Education Budget

Investing in Children

Heather Rieman — Wed, 07 May 2008 14:00:00 -0400

We hear a lot of rhetoric from politicians about how America's future depends on investing in our children. But this rhetoric is not translating into spending realities. A new report from First Focus, "Children's Budget 2008," provides information on federal spending for children's programs. The report slices the data in a number of different ways, but the overall theme is that the federal government is not prioritizing children when it comes to allocating resources.

The report indicates that federal domestic discretionary spending on children in 2008 was only about 10% of all non-defense spending (a 23% decline since 1960). That's a pretty surprising number when you think about it—it means that as a nation we spend only 10 cents of every discretionary dollar on children.

Recent budget decisions have only exacerbated the downward trend. In the last five years, domestic spending on children's programs has decreased by 6.7%. While mandatory spending on children increased by 5.7% in that time period, overall federal spending was increasing at a much faster rate (almost 10%), meaning that other types of spending are outpacing spending on children. Of all the new real non-defense spending in the past five years, only one penny of every dollar has gone toward children's programs.

Lower Priority for Education Funding

For those who believe education is a sound investment in the nation's future, the news is not good. According to the report, spending on children's education has been relatively flat in real terms, and declined by 9.9% over the last 5 years when adjusted for inflation. (Although we'd be remiss if we did not point out that using a 5 year period doesn't capture increases in education funding from 2001-2004).

Over the long term, funding levels that do not keep up with inflation have real consequences for education programs and students. They can mean fewer teachers in the classroom, fewer early education services through programs like Head Start, and less money to provide the type of support that students with disabilities and from low-income backgrounds need to succeed.

Funding for children's education has also declined as a share of total federal spending. From 2004 to 2008, the share of federal spending on education fell from 2.2% to 1.8%. As a percent of the national Gross Domestic Product, federal spending on children's education dropped from 0.43% of GDP to 0.35%. Spending on children has not kept up with overall economic growth, raising the question: How much continued economic growth will the nation enjoy if we do not sufficiently invest in education and human capital, which drive that economic growth?

Where's the Money Going?

If children's issues are not the priority, what is? Where is the money going? Clearly, increased spending over the last couple of years has funded the war in Iraq. But that isn't the only answer—even with defense spending excluded, the share of federal spending on children's programs has decreased.

The report doesn't delve in to the government's spending priorities, but a larger and larger portion of federal spending is going to fund programs for the elderly. Social Security and Medicare are taking up an ever increasing share of federal funds. As baby boomers age, the number of elderly Americans will only increase, setting up a generational war over resources that is already starting to play out. With children lacking money and the ability to vote, it's not hard to foresee where this is headed...

There's more to come about this issue in future Ed Money Watch blog posts as we keep track of the generational funding wars and what they mean for education funding.

Clueless about Education Spending? You're Not Alone

Lindsey Luebchow — Thu, 01 May 2008 20:00:00 -0400

Most Americans do not know how much their local school districts are spending on education, according to a new national survey. This isn't a surprise to Ed Money Watch. Poor understanding of education expenditures spurred the creation of our Federal Education Budget Project. But what does surprise us is the size of the misinformation gap: Americans vastly underestimate per-pupil expenditures, by $6,122 on average.

Education Next and the Program on Education Policy and Governance at Harvard conducted a survey in 2007 of a nationally representative sample of 2,000 American adults. They asked the question: "Based on your best guess, what is the average amount of money spent each year for a child in the public schools in your school district?" Then they matched those answers to the actual per-pupil expenditures of the respondents' districts.

The average per-pupil expenditure of the districts in the sample was $10,353 (slightly higher than the actual national average of $9,435). The average estimate collected by the survey was $4,231, and the median estimate was only $2,000. More than 40 percent of the respondents guessed that their districts' per-pupil expenditures were $1,000 or less.

Then, in an attempt to make sure the respondents understood the full range of costs included in per-pupil expenditures, the survey gave a prompt to half of the respondents: "Individual student costs go toward teacher and administrator salaries, building construction and maintenance, extracurricular activities, transportation, etc." While the average estimate did increase by about $1,000 to $5,262, it was still off by $5,138. And the median remained at $2,000, and more than one-third of the respondents still guessed less than $1,000.

