorities are requirements that grant applicants absolutely must meet in order to receive funding. Applicants do not have to meet competitive priorities, but those who do so receive additional points or other advantage in the selection process.

The four absolute priorities outlined by the Department are aligned with the four assurances required of states under the ARRA:

Innovations that support effective teachers and school leaders, such as models that recruit, develop, place, reward, and retain effective teachers and leaders, or remove those who are ineffective.
Innovations that improve the use of data, by encouraging and facilitating evaluation, analysis, and use of data by educators, families, and other stakeholders to improve student learning outcomes.
Innovations that complement the implementation of high standards and high-quality assessments, such as strategies that enable high-need students to succeed in academically rigorous courses and programs, increase development and use of formative, interim, and performance-based assessments aligned with rigorous academic standards, and translate standards and assessment information into effective classroom practices.
Innovations that turn around persistently low-performing schools, including both whole-school reforms that comprehensively intervene in or replace persistently low-performing schools and interventions targeting specific reform needs in low-performing schools.

The four competitive priorities include:

Innovations for improving early learning outcomes, including innovations that improve school readiness, and alignment, collaboration, and transitions between 0-3 programs, preschools, kindergarten, and grades kindergarten through third.
Innovations that support college access and success, including innovations that increase college readiness, expectations, and understanding of financial aid and college application process.
Innovations that address the unique learning needs of students with disabilities and English Language Learners.
Innovations that serve schools in rural LEAs.

The notice released Tuesday also proposes eligibility requirements for i3 grantees. Under ARRA, local educational agencies (LEAs) and nonprofits operating in partnership with one or more LEAs or consortia of schools are eligible to apply for i3 grants. The Secretary proposes requiring all applicants to use the funds to serve high-need students.

The Secretary also proposes requiring that all i3 grantees obtain matching funds-equivalent to 20 percent of the federal grant award-from private sector or philanthropic sources. The Secretary could reduce the amount of the required match on a case-by-case basis.

The ARRA language requires i3 applicants to have demonstrated academic success through either adequate yearly progress under the No Child Left Behind Act or significant increases in achievement for all subgroups of students. It's pretty clear how this applies to LEA applicants, but not what it means for nonprofits. Today's announcement clarifies that nonprofit applicants can satisfy these requirements by demonstrating that they have previously helped school districts achieve these goals. Additionally, the proposed requirements allow effective nonprofits to partner with low-performing schools and districts to help them improve student learning and other outcomes. The Secretary is also proposing a requirement that nonprofits provide the names of LEAs and/or schools with which they propose to partner.

Recipients of i3 funds must agree to participate in a rigorous independent evaluation of their effectiveness. ED is also proposing a requirement for grantees to participate in "Communities of Practice"-essentially forums for the collective problem solving and sharing of lessons learned and best practices among i3 grantees. Venture philanthropists who invest in social entrepreneurship-including in education-have found positive outcomes from building networks of grantees and providing opportunities for them to learn from each other. It's good to see ED seeking to emulate that role with i3-essentially the federal government's venture philanthropy effort in education.

Interested parties will have 30 days to offer comments on these proposed priorities, requirements, and selection criteria. ED is particularly seeking comments that better define the criteria it will use to judge the evidence of effectiveness of applicants' models and proposed projects. The i3 program must find balance between the desire to focus on programs with evidence of effectiveness, and the desire to support development and implementation of innovative models, which often have not been fully tested. Hopefully, ED will use the comment period to develop a thoughtful approach to get that balance right.