Education

Friday News Roundup: Week of November 16-20

Emilie Deans — Fri, 20 Nov 2009 17:26:00 -0500

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.

Alabama Considers Charter Schools in Pursuit of Federal Race to the Top Funds

New York Plans to Reform Teacher Preparation Efforts

Missouri Freezes Higher Education Tuition

Florida Will Request $1 Billion in Federal Race to the Top Funds

Alabama Considers Charter Schools in Pursuit of Federal Race to the Top Funds
As Alabama grapples with a recession that continues to eat away at its education budget, the state is contemplating charter school legislation to increase the state's chances of receiving a slice of the federal Race to the Top (RttT) pie. In the past, Democratic state legislators, backed by the Alabama Education Association, have opposed charter schools. State Representative Max Gipson, a Republican, introduced charter school legislation a few years ago, but the bill never made it out of committee after opponents accused him of trying to re-segregate schools and take money away from traditional public schools. However, with a potential $175 million in federal RttT funds for Alabama, many legislators are re-thinking their stances on charter schools. By enacting charter school legislation, they hope to improve their chances of receiving a large chunk of the competitively awarded RttT funds, which will help them finance K-12 schools overall. More here...

New York Plans to Reform Teacher Preparation Efforts
The New York state Board of Regents this week approved a plan to change the way the state prepares new teachers. The reforms would place more emphasis on classroom experience and streamline the process for professionals in other fields that want to become teachers. Under the new plan, cultural institutions, research centers, and nonprofits would be allowed to certify teachers - a job currently dominated by universities. Bonuses of up to $30,000 would be awarded to teachers in high-demand fields who agree to teach in high-needs schools. The Board of Regents plans to include colleges, teachers unions, and community groups in the planning and implementation of the new plan. More here...

Missouri Freezes Higher Education Tuition
Missouri Governor Jay Nixon this week announced that the state's public four-year colleges and universities will freeze in-state tuition for the second year in a row. The agreement must still be passed by Missouri lawmakers and college and university governing boards, which appears likely. Lawmakers and higher education officials seem to agree that keeping higher education affordable is a priority. The freeze came in response to a decade of annual tuition hikes - averaging 7.5 percent - in Missouri. Though Governor Nixon and higher education officials don't yet know where the 5.2 percent in spending cuts to higher education will come from, they agree that improvements must continue to be made even while cutting costs. Ultimately, Governor Nixon says, keeping higher education affordable will be one step to turning the economy around. More here...

Florida Will Request $1 Billion in Federal Race to the Top Funds
Florida Education Commissioner Eric Smith this week announced that the state will likely apply for $1 billion in federal Race to the Top (RttT) funds - nearly one quarter of the overall budget for the competitive grant program. According to guidelines released by the U.S. Department of Education, Florida and two other states are eligible to receive between $350 million and $700 million if they are awarded grants. But states may apply for higher amounts if they believe their proposals warrant it. Union and school district officials are working together on plans to align Florida's system with each of the four reform areas given priority in RttT awards. The reforms will likely include proposing teacher merit pay systems, getting involved in a consortium with other states on student achievement standards and testing, developing more rigorous teacher certification exams, and establishing school reforms like extended school days or year, or expanded full-day pre-K. Because of these plans and existing reforms, the state appears to be well positioned to win a large chunk of federal RttT funds. More here...

Briefly Noted

Kansas regents hold meeting to outline higher education budget issues.

Friday News Roundup: Week of November 9-13

Emilie Deans — Fri, 13 Nov 2009 15:57:00 -0500

New Mexico Lawmaker Proposes Budget Fix Using Endowment Fund

Colorado Cuts to Education Bigger than Expected

More Cuts for South Carolina Schools

New Mexico Lawmaker Proposes Budget Fix Using Endowment Fund
New Mexico State Senate Majority Leader Michael Sanchez this week laid out a proposal to tap into the state's $9 billion Land Grant Permanent Fund to help balance the state's budget. The fund makes yearly payments to school districts, universities, hospitals, and other public institutions. Sanchez's plan would take $2 billion from the fund to pay for these and other critical government operations and minimize tax hikes over the coming years. Sanchez also seeks to bolster state finances for projected state deficits for next year and potentially slow economic growth over the next few years. The state already needs $400 million to fill a hole in the fiscal year 2011 budget. Opponents to the proposal claim that removing the money will slow the fund's growth and result in smaller payments to schools and the other beneficiaries later. If Sanchez's proposal passes the state legislature, voters will have to approve it in November because it includes a change to the state's constitution. More here...