The survey also uncovered large underestimates for teacher salaries—actual salary spending was $47,424 per-teacher on average, while the respondents' average estimate was $33,054. Not quite as far off as the expenditure guesses, but still underestimated by 30 percent (vs. per-pupil expenditures underestimated by 59 percent without the prompt and 50 percent with the prompt).

We started our Federal Education Budget Project to dispel myths about education spending by distributing facts and data. A large part of this effort involved creating an interactive website that allows anyone to look up federal funding, achievement, and demographics data for every school district in the country. This new survey highlights the need to better inform parents and taxpayers about the realities of expenditures on schools.

Check out http://www.EdBudgetProject.org/ to look up your school district's per-pupil expenditures, including how much it receives from the federal government in Title I funding for low-income students and IDEA funding for students with disabilities. You can compare your district to others in your state, and you can compare your state to the nation. The results are often eye-opening.

Does Title I Funding Go Holy to Fund Private School Students?

Lindsey Luebchow — Thu, 17 Apr 2008 14:00:00 -0400

Pope Benedict XVI's first visit to the United States is spurring supporters of Catholic schools and the media to highlight the decline of and obstacles facing Catholic schools. Demographic changes, a reduced supply of priests and nuns to serve as teachers, and the aftermath of sex abuse scandals have acted to undermine Catholic schooling in many places. This attention to the crisis in Catholic education has also highlighted a little known fact: federal education programs provide support to educate low-income students not just in public schools, but also in private schools.

When spending federal money, school districts are required to provide equitable services to private school students and teachers. The Elementary and Secondary Education Act—Title IX, Part E, Subpart 1—enshrines this right to equitable services. Ed Money Watch will use the Pope's visit as an opportunity to clarify how federal funds are distributed to and spent on private school students and teachers (not private schools).

Title I Funds for Supplemental Instruction

NCLB requires school districts to evenly distribute their Title I funds among eligible, poor students in both public and private schools (those private schools that choose to participate). Districts do not distribute Title I funds directly to private schools (as they do for public schools), however, but rather use the per-pupil Title I allocation to pay for support services for private school students.

Typically, this means district provide supplementary instruction for private students, delived either by public school teachers or through a third-party contractor. For example, eligible students may receive targeted, pull-out sessions in school, in computer labs, or through outside counseling or tutoring. Districts have to consult with the private schools to design and implement a program that will meet the needs of the eligible students. Other Title I services and programs, such as professional development for teachers of Title I students, follow the same model, as does the Reading First program.

According to the most recent National Assessment of Title I, one percent of Title I funds in 2004-05 provided services for 188,000 private school students. Given that most of these students were likely in elementary school, this represents about five percent of the total 3.7 million K-8 private school population. In 2005-06, 16 percent of all private schools, and 37 percent of Catholic schools, reported participating in Title I (vs. 56 percent of all public schools in 2004-05).

Other Federal Money for Private School Students

Other federal elementary and secondary education programs are also subject to the same mandate of equitable services for private school students and teachers, because they are governed by the Uniform Provisions in Title IX, Part E of NCLB:

[The district] shall, after timely and meaningful consultation with appropriate private school officials provide to those children and their teachers or other educational personnel, on an equitable basis, special educational services or other benefits that address their needs under the program.

For example, when distributing its Title II teacher training funds, a district must provide the same professional development opportunities to public and private school teachers.

Private school students are also eligible to receive funding from the National School Lunch Program and Individuals with Disabilities Education Act (IDEA) grants. If students qualify for free or reduced price lunch (their family's income is below 185 percent of the poverty line), their private school can apply for cash reimbursements from the program for each meal served to an eligible student. Private schools approved by the Department of Education can receive federal IDEA funds from the district, proportionate to their share of special education students.

Under-Utilization of Federal Funds

While there is a fair amount of federal money available to private schools, particularly those serving low-income children, not all private schools take advantage of these federal funds. This means that the number of private school students eligible for federal support is higher than the number who actually receive federal services—and the amount of federal money going to private schools is lower than it could be.

