Education Budget

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."

As we discussed yesterday, both Houses of Congress took up the 2009 congressional budget resolution this week. The budget resolution serves primarily as a blueprint that shapes tax and spending legislation considered later in the year by Congress. One obscure component of the budget resolution can have a big influence on education funding for the upcoming fiscal year: the advance appropriations limit.

Both the House and Senate versions of the budget resolution would increase the limit on the amount of funding that the Appropriations Committees can appropriate through advances. The House sets the advance limit at $27.6 billion, and the Senate allows $29.4 billion—$2.4 and $4.2 billion more than in fiscal year 2008. What does this mean for education? It likely means Congress is planning on boosting education funding this year—but at the expense of budget transparency by using this confusing procedure.  

The House and Senate are expected to vote tomorrow on the congressional budget resolution for fiscal year 2009, and debate over the resolution is becoming increasingly contentious. Do education advocates and the media really know what is at stake for education?

Both the House and Senate budget resolutions would boost discretionary spending above an inflationary baseline increase from the current fiscal year 2008 levels and above President Bush's fiscal year 2009 budget request. The Republican minority is not pleased, labeling the spending increase "huge" and "astonishing"

PHEAA Temporarily Suspends Federal Student Loans

Spellings Takes the Heat for President Bush's Education Budget Request

Public Colleges and Universities Pinched by State Budget Shortfalls

Brown University Increases Financial Aid

Ed Money Watch has some questions for the Bush administration on its fiscal year 2009 budget request for education.

K-12 EDUCATION

1) The administration proposes increasing No Child Left Behind (NCLB) Title I grants to school districts by 2.9 percent, essentially an increase matching inflation. It also proposes redirecting a greater proportion of Title I funds to high schools. Does this mean that school districts will have to cut Title I funding for K-8 schools, since districts will effectively receive the same level of funding as in the previous year? How will this affect student achievement in grades 3 through 8?

[slideshow] 2) The administration’s budget proposes shifting $100 million from the NCLB’s Title II "Improving Teacher Quality State Grants" program to a "Teacher Incentive Fund" program that supports state and local performance-based compensation initiatives and incentives for teachers to serve in challenging schools. These activities already are allowed under the large and flexible Improving Teacher Quality State Grants program. Why, when the administration is generally trying to consolidate programs and get rid of duplicative ones, does the budget slice off funding for this smaller duplicative program?

Higher Ed Watch has some questions for the Bush administration about its Fiscal Year 2009 higher education budget: [slideshow]

1) The Federal Family Education Loan (FFEL) program and the Direct Loan program show similar per loan costs for 2008 and 2009, with the FFEL program showing a slight cost advantage for the first time. However, page 364 of the Budget Appendix notes that costs are higher for the Direct Loan program, because it holds nearly 100 percent of student loans that have defaulted (under FFEL and Direct Loans) and have been rehabilitated through consolidation.

Can per loan program costs be accurately compared when high-default risk FFEL loans are dumped into the Direct Loan program? If OMB and the Department of Education corrected cost estimates for this bias, how would the costs change? Which program would be cheaper for taxpayers if costs were controlled for borrower differences?

2) Federal funds held by state guaranty agencies used to pay loan default claims under the Federal Family Education Loan (FFEL) program nearly doubled to $1.1 billion in 2007 from $579 million in 2006. Are the federal funds held by guarantee agencies in excess of what is needed to pay default claims, and if so, would the administration recommend recalling those funds?