Colorado Cuts to Education Bigger than Expected
Cuts to spending on K-12 education in Colorado for fiscal year 2011 will total 6.1 percent despite Governor Bill Ritter's claims that it is only 4.6 percent. According to a calculation by the Colorado Department of Education, cuts to spending on education in the fiscal year 2011 budget total $374.1 million, or 6.1 percent of what schools would have normally expected for that fiscal year. Governor Ritter's calculation, they say, made cuts appear smaller because it was done using the current fiscal year 2010 budget as a baseline. The cuts to spending on schools will likely mean increasing class sizes, teacher and staff layoffs, salary cuts or freezes, and possible service reductions. However, categorical funding for transportation, special education, and some other programs will not be affected by the proposed cuts. Funding for full-day kindergarten programs is also expected to hold steady. For higher education, Governor Ritter's plan includes a modest $1.98 million growth in spending despite a projected decline in support from federal stimulus funds. The spending growth would come from a proposed 9 percent tuition increase. More here...

More Cuts for South Carolina Schools
The South Carolina Board of Economic Advisors this week released a reduced estimate of state revenue, citing concerns over the nearly half million people in the state who are unemployed. Given this new estimate, Governor Mark Sanford told the state's K-12 schools, colleges, and prisons to prepare to cut another $120 million from their fiscal year 2010 budgets. This comes on top of a $328 million cut from the current budget to these services over the summer. It is not yet clear where exactly cuts will come from at the state level, so school districts are waiting for more information before they make any final decisions on where to trim their budgets. More here...

Briefly Noted

Alabama Board of Education endorses proposed "plan of survival" for K-12 schools.
Illinois budget cuts squeeze the state's universities.

Friday News Roundup: Week of November 2-6

Emilie Deans — Fri, 06 Nov 2009 17:43:00 -0500

As Enrollment Grows in Utah, Budget Shrinks

Arizona Budget Shortfall Forces Cuts

Pennsylvania Universities Anxiously Await Decision on Gambling Taxes

Nebraska Legislators Propose Cuts to School Aid

Kentucky Higher Education Council to Vote on Budget Plan

As Enrollment Grows in Utah, Budget Shrinks
Utah's State Office of Education this week released data showing that enrollment in the state's public K-12 schools increased by 12,260 students since last fall. This growth came at the same time the state's education budget decreased by 5.2 percent from the previous year, thanks to the economic downturn. These numbers mean that schools will have to cut services for students, and per pupil expenditures will go down. And the forecast for next year doesn't look much better - the State Office of Education predicts a similar increase in K-12 enrollment with no increase to the budget. The state may need to dip into its rainy day fund just to maintain spending levels from the current fiscal year. More here...

Arizona Budget Shortfall Forces Cuts
Arizona Governor Jan Brewer is planning a mid-November special legislative session to address the state's $2 billion budget shortfall. Governor Brewer has been working with House and Senate leaders to come up with a package of spending cuts to make up for a $500 million revenue shortfall. Most of the cuts will reflect those proposed in a package previously vetoed by Governor Brewer, including much of the annual inflation adjustment for K-12 public schools and funding for purchases of computers, textbooks, and other equipment. Additional cuts will be made during a second special legislative session and during the 2010 regular session, which begins in January. More here...

Pennsylvania Universities Anxiously Await Decision on Gambling Taxes
Lawmakers in Pennsylvania have reached a stalemate over details of a bill to legalize and tax gambling table games, like poker, at the state's existing slot-machine casinos. Last month's budget agreement between Governor Ed Rendell and state legislators assumed passage of the bill to raise $200 million in tax revenues. This revenue would contribute to university funding, without which the universities could have to raise tuition for the 2010 spring semester. The universities are pressing the legislature to ensure that they will receive the full amount they've been promised as tuition bills will go out on November 13^th. More here...

Nebraska Legislators Propose School Aid Cut
In a special budget cutting session of the Nebraska state legislature, the State Senate Education Committee proposed cuts totaling about $47 million to schools for fiscal year 2011. About half of the savings would come from limiting to 1 percent the annual funding increase for most school districts. An additional $24 million in cuts would be made by reducing state aid to school districts based on the number of teachers with graduate degrees. The Education Committee's proposal—one of seven introduced on the first day of the special budget-cutting session—came as part of Governor Dave Heineman's plan to cut about $336 million from the state's current two-year budget plan. More here...