There are several reasons why private schools do not make use of all available federal funding. First, federal money comes with a lot of federal requirements. For example, the School Lunch Program has nutritional requirements for its meals, and every school must adopt a wellness policy with nutrition goals. IDEA has specific "individualized education plan" (IEP) requirements for disabled students who receive federal funds.

In addition, some private schools choose not to expend the administrative effort necessary to obtain federal money. For example, for private school students to receive Title I services, their schools have to negotiate and set up arrangements with the district. And private schools must deal with state Departments of Education in order to receive school lunch reimbursements. Some private schools don't have the administrative capacity for this, and many conclude the money is worth the bother.

President Bush is convening a White House summit on inner city children and faith-based schools sometime this spring, at which these federal funding issues will likely be discussed. It's unlikely, however, that anything substantive will change with federal funding of private schools in the near future—unless John McCain decides to make increased federal support for private schools a part of his campaign agenda.

Navigating the Rocky Road of School Improvement Funding

Lindsey Luebchow — Tue, 15 Apr 2008 15:00:00 -0400

As the number of schools identified for school improvement, corrective action, and restructuring under the No Child Left Behind Act continues to increase, states are under increasing pressure to improve student performance in these schools. Yet a new report from the Government Accountability Office finds that a little-known funding provision in NCLB is undermining state efforts to turn around low-performing schools.

The 4% Set-Aside vs. the Hold Harmless Provision

Under NCLB, schools that fail to meet state achievement benchmarks—otherwise known as Adequate Yearly Progress or AYP—for two consecutive years enter "school improvement" status. NCLB requires states to set aside four percent of their Title I funds to support school improvement activities—such as professional development, new curriculum, extended learning time, or full-scale restructuring—in these schools.

Yet many states are not able to reserve the full four percent of their Title I funds for school improvement, because a separate provision of the law prevents them from doing so. NCLB includes a "hold-harmless" provision that prevents states from reducing a school district's Title I funding more than 5 to 15 percent below the previous year's level as a result of the set-aside. States have to fulfill this obligation before reserving any funding for school improvement.

Title I funds are allocated to school districts through a formula that is based primarily on the number of poor children they enroll. The hold-harmless provision protects school districts from Title I funding cuts if their proportionate share of poor children declines. In practice, that means giving more money to such districts than the Title I formulas would allocate otherwise. After meeting hold-harmless requirements, some states have less than four percent of Title I funds left over to support school improvement.

The Result: Less, Unpredictable School Improvement Funding

According to a new report by the Government Accountability Office, 22 states have not been able to spend the full four percent of their annual Title I allocations on improvement activities for at least one year since 2002. A separate, earlier report by the Center for Education Policy found that 29 states would be unable to meet the four percent set-aside in 2007-08.

In theory, states should spend four percent of their Title I funds—a total of about $500 million out of the $12.8 Title I appropriation for fiscal year 2007—on school improvement. But the Center for Education Policy estimates that $192 million of that $500 million will be lost because of the hold-harmless provision.

Moreover, the amount of money states have to spend to satisfy hold-harmless requirements is unpredictable from year to year, depending on the amount of money that Congress appropriates for Title I and demographic changes across and within states. This instability makes it difficult for low-performing schools to implement coherent, long-term school reforms, as the amount of money they receive to support these efforts often fluctuates each year. Some states have compensated by finding other funding sources for school improvement activities. For example, states have used federal funds from the Comprehensive School Reform program, Reading First, and Improving Teacher Quality State Grants to support school improvement efforts. In addition, 17 states have used their own funds to help sustain improvement activities in low-performing schools.

Eliminating the Hold Harmless Provision

The Department of Education has recognized these problems with the four percent set-aside. The administration's 2007 budget request proposed eliminating the hold-harmless provision so that federal school improvement funding would stabilize at four percent of overall Title I funding.

As the GAO report points out, there has been little analysis of how the hold harmless provision affects different types of school districts. The Department claims that the provision is keeping too much federal money in lower-poverty school districts, and harming high-poverty, low-performing districts by leaving less money for them and for school improvement activities.

