Ed Money Watch

Much has been said about the recent student loan bill authored by Congressman George Miller (D-CA). The bill makes some major changes to the existing federal student loan program and provides significant funds for early learning programs. But little has been said about the $5.0 billion the bill provides for modernization, renovation and repair of public school facilities including early learning facilities.

The bill provides school facilities funding through two separate pots. One funding pot, $2.5 billion in both 2010 and 2011, will be distributed to states based on their share of total Title I funding (after reserving 7 percent of funds for outlying and disaster areas). States will then distribute those funds - minus a 1 percent set-aside for administration - directly to local education agencies (LEAs) based on their share of total state Title I funds.

The second pot consists of an additional $35 million in both 2010 and 2011 for LEAs in Louisiana, Mississippi, and Alabama to address damage incurred during Hurricanes Katrina and Rita. These funds will be distributed based on each LEA's share of the total cost of damage to public school infrastructure.

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.

In Massachusetts, Charter School Limit Could Double

Arizona Stimulus Mix-Up Leaves Schools with a $250 Million Windfall

Ohio Education Plan Is a Mixed Bag

Avoiding Tax Hikes, Pennsylvania Democrats Drop Some Higher Ed Funding From Budget

Last Friday the House Appropriations Subcommittee on Labor, Health and Human Services, and Education approved its version of the 2010 appropriations bill for programs under its jurisdiction. Overall, the bill increases the total Department of Education appropriation by more than $6.0 billion from 2009 levels with large increases for several major programs. However, the House bill does not fulfill all of the President's requests.

Most notably, the House Subcommittee did not honor the President's request to increase the allocation for School Improvement Grants under Title I of the Elementary and Secondary Education Act by nearly $1.0 billion. While the President's plan would have diverted funds from Title I Grants to local education agencies (LEAs) into the School Improvement Grants, the House Subcommittee bill maintains 2009 levels for LEA grants and School Improvement Grants. However, the American Recovery and Reinvestment Act (ARRA) provides an additional $3.0 billion in School Improvement Grants for 2009 and 2010.

In February, President Obama proposed eliminating the Federal Family Education Loan (FFEL) Program and shifting all new federal student loans to the Direct Loan Program. Both programs provide the same loans to student borrowers (i.e. Stafford loans), although they are administered in different ways. While media coverage has focused on the lenders that operate the FFEL Program, federal student loan guaranty agencies have been largely ignored. Guaranty agencies are private non-profit or state government entities that administer federal insurance and collect on defaulted student loans. Yet any significant changes to the FFEL Program will affect these little-understood entities.

To help inform the debate on federal student loan reform, the New America Foundation's Education Policy Program today released "Rethinking the Middleman," a policy paper that provides an overview of the history and current responsibilities of guaranty agencies, a critical analysis of the federal payments these entities receive, and recommendations for reforms.

The paper includes the following:

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.

Education Budget Higher Overall, but Other Districts See Cuts in Indiana

Budget Shifts in North Carolina

California's Governor's Borrowing Plan Risks Stimulus Funds

Texas Stimulus Application for Education Draws Concerns

As states have been submitting their State Fiscal Stabilization Fund (SFSF) applications, questions have arisen regarding Maintenance of Effort (MOE) provisions. In order to receive SFSF monies, states must maintain fiscal year 2006 spending levels in 2009, 2010, and 2011 for both K-12 and public institutions of higher education, or apply for a waiver. Recent guidance from the Department of Education (ED) provides insight into what the MOE provision actually means for state spending and how states can apply for waivers if necessary.

According to the American Recovery and Reinvestment Act (ARRA) legislation, states must satisfy the MOE for state spending on K-12 and higher education separately. This means that states cannot combine all state education spending into one lump sum that must be maintained in each year. Instead, they must ensure that K-12 and higher education receive at least a minimum level of funding individually.

The American Recovery and Reinvestment Act (ARRA) mandates significant reporting and record-keeping for states and school districts that accept funds. Recent guidance released by the White House's Office of Management and Budget (OMB) details those requirements, including the newly developed online system that will be used to collect the data. While the Department of Education (ED) will soon release further guidance on education-specific stimulus fund reporting, the OMB guidance provides good insight into the effort that will be involved in maintaining public records of stimulus funds and their impact on the economy, including an estimate of jobs created and retained.

New America Foundation's Education Policy Program is now on twitter.  For blog posts, event notifications, and press releases, follow us here:

 http://www.twitter.com/EdPolicyatNAF

The Department of Education recently approved the State Fiscal Stabilization Fund (SFSF) applications of five more states - Alaska, Nebraska, North Dakota, New Mexico, and New Hampshire. These states join the 31 states/territories that have already begun to receive funds. As of June 26th, nearly $6.2 billion in SFSF monies have been disbursed to states. (Previous posts analyzing the applications of the first 31 states/territories can be found here, here, here, here, and here.)

The full table of all 31 states/territories can be access here.

Something funny is happening in Pennsylvania. Last Friday, Pennsylvania Governor Ed Rendell submitted the state's State Fiscal Stabilization Fund (SFSF) application to the U.S. Department of Education. Although the application allocates funds to K-12 education, community colleges, a college of technology, and the state university system, it purposely leaves out the state's four "state-related universities."  These four institutions - Pennsylvania State University, University of Pittsburgh, Temple University, and Lincoln University - expected to receive more than $41.9 million under the state's original SFSF application.

The governor justifies the controversial move claiming that the four institutions are not under the "absolute control of the Commonwealth," meaning that he has no influence over how they allocate funds or set tuition levels. Similarly, the institutions do not receive funds from the state university system. Instead, they are funded via a "non-preferred appropriation," also referred to as "an appropriation to any charitable or educational institution." However, these funds are allocated through the General Fund Budget, just like funding for the state's Thaddeus Stevens College of Technology, which remains in the SFSF application. But this change may violate SFSF guidance which requires states to distribute SFSF monies to K-12 and higher education according to their share of the state's budget deficit.