Kentucky Higher Education Council to Vote on Budget Plan
The Kentucky Council on Postsecondary Education, the state's coordinating agency for higher education, was scheduled to vote this week on a budget recommendation calling for a $2.1 billion increase in state spending on higher education in the 2011-2012 two-year budget. The increase includes $70 million in each fiscal year to replace federal economic stimulus funding included in the current fiscal year 2010 budget. It also includes a request for a $50 million fund for higher education institutions to promote student retention and graduation rates. This request comes as state officials brace for a difficult budget session - revenue to the state's General Fund is expected to fall about $1 billion short of the $9 billion required for the current fiscal year. Governor Steve Beshear told higher education officials that the upcoming budget will be difficult, but that access to higher education for all Kentuckians is a priority. More here...

Friday News Roundup: Week of October 26-30

Ed Policy — Fri, 30 Oct 2009 19:31:00 -0400

Montana Education Officials Doubtful About Race to the Top Chances

Colorado Governor Unveils Plan to Close Budget Shortfalls

School Districts in Oklahoma Face Steep Cuts as Funding Streams Dry Up

New York Governor Proposes New Cuts as Deficit Climbs

Massachusetts Governor Makes New Cuts, Spares Education

Montana Education Officials Doubtful About Race to the Top Chances
Education officials in Montana are critical of the priorities laid out by the Obama administration for the upcoming Race to the Top (RttT) competitive grants, a new program created by the American Recovery and Reinvestment Act. Montana's Superintendent of Schools, Denise Juneau, called RttT's approach a one-size-fits-all prescription for states. While she agrees with the administration's priorities of hiring quality teachers, turning around struggling schools, and using data to inform decisions, Juneau claims that fulfilling the requirements of RttT would violate the state's constitution. Instead of making changes to state law to better accommodate charter schools and alter teacher and principal evaluations to align with RttT's priorities, Juneau and other state education officials have proposed that U.S. Education Secretary Arne Duncan change the rules of RttT. They claim that the current priorities, especially the charter school elements, don't make sense in rural states where school districts are already small. More here...

Colorado Governor Unveils Plan to Close Budget Shortfalls
Colorado Governor Bill Ritter this week unveiled a plan to close a $286 million budget shortfall, the latest in a series of shortfalls caused by the economic recession. Governor Ritter's plan would cut $145 million in funding for public colleges and universities, $37 million in grants to counties that produce oil, gas, and minerals, and $16 million in delayed Medicaid reimbursements. It also would save $27 million by adding four additional furlough days for state workers. The cuts to higher education will be replaced with funds from the American Recovery and Reinvestment Act. While the one-time federal stimulus funds will save the state from serious cuts now, critics of Governor Ritter's plan say he is putting off necessary decisions about how to reduce the state budget in the future. Colorado State Senate Minority Leader Josh Penry proposed closing Governor Ritter's energy office, and has mentioned other cuts that could lead to long-term budget trimming. Governor Ritter called these proposals "a $100,000 solution to a $100 million problem." More here...

School Districts in Oklahoma Face Steep Cuts as Funding Streams Dry Up
In Oklahoma, school districts are bracing for deep cuts as the state's revenue shortfalls lead funding streams to dry up. The state account that usually contributes more than 25 percent of the state's education funds is likely to be completely empty by the end of October, leaving the state to rely solely on tax collections for payments to districts starting in November. This comes on top of a 5 percent budget cut for the current fiscal year across all state agencies. The state is encouraging districts to try to make cuts without removing teachers from classrooms, but with such great budget reductions, officials recognize this is a tall order. School districts also may be consolidated or closed to save money. More here...

New York Governor Proposes New Cuts as Deficit Climbs
New York's state budget deficit has climbed $1.1 billion since July to $3.2 billion according to a report released this week. The state Budget Division also predicts that next year's budget will total $6.8 billion, a $2.2 billion increase from the July estimate. With this in mind, Governor David Patterson proposed wiping out $5 billion in spending over the next two years. While most state legislators supported many of the cuts, State Senate leaders opposed cuts to education and Medicaid. Governor Patterson has ordered a special session of the state legislature starting on November 10^th to address the increasing shortfall. More here...