But this is all hypothesis. For years hold harmless provisions in Title II of NCLB protected districts throughout Mississippi from experiencing dramatic funding declines, whereas low-poverty but high-growth districts in California were slated for increases. GAO recommends that the Department of Education "develop an analysis comparing the characteristics of districts that contribute to the set-aside with those protected by the hold-harmless provision." The Department agreed with this recommendation. Congress will need to address this issue when it resumes reauthorization of NCLB legislation—and the Department must ensure it has the facts and data to make informed decisions about these policies.

A Separate School Improvement Funding Stream

The fiscal year 2007 budget also provided funding to support "School Improvement Grants" to states to supplement the four percent set-aside. Although NCLB authorized these grants, the Bush administration did not request funding for them until fiscal year 2007. Congress funded the program in fiscal year 2007 at $125 million and increased funding to $491 million in the current fiscal year. In order to receive the grants, which are distributed in proportion to each state's Title I allocation, states must submit an application and meet some additional reporting and accountability requirements.

As the four percent set-aside shrinks in many states, School Improvement Grants are an important source of additional federal funding needed to sustain school improvement activities in low-performing schools. The Bush administration has requested level-funding for this program in fiscal year 2009—even as the number of schools in school improvement status rises (8,400 in 2004-05 to 10,700 in 2006-07). In the near term, Congress must continue to fund, and possibly even expand, the School Improvement Grants program. It must also make sustained funding to support school turnaround efforts a key priority in the NCLB reauthorization.

What's Behind Standardized Graduation Rates? Data System Investment

Lindsey Luebchow — Wed, 09 Apr 2008 17:00:00 -0400

Last week Secretary of Education Margaret Spellings announced that the Department of Education will begin requiring all states to use the same method to calculate high school graduation rates. NCLB already requires states and high schools to report graduation rates, but it allows states to craft their own formulas to do so. The result: states inevitably found ways to inflate graduation statistics. And the state-by-state patchwork of methods used makes it impossible to compare graduation rates across states.

Spellings' announcement is an important, smart move following years of pressure from education and civil rights organizations to improve graduation rate data. Without comparable, meaningful data to expose low graduation rates, states can continue to ignore the drop-out crisis that is plaguing low-income communities—especially in urban areas—around the country.

But Spellings' announcement also raises some important questions: Do states have in place the data systems they need to calculate new, standardized graduation rates? And, if not, how will they pay for new state data systems? So far, neither Spellings nor news articles covering the new regulations have addressed these issues in any detail.

Where State Data Systems Stand

The first step toward accurate graduation rates is a student unit record data system that can track individual students. These systems assign a unique identification number to each student in the state, so that the state can follow individual students from the time they enroll in ninth grade through high school graduation—even if they transfer between schools or school districts.

An accurate graduation rate formula (such the one adopted by the National Governor's Association, which appears below) measures the percent of students from an entering ninth grade cohort who graduate with a standard diploma in four years. This is commonly known as a "cohort" method of calculating graduation rates.

According to the results of a 2007 survey by the Data Quality Campaign, 36 states have the full data system capability to calculate this formula. Seven other states have student unit records in place, but lack a robust data audit system. Robust audit systems ensure that districts report valid dropout data, and they are necessary to remedy past documented problems with unreliable district reporting.

All 43 states that have already invested in data systems to track individual high school students should be prepared to comply with new federal graduation rate measures within the next four years. Some states that implemented these data systems only recently may need time to accumulate four years of student data (from the time the first ninth grade class enrolls until they complete 12th grade) to calculate a cohort graduation rate.

But seven states that don't have the necessary data infrastructure to calculate accurate graduate rates are going to have to play catch up—and that will likely be expensive.

Laggards Face Data System Costs

The exact costs of establishing a student unit record data system depend on the data infrastructure a state already has in place, but they are substantial. The Data Quality Campaign estimates that putting in place the structure for these systems costs between $1 million and $3 million annually over several years of development—not including ongoing maintenance costs after the system is in place or staff time at the district level.

These seven states may not be eager to spend money on K-12 data initiatives. One reason they don't have them already is that they've been unwilling to pony up the necessary funds in the past. But soon they may not have a choice—although if the history of NCLB and IASA implementation is any guide, they will likely drag their feet. And they may complain about more "unfunded mandates" from the federal government.

