Education Budget

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

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.

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

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.

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.

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.

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 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.

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?

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."