Massachusetts Governor Makes New Cuts, Spares Education
Massachusetts Governor Deval Patrick this week cut $277 million from the state's fiscal year 2009 budget to close a growing gap between revenues and spending. This included budget cuts to state agencies, nine-day furloughs for 4,000 state employees, and layoffs for 2,000 state workers. While K-12 school aid was spared in this round of cuts, school districts may still feel the pinch as regional school bus transportation aid and state reimbursements for special education schools were cut. Charter schools will also feel the blow of a $5 million cut in reimbursements. Governor Patrick was able to use federal stimulus dollars to avoid cuts to state colleges and universities. More here...

Briefly Noted

Michigan budget nears completion, but contentious items still could face line-item vetoes.
Districts in Minnesota await outcome of Nov. 3^rd vote on school levies.

Friday News Roundup: Week of October 19-23

Emilie Deans — Fri, 23 Oct 2009 19:02:00 -0400

Michigan Governor Signs Education Budget, Vetoes Some School Funding

Education Not Spared in Iowa Governor's Budget Cuts

Lawsuits Filed Over Hawaii Teacher Furloughs

Massachusetts Disputes Pew Report on Early Education Spending

Mississippi Contemplates School District Consolidations

Michigan Governor Signs Education Budget, Vetoes Some School Funding
This week, Michigan Governor Jennifer Granholm signed the state's education budget for fiscal year 2010, but not without a line-item veto of $51 million in supplemental payments for the state's 39 largest and highest spending school districts. Governor Granholm said she was forced to veto the spending because the legislature did not provide enough revenue to pay for the budget. Michigan Senate Republicans say that there was sufficient funding for the payments, and that the Governor is using it as an excuse to push for higher taxes. Separately, The State Board of Education has moved its November 10meeting up to October 26 to address the 2.9 percent overall cut in the education budget for the 2010 fiscal year. More here and here...

Education Not Spared in Iowa Governor's Budget Cuts
Iowa Governor Chet Culver this week announced a 10 percent across-the-board budget cut for state agencies. In addition to laying off 791 government employees and leaving 529 positions vacant, departments will have to make cuts to programs and services. Education is no exception. As a result, fewer students will be able to attend preschool for free, college financial aid will be cut, and school lunch prices will go up. Governor Culver wants to force school districts to spend their reserves before raising property taxes to cover state aid cuts. However, many school districts won't have enough money in their reserves to cover the cuts. Some of these districts may resort to cutting programs rather than raising taxes. Community colleges are also seeing cuts in state aid, forcing them to cut services, layoff staff, or hike tuition. Governor Culver has warned that more cuts are likely next year. More here...

Lawsuits Filed Over Hawaii Teacher Furloughs
Two separate groups in Hawaii have filed lawsuits over teacher furloughs approved by the state Department of Education and the Hawaii State Teachers Association. The groups claim that the agreement, which requires 17 furlough days in the current school year and the 2010-11 school year, would violate Hawaii's obligation to provide 180 days of schooling to resident children, five days a week. One lawsuit, a class-action case representing all Hawaii public school students, claims that the furloughs disproportionately affect children at certain income levels and of certain racial and ethnic groups. The second lawsuit, filed on behalf of the state's special education students, claims that the furloughs would cause prohibited changes to special education. State Attorney General Mark Bennett believes the suits are without merit, and will fight them. More here...

Massachusetts Disputes Pew Report on Early Education Spending
According to a report released this week by the Pew Center on the States (Pew), Massachusetts is one of 10 states that made cuts to its prekindergarten spending this year. Pew reported that the state cut aid for its universal prekindergarten program by $2.9 million, the federal Head Start program by $1 million, and scholarships, mental health services, and other "quality improvements" by $5.5 million - a combined 22 percent of the pre-kindergarten budget. State officials claim that the report does not accurately measure the state's investments in prekindergarten. They note that the Pew report focuses on three areas and doesn't take into account the overall budget of the Department of Early Education and Care, which fell only by 3.4 percent. Officials at a Boston advocacy group noted that 70 percent of the state's children aged 3 to 5 are in some form of preschool, and that the state is in the process of improving the quality of the available programs. More here...

Mississippi Contemplates School District Consolidations
Mississippi State Representative George Flaggs this week questioned whether the state can afford its 152 school districts and eight public universities. He suggested that the state consider consolidating school districts in order to save money. Interim state superintendent John Jordan said that, while he understands that these are difficult economic times, he hopes lawmakers will study the impact of consolidations before moving forward. Several school districts in the state have performed voluntary consolidations, providing an opportunity to examine the academic and financial impact of such efforts. Because the state's continuing drop in revenue forced Governor Haley Barbour to slash $172 million from the state budget last month, lawmakers are considering options, like consolidation, that they wouldn't have put on the table previously. More cuts are expected as Mississippi's financial situation becomes clear. More here...