NCLB does provide funding to help states cover the costs of developing and administering state assessments and standards—$409 million in fiscal year 2008, distributed to states based on their share of students ages 5 to 17. Once a state meets all of NCLB's assessment requirements, it can use the grant money for "support for data reporting." But given the limited amount of money available in this pot (average state grant: $7.6 million), many states don’t have a lot left over after annual testing costs. The Bush Administration's 2009 budget request did not propose any increase in funding for state assessments. And Secretary Spellings hasn't indicated that the Department of Education will provide additional funding to help states implement new graduation rate standards.

A Worthwhile Investment

States that haven't already invested in student unit record data systems may not want to pay the costs to do so. But in the long run, student unit record data systems are an incredibly valuable investment that every state should make. If new, standardized graduation rate standards require lagging states to improve their data systems, that will be an additional benefit of these requirements.

Even states that already have the framework in place for graduation rates could do a lot to further develop their systems—for example, tracking all students from pre-kindergarten through higher education, or performing more extensive coding of student characteristics and outcomes. This type of data is invaluable in education research and accountability efforts.

That is, if states actually use it. According to the Editorial Projects in Education Research Center, only 16 states used a cohort formula for NCLB accountability purposes in 2006-07, while others preserved their old formulas even if they had accumulated the data to use a more accurate cohort formula. In many cases, the less accurate measures produce inflated graduation rates that make states look like they're doing better than they actually are. Standardizing graduation rate measures will result in more accurate data—and make sure state taxpayers are getting their money's worth from new data systems.

Ending the Reading First Funding Limbo

Lindsey Luebchow — Wed, 02 Apr 2008 19:00:00 -0400

States and school districts are starting to feel the impact of major funding cuts to the federal Reading First program. Congress cut Reading First funding by 61 percent in fiscal year 2008—the unfortunate result of a serious federal-level management scandal. On the ground, however, the Reading First program is producing results in many schools, and school administrators and teachers have praised it.

President Bush's fiscal year 2009 budget request would return Reading First funding back to $1 billion annually. As school districts scramble to look for other funding sources to keep Reading First programs alive this year, Members of Congress should reassure them by making a commitment to restore funding in the fiscal year 2009 budget. Congress has made its point on the scandal and should end the political games.

The Administration did make grave errors in program management. But Secretary of Education Margaret Spellings has promised that the program is running cleanly, and she's fighting to restore funding to the $1 billion level.

Of course, in order to restore funding, Congress will have to pass a fiscal year 2009 appropriations bill, instead of a continuing resolution (which would maintain funding at the 2008 level for the next fiscal year). Reading First is a prime example of why Congress should work on and pass a Labor, Health and Human Services, and Education Appropriations bill—NOT postpone funding questions until fiscal year 2010. While some states and school districts may be able to produce one year of stop-gap funding to cover the Reading First cuts, most will have to significantly alter and downsize their Reading First programs if Congress maintains funding at $393 million for another year.

Schools Deal with Reduced Funding

Reading First funding supports a variety of reading initiatives, including professional development for teachers, additional reading coaches, and new curriculum, assessments, and diagnostic tools. These are intensive and costly interventions for low-performing children. This year's drastic reduction in funding is putting these initiatives in limbo, as districts do not know if they can find enough supplemental funding to continue them.

Some states have funds remaining from last year that they can carry over and use to maintain the current programs for at least one more year. Others may have to raid other federal programs, such as Title I or IDEA, for additional support, but these funding streams are also limited. Schools will have to make tough decisions about which federally supported interventions to prioritize.

A lot of states and districts are simply going to have to cut grants or discontinue programs at certain schools. This will require more difficult decisions: Should districts give priority to successful programs, or to programs that need the most development, or to programs that serve the lowest-performing children...?

Appropriations Politics

Congressional Democrats have signaled that they may not try to pass most fiscal year 2009 appropriations bills. Instead, they may use continuing resolutions to maintain funding for federal programs at the 2008 level until fiscal year 2010, when they hope to have a Democratic president in office. The likelihood that Congress and President Bush can agree on a Labor-HHS-Education spending bill for fiscal year 2009 does appear slim. But Congressional Democrats could postpone the fiscal year 2009 appropriations bill until early 2009, in the hope that a new president and Congress will quickly pass a bill upon entering office.

