Education Stimulus

At Ed Money Watch, we discuss and analyze major issues affecting education funding. In our Friday News Roundup, we try to highlight interesting stories that might otherwise get overlooked. These stories emphasize how federal and state policy changes can affect local schools and districts.

Education Budget Higher Overall, but Other Districts See Cuts in Indiana

Budget Shifts in North Carolina

California's Governor's Borrowing Plan Risks Stimulus Funds

Texas Stimulus Application for Education Draws Concerns

As states have been submitting their State Fiscal Stabilization Fund (SFSF) applications, questions have arisen regarding Maintenance of Effort (MOE) provisions. In order to receive SFSF monies, states must maintain fiscal year 2006 spending levels in 2009, 2010, and 2011 for both K-12 and public institutions of higher education, or apply for a waiver. Recent guidance from the Department of Education (ED) provides insight into what the MOE provision actually means for state spending and how states can apply for waivers if necessary.

According to the American Recovery and Reinvestment Act (ARRA) legislation, states must satisfy the MOE for state spending on K-12 and higher education separately. This means that states cannot combine all state education spending into one lump sum that must be maintained in each year. Instead, they must ensure that K-12 and higher education receive at least a minimum level of funding individually.

The American Recovery and Reinvestment Act (ARRA) mandates significant reporting and record-keeping for states and school districts that accept funds. Recent guidance released by the White House's Office of Management and Budget (OMB) details those requirements, including the newly developed online system that will be used to collect the data. While the Department of Education (ED) will soon release further guidance on education-specific stimulus fund reporting, the OMB guidance provides good insight into the effort that will be involved in maintaining public records of stimulus funds and their impact on the economy, including an estimate of jobs created and retained.

The Department of Education recently approved the State Fiscal Stabilization Fund (SFSF) applications of five more states - Alaska, Nebraska, North Dakota, New Mexico, and New Hampshire. These states join the 31 states/territories that have already begun to receive funds. As of June 26th, nearly $6.2 billion in SFSF monies have been disbursed to states. (Previous posts analyzing the applications of the first 31 states/territories can be found here, here, here, here, and here.)

The full table of all 31 states/territories can be access here.

Something funny is happening in Pennsylvania. Last Friday, Pennsylvania Governor Ed Rendell submitted the state's State Fiscal Stabilization Fund (SFSF) application to the U.S. Department of Education. Although the application allocates funds to K-12 education, community colleges, a college of technology, and the state university system, it purposely leaves out the state's four "state-related universities."  These four institutions - Pennsylvania State University, University of Pittsburgh, Temple University, and Lincoln University - expected to receive more than $41.9 million under the state's original SFSF application.

The governor justifies the controversial move claiming that the four institutions are not under the "absolute control of the Commonwealth," meaning that he has no influence over how they allocate funds or set tuition levels. Similarly, the institutions do not receive funds from the state university system. Instead, they are funded via a "non-preferred appropriation," also referred to as "an appropriation to any charitable or educational institution." However, these funds are allocated through the General Fund Budget, just like funding for the state's Thaddeus Stevens College of Technology, which remains in the SFSF application. But this change may violate SFSF guidance which requires states to distribute SFSF monies to K-12 and higher education according to their share of the state's budget deficit.

Last week Education Secretary Duncan announced that $350 million of the $4.35 billion in Race to the Top funds for states will be dedicated to competitive grants to help states improve assessments of student achievement. This announcement was well timed with a forum held by the National Governors Association and the Council of Chief State School Officers (NGA/CCSSO) to introduce their Common Core State Standards Initiative. Combined, these two efforts could mean a significant change in both the expectations students are held to and the way in which their performance is measured.

The NGA/CCSSO Common Core State Standards Initiative represents a major step towards national standards for college readiness and student achievement in math and English-Language Arts. By signing on to the initiative, states are agreeing to participate in the creation of internationally benchmarked standards that they can then choose to adopt within three years. These standards aim to be clearer and more concise than existing state standards and should guarantee that students across the country are learning the same thing and are held to similar standards.

The Department of Education recently approved the State Fiscal Stabilization Fund (SFSF) applications of five more states - Arizona, Colorado, Connecticut, New Jersey, and Ohio - the District of Columbia. These states join the 26 states/territories that have already begun to receive funds. As of June 12th, nearly $3.9 billion in SFSF monies have been disbursed to states. (Previous posts analyzing the applications of the first 26 states/territories can be found here, here, here, and here.)

Two weeks ago, our sister blog Higher Ed Watch published a post uncovering the truth behind Kentucky's terminated teacher loan forgiveness program, "Best in Class." Although the Kentucky Higher Education Student Loan Corporation (KHESLC), the state's nonprofit student loan agency that administered the program, blamed federal subsidy cuts for the program's demise, Higher Ed Watch showed that the agency had engaged in questionable practices to collect these subsidies. Now, many Kentucky teachers enrolled in the program are in a financial bind and many stated their outrage in comments on the blog. One commenter suggested Kentucky use it's State Fiscal Stabilization Fund (SFSF) under the 2009 economic stimulus law to fund the program. Unfortunately, the structure of the SFSF makes this very unlikely.

The following op-ed originally appeared in U.S. News & World Report on Friday, June 12^th and can be accessed here. The full report, Equitable Resources in Low Income Schools: Teacher Equity and the Federal Title I Comparability Requirement, can be read here.

Imagine for a moment that you are driving your child to the hospital. She has a high fever and is suffering from severe abdominal pain. It's unclear what's wrong but she is in definite need of medical attention.

Now imagine that the only doctor on call is a recently graduated medical student. It's her first day on the job and there is no experienced physician or surgeon available for consultation. Are you satisfied with this level of care for your child? I wouldn't be. I'd want to benefit from the knowledge of a more experienced physician. Wouldn't you?

Unfortunately, a similar scenario is playing out in America's urban classrooms with shocking regularity. Teachers with the least experience are educating the most disadvantaged students in the highest poverty, most challenging schools. Low-income kids are being "triaged" not by experienced teachers, but by those with fewer than three years of teaching to go on.

It is no secret that California is in a heap of budget trouble for fiscal years 2009 and 2010, let alone the years after that. Thus far, California has taken its fiscal woes seriously with respect to federal education funding. It submitted and won approval for its State Fiscal Stabilization Fund (SFSF) application in the very first round to ensure a quick flow of federal economic stimulus dollars. But a $2.0 billion dollar accounting mistake has led the state to submit a revision to its application that could enable Governor Schwarzenegger to cut education funding further.

Essentially, the California Department of Finance claims that it overestimated the state's maintenance of effort (MOE) baseline funding (based on the state's fiscal year 2006 spending levels) by $2.0 billion due to complications with "settle up" funds owed to school districts. The MOE determines the minimum amount of funding a state must provide to both K-12 and higher education in 2009 and 2010, enabling states to use SFSF dollars to fill in resulting budget gaps. This oversight allows the state significant flexibility in its state contributions for education funding in 2009 and 2010.