Briefly Noted

Kansas faces $70 million education budget shortfall.
Over $115 million transferred to North Carolina Education Fund from lottery.

Friday News Roundup: Week of October 12-16

Emilie Deans — Fri, 16 Oct 2009 17:20:00 -0400

Study Finds that California Furloughs Don't Save As Much As Expected

Big Ten Schools Suffer from State Budget Cuts

Louisiana State Board of Elementary and Secondary Education Passes Tentative Budget

Pennsylvania Finalizes Budget, School Districts Adjust

Study Finds that California Furloughs Don't Save As Much As Expected
According to a study by the Center for Labor Research and Education at the University of California at Berkeley, California's three-day-per-month furloughs for state workers aren't saving as much as expected. The program was expected to save the state $1.3 billion this year, but the study predicts that the savings will be a little more than half that. The study also notes that the savings will decline as the real costs of furloughs come to light over the next few years. According to Ken Jacobs, chairman of the group that conducted the study, the state would actually save more money over the long term by imposing only one furlough day per month. More here...

Big Ten Schools Suffer from State Budget Cuts
Universities in the Big Ten conference are scrambling to make cuts to their budgets as state aid dwindles. While the University of Michigan and Ohio State University have managed to avoid cuts this year, the other schools in the conference are facing cuts ranging from about 1 percent to more than 5 percent for the current fiscal year - and more cuts loom for next year. Some schools, like Penn State and the University of Illinois, are depending on state aid to keep budget cuts low for this year. At Perdue, where 5.3 percent of the budget will be cut in the current fiscal year, faculty will not receive merit salary increases, among other cuts. Other schools are halting construction projects and shutting down during breaks from classes. Many universities still have not determined all the cuts necessary to avoid shortfalls. More here...

Louisiana State Board of Elementary and Secondary Education Approves Tentative Budget
The Louisiana State Board of Elementary and Secondary Education (BESE) this week approved a $3.276 billion preliminary education budget for fiscal year 2011. State regulations require agencies to submit preliminary budgets by November 5^th so that the governor's office can begin assembling an executive budget. Changes can be made to the budget later in the process, and many Louisiana school district superintendents believe changes are necessary. The approved K-12 budget recommendation includes a 2.75 percent increase, a growth factor that is normally included in the school funding formula, but which state superintendents waived in the current fiscal year to help the state avoid deficit spending. But now superintendents believe they will need more than the 2.75 percent, or $62.25 million, increase to keep schools running, especially given decreasing local tax revenues and significant increases in retirement and health care benefits for teachers and other school employees. The BESE will be able to make changes to its recommendations when firmer financial data are available before the final budget goes before the state legislature. More here...

Pennsylvania Finalizes Budget, School Districts Adjust
After a standoff between Governor Ed Rendell and the state legislature over spending priorities, Pennsylvania finalized its state spending plan on October 9 - 101 days after the deadline. School districts, on the other hand, had to approve their 2009-10 budgets on time, over three months ago. As a result of the state's delay, district leaders had to estimate state contributions to K-12 education. While some districts planned cautiously, others overestimated their chunk of the $27.8 billion education budget, and must find ways to scale back. Thanks to federal stimulus dollars, however, the state's education budget actually increased by $300 million, or about 5.7 percent, to provide increased subsidies and grants for schools. Despite the influx in federal money, some programs didn't receive increases, while others were eliminated completely. The state will freeze spending on special education, Pre-K Counts, Head Start, and Accountability Block Grants at the 2008-09 level, while Classrooms for the Future, Teen Pregnancy and Parenthood, and Safe and Alternative Schools programs will be eliminated. More here...

Briefly Noted

Hawaii furloughs won't close gaps - more layoffs may loom.
Florida governor warns agencies to brace for cuts as Education Department requests more.

"Investing in those who invest in themselves" First-of-its-kind asset building pilot launched in Nigeria

Shweta Banerjee — Wed, 14 Oct 2009 15:27:00 -0400

By Jamie Zimmerman & Shweta Banerjee

Notoriously resource-rich, poverty-stricken and conflict-prone, the Niger Delta region has always been viewed among the unlikeliest places for reform, particularly one that "spreads the wealth." But this week we are proud to announce that the Bayelsa State Government (BYSG) located in the delta region of Nigeria will launch of a policy pilot that provides matched savings accounts to children and youth throughout the state's eight districts. This initiative is not only the first government-supported anti-poverty intervention in the Niger Delta region, but the first state-wide CDA policy pilot in the developing world.