Whether Congress passes a fiscal year 2009 education appropriations bill under Bush or a new President doesn't matter to states and school districts, because they don't get fiscal year 2009 funding until July 1, 2009, regardless of when the legislation passes. What matters for Reading First programs is that Congress passes a fiscal year 2009 bill, because a continuing resolution will likely maintain the 61 percent funding cut. (There is some room for changing funding levels in a continuing resolution, but that room is limited and unlikely to be used for a large funding restoration.)

Leading Democrats should recognize that the Reading First cuts have real, negative consequences for their constituents, and they should set aside their political bias against the program and restore funding. This requires sitting down at the appropriations table and doing the tough budget work for the next fiscal year. They can accomplish a lot, particularly for low-performing schools, if they don't go the easier continuing resolution route.

"The Cure for Cancer"

Democrats must also continue Congressional scrutiny and assessment of Reading First's implementation. When Spellings recently told Reading First State Directors at a conference in Washington, D.C., "if ever there was a program that was rooted in research and science and fact, this is it. This is [like] the cure for cancer," she may have slightly exaggerated Reading First's results.

Reading First has produced promising achievement gains in many individual school studies. The first large-scale federal evaluation using achievement data has not been released yet, but according to the Office of Management and Budget's ExpectMore.Gov it "yielded positive results" and should be out soon.

There are many critics of the Department of Education's claims about Reading First's success, and they make good points. Reading First is not perfect and we need more evaluation to ensure that schools are using the funding in the scientifically based manner most effective for their students.

Promising to restore funding does not mean accepting Reading First as flawless. But Democrats should recognize that, on the whole, Reading First has been a positive federal investment, and there is room for program improvement with continued evaluation (and tighter management controls). If federal funding remains low, states will not be able to sustain the number or intensity of Reading First programs, and schools may lose reading achievement gains for low-performing children.

Earmarks Galore! More Transparency, But Still Flourishing

Lindsey Luebchow — Mon, 31 Mar 2008 14:00:00 -0400

Last week, the Chronicle of Higher Education published a database of higher education earmarks for fiscal year 2008. A number of the earmarks are related to K-12 initiatives at colleges and universities, and many of the programs sound valuable and work toward positive goals. Members of Congress are certainly skilled at justifying them. But don't let these justifications sway you—earmarks mean no accountability to taxpayers and no concrete proof of program effectiveness.

The Office of Postsecondary Education routinely receives the most earmarks in the Department of Education, including some for K-12 initiatives such as teacher training programs. The Chronicle database also includes higher education earmarks distributed through the Office of Innovation and Improvement's Fund for the Improvement of Education (FIE), such as grants to support partnerships between colleges and local school systems.

When you look through the Chronicle's list of earmarks, many of the K-12 projects sound, on the surface, like worthwhile efforts. $120,851 for professional development for school teachers in mathematics and science? Great! How about $191,593 to create a Principals Institute, to train and certify all Maryland school principals? Sounds promising!

It's hard to argue that there isn't a need for these type of projects. But because there are no standards for earmarks, the type and quality of the funded programs varies widely. In addition, it can be difficult for taxpayers to get any detailed information about what the projects actually do.

For example, there is a $383,187 earmark for California State University at Northridge for the "development of an assessment-and-accountability system for K-12 teachers." Ed Money Watch wants to know more about that project, but a call to Rep. Brad Sherman's (D-CA) office, one of the sponsors of the earmark, yielded no response (as did most of our calls to Congressional offices). Or how about $286,899 to the Mississippi University for Women "for outreach and research to local school districts." The sponsor Senator Roger Wicker's (R-MS) office had no information for Ed Money Watch, and told us to try contacting the school. After several calls to the school, we finally figured out where the money is going, but it sure wasn't easy.

Of course, there's also the issue of judging whether the earmarked programs are actually effective. Members of Congress do not use a competitive process to distribute earmarks; it's all about special constituent interests. And once the earmark is out the door, there is no accountability for how the funds are spent.

