Education Stimulus

Pell Grants for the 2009-10 school year have become a budget nightmare. The program has always had its budgeting quirks, but this year is shaping up to be the most complicated and confusing of all. New funding streams, unfinished 2009 appropriations bills, stopgap funding measures, shortfalls, and now a stimulus bill have created one ugly Pell Grant budget. We'll try to sort out the factors that play into the 2009-10 grant.

The Pell Grant program is the cornerstone of federal grant aid for low-income college students. This academic year, low-income students will receive Pell Grants worth between $890 and $4,731 each to pay for tuition and other attendance related costs. When determining Pell Grant appropriations, Congress sets a maximum grant level for the year and provides what it estimates to be the necessary funding. Each student's grant amount is determined by a formula based on his or her financial need.

The Shortfall and Temporary Fix

Over the weekend, Congress passed the much anticipated 2009 stimulus bill. Once the president signs the bill, the Department of Education will begin the process of distributing the over $90 billion in education funds. In the end, the amount each state will receive is only slightly less than what was allocated in the House adopted bills. Some states fare quite well and can expect a rather large infusion of funds (DC, Louisiana, Wyoming), while others will have to make do with considerably less (Utah, Mississippi). As was expected, the distribution of funds is skewed by the existing Title I formulas.

To help shine a light on the distribution process, the House Education and Labor Committee has released state and district level estimates of stimulus dollar distributions for the major programs listed in the stimulus bill.  The Committee's estimates are based on CRS calculations of 2009 allocations to states and districts for Title I Grants to local education agencies (LEAs), Title I School Improvement Grants, Title II Education Technology Grants, McKinney Vento Homeless Assistance, IDEA Part B, IDEA Part C, and the State Fiscal Stabilization Fund (for all years).

After much deliberation, the Senate and House of Representatives have come to an agreement on a conference report of the stimulus bill. If the conference report passes in both houses, the bill will go to the president for his signature. As we described in previous posts, there were many significant differences between the versions passed originally by the House and Senate. In the majority of cases, the conference report represents a compromise between the two bills, particularly as it concerns the Fiscal Stabilization Fund - a new fund to help states maintain funding for education and other services.

The conference report funds the State Fiscal Stabilization Fund at $53.6 billion for the purpose of filling the gap between 2006 and 2008 or 2009 elementary, secondary, and post-secondary funding levels in fiscal years 2009, 2010, and 2011. It includes a maintenance of effort provision requiring states to maintain 2006 funding levels for K-16 education in order to receive funding. These funds are to be distributed to states based on school age and total population. 

Stimulus Agreement Reached That Will Benefit Students and Colleges

More Help on the Way for Private Loan Providers

MyRichUncle Declares Bankruptcy

Earlier today, Higher Ed Watch offered our recommendations for how Congress should resolve differences between the U.S. House of Representatives and Senate stimulus packages over legislative provisions that would send money directly to states so they can help their higher education systems weather the fiscal crisis. In this post, we will weigh in with our suggestions for how lawmakers should resolve the legislative differences in the student aid proposals.

Members of the U.S. House of Representatives and the Senate are reportedly close to striking a deal to reconcile their competing versions of the American Recovery and Reinvestment Act. Though both bills come with a price tag in the hundreds of billions of dollars, there are substantial differences between the House and Senate stimulus bills -- especially with respect to higher education. Yesterday, we outlined where the two bills diverged. Today at Higher Ed Watch, we will offer our own advice, suggestions, and important points to remember for the conference committee as it meets to forge a compromise acceptable to both chambers.

In this post, we will focus on provisions in the legislation that go directly to states so they can help their higher education systems weather the fiscal crisis. Later today, we will shift our attention to the student aid proposals in the bills.

The Stimulus bill has been the topic of news coverage, blogs, and dinner table conversations since it was first released by the House a couple of  weeks ago.  But amongst the din of discussion, some common misperceptions have developed, as multiple versions of the bill have been debated. Here at Ed Money Watch we aim to clear up such misperceptions and provide you with up-to-date information on federal education funding.  As such, below is our list of the top five common stimulus misperceptions.

 Top Five Stimulus Misperceptions

This afternoon the Senate voted 61-37 to pass a slightly slimmer iteration of the American Recovery and Reinvestment Act than it initially proposed. Now, members of Congress will have some important decisions to make when they try to reconcile the two competing stimulus bills in conference committee. Today, Higher Ed Watch takes a look at some of the looming fights. Tomorrow, we will offer our suggestions for resolving the discrepancies between the two bills. 

Since the House passed its version of the Stimulus bill late last month, the Senate has been crafting its own version.  The Senate is wrapping up debate on the initial bill reported from the Senate Appropriations Committee on January 27th. News reports suggest that several Senators took issue with the total cost of the bill, jeopardizing the 60 votes needed to pass it.  To avert a stalemate, Senators Collins (R-ME) and Nelson (D-NE) forged a compromise late last week that appears likely to garner sufficient support to pass. 

Ed Money Watch has analyzed the proposed compromise below. Our calculations suggest that if amended, the Senate version would provide $60 billion less in education stimulus funding than the version reported out of committee.  This difference is primarily due to the elimination of stimulus dollars for K-12 and higher education renovation and modernization (previously $19.5 billion total) and the $40 billion reduction in the State Fiscal Stabilization Fund (previously $79 billion total).

The Senate and House of Representatives versions of the stimulus legislation both contain billions of dollars for institutions of higher education to modernize, renovate, and repair their existing instructional and research facilities. But there are crucial differences between the two bills that will have important ramifications for states and institutions of higher education, especially community colleges.

Unlike the additional Title I stimulus funding, which yielded surprising winners and losers, the higher ed construction money would be doled out relative to a state's percentage share of the total full-time equivalent national undergraduate population. (This includes students at public and private nonprofit schools, but not those at for-profit institutions like the University of Phoenix). It is unsurprising, therefore, that highly populated states (California, Texas) will receive the most money, while small population states (Alaska, Wyoming) will receive the least.