Child development accounts (CDAs) have been successfully launched as a policy in developed countries such as United Kingdom and Singapore but there is a need for adapting this approach to developing country contexts. Development practitioners in Africa are moving away from traditional aid-based models and experimenting with new bottom-up approaches that directly invest in creating assets and wealth and improving education for the poor.

Columbia University and New America's Global Assets Project, who worked together to design the pilot, received a grant from the BYSG to assist in the launch of the pilot and test the impact of the accounts. The pilot will be implemented over a period of three years and introduce CDAs for at least 1000 school children throughout the 24 constituencies of the 8 districts of the Bayelsa State. The accounts provide a means and an incentive to stay in school, save and invest for their futures and also have positive changes in their attitudes towards themselves and their choices. By opening accounts for and matching the savings of low-income children and youth, the BYSG hopes to break the cycles of poverty, conflict and distrust of government by "investing in those who invest in themselves."

Despite being, or perhaps because of being, the most resource-rich region of Nigeria, the Bayelsa State in the Niger Delta faces extreme social and economic challenges, including high poverty and militancy rates. Youth lack access to adequate skills training or employment opportunities and increasingly become disenfranchised and unsettled, with little optimism about their future.

This policy pilot, intended to address these challenges, will be the first anti-poverty intervention of its kind in the conflict-prone region. If this yields intended results, lessons could be incorporated to implement similar programs for children in need across the world, including places such as Afghanistan where there is a need to make aid reach the poor.

Columbia University is inviting applications for the position of a consultant who will be based in Yenegoa, Nigeria, for six months to start-up this project. Click here for a more information.

This project is part of an overall strategy to build assets for the poor in Africa. It has been well documented as to why traditional aid and development assistance - from both small and large actors - have fallen short in alleviating the extreme poverty that persists in the world's poorest region. A forthcoming report by Fred Ssewamala, Elizabeth Sperber and Jamie M Zimmerman examines a bottom-up, asset-based approach that draws on findings from latest development and research projects in the region. This report is slated to be published by the Global Assets Project by November 2009.

Jamie Zimmerman is the Deputy Director for the Global Assets Project.
Shweta Banerjee is a consultant with the Global Assets Project. Banerjee@newamerica.net

Friday News Roundup: Week of September 28-October 2

Emilie Deans — Fri, 02 Oct 2009 19:37:00 -0400

Michigan Governor to Veto Budget Cuts

States Are Not Using Stimulus to Boost Aid for Schools

Education Professionals Ask Illinois to Fund Programs

Alabama Budget Cuts Loom as Tax Revenues Shrink

Michigan Governor to Veto Budget Cuts
Michigan Governor Jennifer Granholm vowed this week to veto a budget approved by the state legislature that includes deep cuts. The budget deal brokered in the state legislature after a two hour government shutdown would cut nearly $1.3 billion from the state's earlier agreed upon fiscal year 2010 budget. The cuts include a 2.9 percent reduction in the K-12 budget and deep cuts to Michigan's higher education Promise Grants for low income students. Alternatively, Governor Granholm has proposed cutting $2.2 billion in spending from the budget and increasing taxes by $1.1 billion. State Republicans insist they will not approve any tax increases. The current budget crunch is only one indicator of the state's flawed tax system, which has led to frequent budget shortfalls and two state government shutdowns in three years. State lawmakers have introduced bills in both Houses which would require members to forfeit their pay each day the budget is delayed. The state has 30 days to come to an agreement and finalize a budget deal. More here...

States Are Not Using Stimulus to Boost Aid for Schools
A U.S. Department of Education official says states are not using federal economic stimulus money as Congress and the Obama administration intended. Instead of using the additional funds to supplement state aid to schools in accordance with federal guidance, some states are simply using the money to plug budget holes. The inspector general for the Department of Education singled out Pennsylvania, Massachusetts, and Connecticut as states that have cut their investments in education and replaced them with stimulus money. Pennsylvania has yet to finalize a state budget, leaving the state's education funding up in the air. In Massachusetts, officials argue that they have complied with the guidance given them by federal officials. These officials argue that federal rules and regulations only require that states use economic stimulus funds under the State Fiscal Stabilization Fund to maintain education funding at 2006 levels, which allowed many states to make significant cuts to education. More here...