It's good to see that the Chronicle and the Office of Budget and Management have started to publish earmarks in searchable databases, following the mandate of the Federal Funding Accountability and Transparency Act of 2006. Transparency forces Members of Congress to at least validate their earmark spending, and maybe even pushes them to keep closer tabs on the money.

The public needs to ask tough questions about earmarks and not get caught up in Congressional spin—unless, maybe, a new President and new Congress get rid of earmarks for good. Wishful thinking from Ed Money Watch.

Education Funding Rhetoric: The Budget Reserve Fund

Jason Delisle — Wed, 26 Mar 2008 15:00:00 -0400

When Congress took up the 2009 budget resolution earlier this month, Members of Congress gave stirring speeches about how the budget would "strengthen the federally subsidized student loan program" or carry out other education policies. Some pointed to something called a "deficit-neutral reserve fund" in the budget resolution as proof. The press also highlighted these reserve funds, writing of a "pool of funds" set aside for various education initiatives. Advocacy groups issued press releases touting policy success.

Anyone trying to make sense of the congressional budget process and what it means for education funding likely was led astray by these reports. Reserve funds can’t accomplish any of the things promised by lawmakers and celebrated by advocacy groups, although they can serve an arcane procedural purpose. But this procedural purpose is rarely why reserve funds are included in a budget resolution. The budget resolution doesn’t specify funding levels for any particular program, so reserve funds allow Members of Congress to point at a particular page of the budget resolution (the reserve fund) and talk about any sort of pet education project.

Arcane Procedure With Little Influence

Here is why the reserve fund can’t influence education policy in the manner that lawmakers would have us believe. (The reserve fund text appears on page 60 of the Senate budget resolution and page 34 (right) of the House version.)

The budget resolution sets a spending plan for the upcoming five fiscal years that loosely governs all legislation considered later in the year. When Congress adopts a budget resolution, each congressional committee (the appropriations committee and each authorizing committee) is allocated a slice of the overall federal spending plan. Procedural hurdles called "points-of-order" help ensure that legislation consider throughout the year stays within these allocations.

A reserve fund allows the congressional budget committees to adjust a committee’s spending allocation after the budget resolution has been adopted. So, if the Senate Health, Education, Labor and Pensions (HELP) Committee brings up a bill that spends more than the budget resolution allocated to it, say by increasing student loan limits, the Budget Committee Chairman may use the reserve fund to grant the HELP Committee extra room in its allocation. Thus, a reserve fund can prevent a point of order from killing an education bill. While that might sound influential, it rarely is, because points of order are a weak budget enforcement tool.

No Need to Worry About Points of Order

Points of order do not automatically kill legislation. A Member of Congress must raise the point of order for it to have effect, but Members often choose not to raise them. And points of order can always be waived. In the House a point of order is meaningless, because it takes a simple majority vote to waive a point of order. If a majority of Members will vote to pass an education bill, then the same majority will vote to waive a point of order.

The mechanism has more teeth in the Senate. A point of order can kill a bill unless 60 Senators (three-fifths) vote to waive it. So preventing a point of order in the Senate could allow a bill to pass by simple majority. But even if the point of order does not apply, Senators could still fillibuster the bill, subjecting the bill to a separate 60 vote hurdle. In other words, a bill almost always needs 60 votes to pass in the Senate, so it matters little whether or not a point of order applies to it.

"Deficit Neutral" Means More Taxes

One final point makes reserve funds even less likely to come into play. This year's education reserve funds are "deficit neutral." This means that education allocations cannot be increased unless taxes are first raised to offset new spending, and Congress is loath to raise taxes. Instead of a tax increase, another committee could offer to reduce spending in its allocation to offset the education increase and satisfy the deficit neutral requirement – but don’t count on it. No committee wants to voluntarily give some of its budget allocation to another committee.

Empty Rhetoric

The truth is, reserve funds do not enact policy or provide funding for programs, nor can they set aside a pool of money for education initiatives. They are merely a procedural tool that gives Congress more flexibility in how it outlines future spending in the budget resolution. Education funding promises in deficit neutral reserve funds are empty rhetoric.

