Low-Income Students

In 2006, President Bush signed two new higher education grant programs into law: the Academic Competitiveness (ACG) and Science and Mathematics Access to Retain Talent (SMART) grant programs. Both have received mixed reviews from the higher education community, and recent reports from the Department of Education have shed new light on the programs' fledgling operations. This information will certainly affect Congress and the president's decision to extend the programs which are set to expire after fiscal year 2010. The Obama Administration's full fiscal year 2010 budget, expected to be released as early as this week, might give the first clue as to what the new Administration plans to propose for the grant programs. In the meantime, let's take a brief look at what we know about the programs.

Since the passage of the stimulus bill in mid February, states and school districts have been curious about the details for the new Qualified School Construction Bond program. To date, the Department of Education hasn't provided many details on the program, perhaps because it is a tax program, not a spending program. Turns out, the Internal Revenue Service (IRS) released guidance and allocations for the program to states and LEAs in mid April.  We review these allocations in the post below[1].

The Qualified School Construction Bond program provides $11 billion face value in tax-free bonds in both fiscal years 2009 and 2010 to help fund school construction, rehabilitation, repair, and land acquisition. It is estimated that the federally-funded bonds will save schools nearly $10 billion in taxes over the next 10 years. Effectively, the federal government is providing interest-free loans to schools and districts to finance school construction efforts. While the schools and districts must repay the loan face value, they do not have to pay interest on it. Stimulus legislation stipulates that 40 percent of the bond face value be distributed to the 100 local education agencies (LEAs) with the most students living in poverty and the remaining 60 percent to other LEAs based on the distribution of Title I Part A Basic Education Grants.

The Department of Education (ED) released long awaited guidance documents for the major programs funded in the American Recovery and Reinvestment Act on April 1st. Each document specifies how funds for each program will be distributed, how each governor must disperse the funds, and how states and local education agencies (LEAs) will be able to use them.  Because each document is 40 pages or longer, we will summarize the guidance in three separate posts.  Yesterday we discussed the guidance for the State Fiscal Stabilization Fund.

Today, we take you through the details of the guidance for the Title I, Part A funds provided in the stimulus.

Unfortunately, this round of guidance does not provide specifics on programs and services states and LEAs can support with the new Title I funds.  But it does provide extensive details on how states must distribute the money among LEAs and what requirements LEAs must follow while using the money.

Since the President signed the stimulus bill (also known as the American Recovery and Reinvestment Act) on February 17^th, school districts across the country have anxiously awaited the arrival of their Title I and IDEA funds.  The House Education and Labor committee published data on how much money each district is estimated to receive.  But few have taken a closer look at how those dollars relate to poverty and district size.

To get a better sense of how stimulus allocations will be affecting students in school districts across the country, we examined both the total stimulus funding per student and the Title I stimulus funding per poor student.  As we've discussed previously, it's estimated that districts will receive widely varying amounts of stimulus money based on these two measures. Some districts will receive as little as $1 per student or as much as $17,893 per student in total stimulus funds.  At the extremes, the district receiving the most Title I stimulus per poor student will get an estimated $36,889, while the district receiving the least will get $123 per poor student. 

Our Findings

This Guest Post was written by Phillip Lovell from First Focus and  Barbara Duffield from the National Association for the Education of Homeless Children and Youth.

Barely a day goes by without a front page story covering some aspect of the recession. Much of what we read hits on the economic nature of the crisis; much less attention has been paid to the impact of the economic downturn on children.

Policymakers are finally noticing the recession's impact on children. Last summer, Congress passed major legislation-The Housing and Economic Recovery Act-that dedicated two (out of 261) pages to addressing the needs of children who have become homeless due to the foreclosure crisis.  More recently, the economic stimulus package, otherwise known as the American Recovery and Reinvestment Act, includes millions in funding for school districts to help keep children and youth in school even if they lose their homes. These funds are provided through The McKinney-Vento Act's Education for Homeless Children and Youth (EHCY) program.

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).

Yesterday we took a look at total stimulus funding per student as estimated by the House Education and Labor Committee's stimulus allocation data.  Today, we will take a closer look at the estimated 2009 Title I funding distributions per poor student in each state and the District of Columbia (Puerto Rico is not included in Census estimates).  Title I stimulus distribution is expected to be the same in 2009 and 2010.  To the untrained eye, Title I stimulus funding appears to be allocated randomly, with little connection to student poverty levels.

According to the House stimulus bill, distribution of stimulus Title I funds will be channeled through two Title I funding formulas: 50 percent through Targeted Grants and 50 percent through Education Finance Incentive Grants (EFIGs).  Both of these formulas target funds based on the number of poor students in a state or district as measured by the census.  We used 2007 census data for our analysis.

Since the release of the House Stimulus bill more than a week ago, education stakeholders have come alive with speculation about the distribution of funds.  Today, the Education and Labor Committee released Congressional Research Service (CRS) estimated stimulus allocations to local education agencies (LEAs).  The estimates include 2009 and 2010 allocations for Title I, IDEA, school construction, and total stimulus spending, all of which are based on FY 2008 Title I allocations.  In an effort to make this information as accessible as possible, we turned the CRS data into an excel spreadsheet and performed a few analyses using our Federal Education Budget Project (FEBP) data.

The average stimulus allocation per district can be found in the table below.

Our first analysis examined the stimulus allocation by state including the District of Columbia and Puerto Rico.  We summed all of the district allocations at the state level for both 2009 and 2010 and merged in select data from the FEBP database including total students, free and reduced priced lunch participation, special education participation, and Title I and IDEA allocations for FY 2008. 

Here at Ed Money Watch and the Federal Education Budget Project (FEBP) we are always working to better understand the distribution of federal education dollars to schools and districts.  The Department of Education recently released a report that seeks to do just that for six federal education programs: Title I, Title II, Title III, Reading First, Perkins Vocational Education Grants, and Comprehensive School Reform (CSR).[1]

In general, the report gives a frank assessment of the degree to which federal programs effectively or ineffectively distribute funds to the schools and districts that most need them - those with large low-income populations.  The most interesting findings pertain to Title I, the largest source of K-12 federal funding created to provide low-income, high need students with supplementary academic services.