Education Professionals Ask Illinois to Fund Programs
Members of the Illinois State Board of Education's (ISBE) Finance and Audit Committee are seeking advice through a series of hearings on what the fiscal year 2011 budget should include. The participants requested that the state board provide funding for programs and grants that benefit students and schools. This year, many education programs have been cut or eliminated, and ISBE must make recommendations to the state for what to fund next year. The experts who testified asked the ISBE to restore programs for textbooks, agriculture, consumer education, career and technical education, early childhood, and truancy prevention. More here...

Alabama Budget Cuts Loom as Tax Revenues Shrink
Appropriations for Alabama's fiscal year 2010 general and education trust funds, which became law this week, are already subject to cuts as the state's revenue shrinks more than was projected earlier. Alabama state law requires Governor Bob Riley to declare proration - across-the-board-cuts - if the state's budgeted spending outpaces revenue. Cuts to the $6.24 billion education trust fund budget could mean teacher layoffs and salary freezes. School districts may also have to turn to shrinking reserves or loans to survive the school year. Cuts won't be finalized until state officials finish calculating the state's tax receipts next week. More here...

Briefly Noted

Iowa poised to bend rigid teacher rules.

News Flash: Student Loan Industry Denies Subsidies Exist

Jason Delisle — Thu, 01 Oct 2009 16:34:00 -0400

In the coming weeks, the Senate is expected to begin consideration of a companion bill to the Student Aid and Fiscal Responsibility Act adopted by the House of Representatives last month. In an effort to derail the legislation, which would expand the Direct Loan program and eliminate the Federal Family Education Loan program (FFEL), the student loan industry has been making some pretty outrageous arguments to Senators and staff. Consider our favorite example below from loan industry talking points -- which Higher Ed Watch has obtained -- that were provided to Senate staff.

MYTH: Forcing all students to borrow Direct Loans will save billions over the next 10 years by eliminating huge subsidies being paid to private lenders.

FACT: Lenders are not being paid subsidies. This year, lenders will pay the government $9 billion in interest that is passed on from borrowers and in fees. (Source: Budget Appendix, page 388)

It is easy to understand why anyone would be confused by such a statement. Why would private lenders care so much about the proposed elimination of FFEL if they weren't getting any government subsidies under the program? If that were the case, lenders would stand to lose nothing when the program is eliminated -- they would be able to continue to make loans to students at the same FFEL borrower terms as before. Nothing in law would prevent them from doing so.

The claim, of course, is absurd. Without a government subsidy, private lenders would not make loans with as favorable borrower terms as those under FFEL. The loans would be unprofitable.

Lenders do indeed receive government subsidies. They receive two separate subsidies that transfer virtually all of the risk and costs of making a FFEL loan to the federal government. The first subsidy is a default guarantee, which means that if a borrower does not repay his or her loan, the government reimburses the lender for 97 percent of the outstanding loan balance. It is a subsidy in the form of insurance.

The other subsidy is less straightforward, and not surprisingly, is the subject of the misleading talking point above. This subsidy, called a Special Allowance Payment, sets in law the interest rate that lenders are guaranteed to receive on a FFEL loan. The rate adjusts automatically every three months to reflect short-term market interest rates plus an arbitrary 1.79 percentage points. The federal government pays this rate on the loan no matter how high (or low) short term interest might be. That guarantee, or insurance, is a significant subsidy. The Special Allowance Payment is intentionally designed so that it bears no relation to the interest rates that borrowers pay. Thus, lenders do not earn interest from the borrower; they earn it from the federal government.

Now, where do the lenders come up with the $9 billion figure above? The government uses borrower payments to cover the costs of the interest it guarantees the lender under the Special Allowance Payment. But because the Special Allowance Payment rate fluctuates and the borrower rate is fixed, sometimes the borrower rate is more than enough to cover the rate the government guarantees the lender and other times it is not. In 2007 and 2008 the borrower rate was not enough, so the federal government paid lenders $7.7 billion and $2.5 billion respectively. This year it is estimated that borrower interest payments will more than cover the rate guaranteed lenders, leaving some $6.2 billion left over. Add in other fees lenders pay the government and the total comes to $9.5 billion.

But, the cash value of these payments in any one year is not the value of the government subsidy lenders receive. Rather, the actual subsidy is the expected value of all the future payments associated with a loan. And it is also the value of the guarantees - the insurance against default risk and interest rate risk - that lenders receive from the federal government under FFEL.

This is one of the main reasons why loans are subject to accrual accounting in the federal budget rather than cash accounting. The student loan industry knows this of course... and budget analysts know it, too, but the student loan industry is hoping Senators and their staff do not.

