Education Budget

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

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

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

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

This morning, Pre-K Now released its annual Votes Count report, which summarizes state legislative action on pre-k during the 2009 legislative session, including pre-k funding in states' fiscal year 2010 budgets. This year's report focuses on which states have maintained and even increased pre-k investments despite budget shortfalls caused by the past year's economic pinch, and which states are falling behind.

Overall, Pre-K Now says that "the news for young children is surprisingly good." 27 of the 38 states that had state-funded pre-k programs in fiscal year 2009 (as well as the District of Columbia) managed to either increase pre-k funding or maintain current funding levels. That adds up to $187 million dollars of new money for pre-k in fiscal year 2010. Further, of the 10 states with the biggest budget shortfalls this year, seven managed to either increase or maintain their pre-k spending for the 2010 year.

The report groups states into 5 main categories:

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

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

States this year have been faced with tough budget choices, and Pennsylvania certainly did not hurry in making its decisions. At long last, however, stakeholders in early education can relax: the 2009-2010 Pennsylvania budget is in, and early ed was not a victim of this year's budget crunch.

Gov. Ed Rendell signed the budget into law last Friday, thus ending the longest budget delay in any U.S. state this year. It was passed 42-7 in the state Senate, after a 101-day stand-off in the legislature.

The $2.62 billion budget slashed $500 million from 2008-2009 state spending levels and includes a $300 million spending increase in general education funding. This boost in education funding, along with the lack of broad tax increases in the 2009-2010 budget, may prove the most popular piece of the new budget.

THIS POST HAS BEEN UPDATED.

The Federal Education Budget Project (FEBP), Ed Money Watch's parent initiative, provides a wealth of state and school district level data on federal funding, demographics, and achievement through its website www.edbudgetproject.org. These data can tell important stories about how federal education funding interacts with student demographics and achievement. Moreover, the data often reveal rarely-discussed idiosyncrasies in federal funding and education. From time to time, Ed Money Watch will take a close look at one aspect of the data available through FEBP to highlight the value of this information.

This week, we'll take a look at federal Title I grants to local school districts and student poverty data available through the FEBP database. Title I Part A is the largest federal K-12 education program, providing more than $14 billion annually to local education agencies (LEAs) for supplemental education services for students from low income families. Title I funding data reveal formula flaws that significantly skew the relationship between poverty and funds received. In fact, the Title I formulas are considered a relatively opaque and inaccessible process that few education stakeholders understand.

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.

New York Governor Slashes Higher Education Budget

Florida Lawmaker Asks Attorney General to File School Funding Lawsuit

Indiana Governor Hints that Education Cuts Are Likely

Higher Education Costs Continue to Rise in Rhode Island

New York Governor Slashes Higher Education Budget
New York Governor David Paterson this week initiated major midyear budget cuts to higher education, state prisons, and public health, among other programs. The State University of New York (SUNY) saw its budget cut by $90 million, and the City University of New York lost $53 million. The $90 million cut from the SUNY budget represents 18 percent of the cuts to all agencies - a burden that some believe is unfair for to the university system and its students. More here...

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

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

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

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

Last Thursday, October 1^st, federal fiscal year 2010 officially began. Technically speaking, Congress and the President should have wrapped up the annual appropriations bills by that date, providing fiscal year 2010 funding for about a third of the federal government and nearly all federal education programs.

Only one of the 12 separate appropriation bills -- the bill funding the operations of the legislative branch -- actually made it to the President's desk by the start of the new fiscal year. So, as is common practice, Congress passed a bill called a continuing resolution (CR) to provide federal programs a few weeks of temporary 2010 funding while it works to finalize the rest of the bills. The temporary funding lets programs operate at the 2009 funding levels until October 31^st, 2009.

The Labor-HHS-Education appropriations bill, which funds federal education programs, is far from its final form at this stage. The House passed its version in the summer while the Senate has yet to indicate when it will consider its committee's bill in the full chamber. Even after Senate passage, the two Houses will need to reconcile some minor funding differences and vote on the compromise version again before the President can sign it into law. That could be many weeks away.