New Faces, New Education Funding Questions in New York

Lindsey Luebchow — Mon, 24 Mar 2008 17:00:00 -0400

After being sworn in as the Governor of New York on last Monday, David Paterson went right to work on the state budget and its near $5 billion deficit. Education advocates are anxiously waiting to see how the new Governor approaches state education funding. Previous Governor Eliot Spitzer had promised to spend a lot more on education in order to comply with the ruling in a school finance lawsuit, and, equally important, to combine that spending with increased accountability for local school districts. Richard C. Iannuzzi, president of New York State United Teachers, said that Spitzer's resignation was "an overwhelming blow to a process that was under way with respect to equity in education."

Will Paterson continue the commitment to education funding?

[slideshow]For this budget cycle, it looks like Paterson isn't going to prioritize anything. He proposed a 2 percent across-the-board reduction in spending in order to slash $800 million from Spitzer's $124 billion budget. The cuts are needed to balance the state's budget, which has been hit hard by Wall Street's recent woes. An across-the-board cut is politically the easiest way for Paterson to reach budget goals—and given that he has only two weeks to negotiate, probably the only way he could finish the budget on time.

The more important question is, looking forward, will Paterson continue to fight for education spending increases that are necessary to comply with court decisions in school finance lawsuits? After the Campaign for Fiscal Equity won a lawsuit against New York in 2006 that ordered the state to spend an additional $1.93 billion on New York City Schools, Spitzer pledged to bring funding levels into compliance with court rulings. Spitzer's 2007 budget provided a $1.4 billion statewide increase in funding and planned to increase funding to $7 billion in four years. But his 2008 budget plan was not as generous, causing many education advocates to criticize him for not living up to his promise.

We can't predict whether Paterson will respect the court decisions and continue to fight for education funding increases. As a state lawmaker representing Harlem, Paterson supported the Campaign for Fiscal Equity lawsuit, and he is viewed as a "champion" for students with disabilities. In his inauguration speech, he mentioned "giv[ing] children better schools" as one of the main challenges that New York faces. He hasn't yet decided whether to keep Manuel Rivera, Spitzer's chief education advisor and director of his reform agenda, around.

Ed Money Watch is particularly interested in whether Paterson will continue Spitzer's commitment to accountability. Governor Spitzer tied education funding increases to specific accountability measures—Contracts for Excellence—in high-poverty districts that receive a lot of state money. After one year of implementation, school districts are evaluating their Contracts, and it's critical that the Governor remain an active participant and ensure that district assessments are meaningful. Spending money effectively to support student achievement is just as important as the amount of new money received. We sincerely hope that Paterson is as concerned as Spitzer about monitoring where and how state education funding is spent, and whether schools are spending it effectively.

Conversations in California on District Budget Transparency

Lindsey Luebchow — Thu, 20 Mar 2008 14:00:00 -0400

In California, Governor Arnold Schwarzenegger's Committee on Education Excellence released its long-overdue final report last week with recommendations for reforming the state's K-12 education system in four areas: governance, finance, teacher recruitment and retention, and administrator preparation and retention. The finance section, titled "Ensure Fair Funding that Rewards Results," offers a number of good, detailed ideas for making state funding more flexible and student-centered, and better tied to incentives to improve learning.

One specific proposal in the report caught Ed Money Watch's eye: Recommendation 2.1.8—make school budgets more understandable. We believe that changing school district budgeting practices is a key first step in school finance reform. Education advocacy groups in California have been talking about this for a long time, and it's encouraging to see a state committee acknowledge the need for change. We hope that other states will take note.

Specifically, school districts need to report how funding is allocated—using the actual cost of resources—across all of their schools. Currently, districts do not report school-level funding figures, instead using district averages to calculate budgets. As the California report recommends, districts should "clearly delineat[e] the total resources (i.e., the financial value of the personnel, supplies, and services) that reach each school."

Why is this important? Many school districts—specifically, large, diverse districts, which are common in California—systematically spend less on their poorest schools than they do on more affluent schools. Policymakers, parents, and the public are largely unaware of these disparities, because school districts are not required to report them, and district budgeting practices mask their existence.

If the state is going to invest its money in a funding formula that gives additional money to districts based on student needs (as the Governor's Committee recommended), it must ensure that the additional resources actually reach the students who need them. Without more transparent budgeting practices at the district level, the state, parents, and other stakeholders will never know.