So, Senator, when the loan industry hands you the talking point above, tell them that if government guarantees aren't a subsidy, then FFEL lenders should have no problem with Congress eliminating these guarantees. Then, tell them that when FFEL is gone, they can continue to make loans to students at 20-year, fixed 6.8 percent interest rates just as they do today and they won't even have to make those pesky $9 billion payments to the government anymore.

Ed Projections Suggest Shifting Enrollment Patterns

Emilie Deans — Thu, 01 Oct 2009 14:57:00 -0400

Last week, the National Center for Education Statistics (NCES) released "Projections of Education Statistics to 2018," a report predicting enrollment and expenditure increases in education over the coming decade. These projections can provide important information to states and school districts as they seek to invest new funds available through the American Recovery and Reinvestment Act. Strategic investments today can help states and school districts cope with rapidly increasing populations, postsecondary institutions prepare for the shifting needs of those seeking higher education, and policymakers rethink investments to better serve schools and students.

PK-12

According to the NCES study, public school enrollment is expected to increase by 9 percent between 2006 and 2018 from 55.3 million to 59.8 million students. This increase will occur mostly in the South and West, with the greatest increases in Arizona, Nevada, and Texas. The Northeast is projected to see a decrease, led by Rhode Island and New York. Nationally, the greatest enrollment increases are expected to occur in the PK-8 grades.

The report predicts that the number of public high school graduates will increase 11 percent between the 2005-06 and the 2018-19 school years. Increases are primarily expected in the South and West, with Nevada, Utah, and Georgia experiencing the largest increases. Seventeen states and the District of Columbia are predicted to see decreases in graduates, led by Rhode Island and North Dakota.

NCES also predicts that total expenditures for K-12 education will increase 36 percent between 2005-06 and 2018-19 to $626 billion, while per pupil expenditures are expected to increase 24 percent to $11,600.[1]

These changes in student population are significant for several reasons. States like Arizona, Nevada, Texas, and others with rapidly growing populations are likely to experience significant stresses on state and local budgets as school enrollments increase. Additionally, traditional education funding sources, like property taxes, have become less stable and reliable in the recent economic downturn. To ease future pressure on state and local budgets, all states, but especially those with growing populations, must begin to think about new and more sustainable ways to fund education or commit to spending more funds on education from all sources.

Postsecondary

Enrollment in postsecondary institutions is predicted to increase between 2007 and 2018 to 20.6 million students from 18.2 million. NCES predicts that undergraduate enrollment will increase by 12 percent, with larger increases in graduate and first-professional (what is that? That's a little jargony) degrees. Public and private institution enrollments are expected to grow at the same rate, 13 percent.

Between 2006-07 and 2018-19, the number of Associate's degrees conferred is projected to increase by 25 percent. In the same time period, the number of Bachelor's degrees conferred is expected to grow by 19 percent.

This dramatic increase in students seeking Associate's degrees can be partly attributed to the current economic recession. Workers are seeking additional skills to qualify them for higher-paying jobs or exiting the workforce temporarily due to lack of opportunities. Additionally, with the cost of higher education continuing to rise despite the economic downturn, it's no surprise that many students are turning to community colleges for postsecondary training. Students who otherwise may have pursued Bachelor's degrees will be able to attend community college for a fraction of the cost.

This brings to light a greater issue facing higher education in the future. If the cost of attending a 4-year institution continues to rise at the rate it is now, the additional 19 percent of degree obtainers are likely to take on potentially hundreds of thousands in student debt. This model is likely to prove unsustainable in the future unless 4 year institutions are able to cut costs or lower tuition through new tactics like virtual education.

Conclusion

States, school districts, institutions of higher education, and policymakers should heed these predictions - enrollments at all levels are expected to increase, demanding greater investments of resources and funds.

Luckily, there are some ways states, localities, and institutions of higher education can prepare for the inevitable:

State and federal policymakers should begin exploring new ways to fund public education that do not rely entirely on property taxes and other variable sources of revenue. This change can also ensure greater equity in funding among schools and school districts.
States and school districts in regions with rapidly growing populations should begin creating infrastructure to handle increases in enrollments like school facilities and highly qualified teaching forces.
Postsecondary institutions of all kinds must either find ways to keep costs down or dramatically rethink how they provide instruction to students so that higher education is attainable for all high school graduates.

[1] Expenditures are in constant 2006-07 dollars.