Ed Money Watch

Last week we examined the rate at which stimulus funds for different programs have been disbursed by states for spending. Despite encouragement from the Department of Education to spend funds quickly, the majority of education stimulus funds have not yet left the bank. However, this is not the case in all states. While some states are moving quickly to disburse their stimulus funds, others have not, emphasizing the lack of connection between the funds allocated to states and their financial need. Today we will explore the disbursement of stimulus funds at the state level with a close look at activity in two particular states.

As of September 4^th, the Department of Education had obligated (made available for spending) $66.5 billion in stimulus funds to the states. However, states had only disbursed $16.6 billion of those funds for spending at the local level. On average, that's just over 25 percent. While some states have disbursed significantly more than 25 percent of their obligated funds, many states have disbursed far less. The story becomes even more interesting when a state's budget deficit is included in the consideration. While logic would suggest that states with particularly high projected budget deficits would have incentive to spend their stimulus funds more quickly, that is not always the case.

Earlier this month, the Government Accountability Office (GAO) released a new study, "Recovery Act: States' and Localities' Current and Planned Uses of Funds While Facing Fiscal Stresses," examining how 16 states[1] and the District of Columbia have spent and plan to spend American Recovery and Reinvestment Act (ARRA) funds provided under a variety of programs. The study is a follow-up to two earlier reports on the subject, released in April and July. This post discusses the findings in the latest GAO report.

State Fiscal Stabilization Fund
The State Fiscal Stabilization Fund (SFSF) is a new $48.6 billion program designed to minimize state budget cuts for education and other government services.

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.

Arizona to Face School Funding Lawsuit

West Virginia Schools Turn to Stimulus Money to Fill Funding Gaps

Higher Education Targeted in Colorado Budget Cuts

Since the release of the Race to the Top grant priorities in late July, states across the country have been scrambling to ensure their eligibility for their share of the $4.35 billion in federal funds to encourage innovation in education reform. Several states, including California, Nevada, Wisconsin, New York, Alaska, Missouri, and Texas, were immediately identified as ineligible for the program due to student data "fire walls" or unwillingness to participate in the common standards process. But California's Governor, Arnold Schwarzenegger, is unwilling to let as much as $500 million slip through his fingers. On August 20^th he called a special session of the legislature to consider a bill that would immediately enact sweeping changes to the state's education system and remove any barriers to the Race to the Top funds. Below, we discuss details of the proposed California bill.

The bill includes six major changes to existing California education law:

It has been nearly seven months since President Obama signed the American Recovery and Reinvestment Act (ARRA) with the hopes of stimulating the economy and encouraging education reform across the states. While some pundits have already declared the bill a failure, others claim that the stimulus funds are hard at work. At the heart of this discussion are both whether the stimulus funds are available to be spent and whether they have actually been obligated and disbursed to states for spending. Below we discuss the major programs funded through the stimulus and the status of their funds as of August 28^th, 2009.

The ARRA provided nearly $97 billion to the Department of Education (ED) through a variety of existing federal k-12 and higher education programs, as well as a new State Fiscal Stabalization Fund. About $55 billion of this funding is currently obligated to states. Despite encouragement from ED for speedy spending, less than one-third of those funds have been disbursed to states. This leaves nearly $40 billion sitting in ED coffers waiting to be spent.

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.

California Scales Back Class Size Reduction Program

More Cuts Could Coming in Mississippi

Pennsylvania Governor Urges Adequate Funding for Schools as State Grapples with Budget Standoff

In late July the Department of Education (ED) released the draft priorities for the Race to the Top grant funds for public comment. The document outlined 19 criteria on which states' applications will be judged, including the existence of charter school caps, laws preventing the use of student achievement data to determine teacher compensation, and approved alternative pathways to teacher certification. As of August 28^th, ED received over 1,100 comments, with many stakeholder groups voicing concern that the criteria were overly prescribed and stringent, requiring states to improve public education through specific channels like performance pay and charter schools. According to these groups and individuals, this is in direct contradiction with the administration's previous promise to focus on goals for educational improvement rather than the methods by which those goals are achieved. But the unique structure and competition involved in the Race to the Top grants justifies the priority document's specificity.

In mid-August the Congressional Budget Office (CBO) released its 2009 Budget Options, a bi-annual publication estimating the cost or savings associated with numerous possible changes to federal programs. Last November Ed Money Watch discussed problems with a proposal to change the Child Nutrition Program (CNP) analyzed in previous Budget Options (2003, 2005, and 2007). While the Child Nutrition Program proposal analyzed in this year's publication differs significantly from the one included in the past, it still misses out on an important improvement to the program - including Medicaid data as a method of identifying eligible students.

The National Child Nutrition Program provides free and reduced priced meals to low-income children through a per-meal federal subsidy based on family income. Students from families with incomes below 130 percent of the poverty line receive free meals, students from families with incomes below 185 percent of poverty receive reduced-price meals, and all other students receive full-price meals. Student income levels are established either through TANF (the federal welfare program) or food stamp data or paper application.

Ed Money Watch will be on vacation for the next two weeks and back on Tuesday, September 1st. Be sure to come back in the fall for reporting and analysis on the continuing distribution of American Recovery and Reinvestment Act (stimulus) funds including the State Fiscal Stabilization Fund and Race to the Top Grants. We will also provide coverage of the federal education budget as it is shaped by the on-going fiscal year 2010 House and Senate appropriations processes, as well as the budget reconciliation bill likely to pass this fall.

Have a great summer!

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.

Pennsylvania Budget Impasses Leaves Grant Recipients in Limbo

Schools Dealing with Oklahoma's 5 Percent Budget Cut

GAO Releases Teacher Quality Report