Ed Money Watch

Last week, the Department of Education released data on the 339 applicants for the 2010 Promise Neighborhood competitive grant program. Congress included $10 million in 2010 appropriations for Promise Neighborhood planning grants, a particular priority of President Obama. The Promise Neighborhood program is a new program that was first funded in 2010. These grants provide funds to support the development of a plan to implement a comprehensive approach to education in a high-need area that includes a focus on community and family involvement in education. Promise Neighborhoods seek to break down the silo-ed nature of public services in local areas to create a more supportive and synchronized system.

The Department of Education plans to award up to 20 Promise Neighborhood grants ranging from $400,000 to $500,000 under the fiscal year 2010 appropriation that was made last December. These grants, which will support organizations as they plan their Promise Neighborhoods, will last for 12 months. Depending on the further availability of funds, the Department of Education may provide further grant aid that will fund the implementation of projects receiving planning grants.

For the 2010 grant competition, 339 non-profits, institutions of higher education (IHEs) and other organizations applied for grants. Unsurprisingly, the vast majority (260) of the applicants were non-profit organizations. Sixty-two IHEs applied for grants and 17 other types of organizations applied. In most cases, “other” organizations included city governments and school boards.

The Department of Education also identified three “absolute” priorities under which each applicant must apply. The first priority requires an applicant to submit a proposal for how it plans to create a Promise Neighborhood. This proposal must include descriptions of the community it will serve, how it will maintain the programs it implements, and what methods it will use to evaluate its progress. Every applicant must fulfill the requirements of this priority. Applicants that only apply under the first priority must find matching grants equal to 50 percent of their Promise Neighborhood grants. Of the total applicants, 270 applied under only the first priority.

Applicants can also choose to apply under the second or third absolute priorities, given that they also meet the requirements under the first priority. Forty-eight applicants applied from rural communities, qualifying them for the second priority, while 21 applicants applied from tribal communities, qualifying them for the third priority. Applicants under the second and third priorities must find matching grants equal to only 25 percent of their Promise Neighborhood grants.

Organizations applied from all 50 states and the District of Columbia and larger states tended to have more applicants than smaller states. For example, California had 45 applicants and New York had 29. In contrast, only three organizations applied for grants in Iowa and only one applied in South Dakota. Surprisingly, Texas had only 19 applicants, relatively few given its large population size. The District of Columbia, on the other hand, had 9 applicants, significantly more than 37 other states.

The Department of Education expects to announce grant winners in September 2010, meaning they have less than two months to weed through 339 applications and narrow it down to around 20 winners. But for those 20 winners, this grant could be the first step in a major overhaul of how American communities deliver education services.

According to the President’s 2011 budget request, the Obama Administration hopes to make the Promise Neighborhood program more permanent with $210 million in fiscal year 2011 appropriations. However, both the House and Senate Appropriations Subcommittee bills suggest that this goal may be difficult to achieve – they only provide $60 million and $20 million, respectively, for the program in 2011.

Today, U.S. Secretary of Education Arne Duncan announced the finalists for Round Two of the Race to the Top competition – 18 states and the District of Columbia. Race to the Top is a $4.35 billion program created by the American Recovery and Reinvestment Act that provides competitive grants to states to implement education reform programs. The 19 finalists will have a chance to present their Race to the Top proposals to a panel of judges. Final scores will be assessed after the presentations and the top states will receive grants. There is $3.4 billion available for this round of awards after Delaware and Tennessee received a combined $600 million in Round One. Secretary Duncan said that he expects to make 12 awards to states.

For the most part, the 19 finalists are no surprise. Favored states like Georgia, Florida, and Illinois, which have solid records for reform, all made the cut. These states ranked third, fourth, and fifth in the Round One scoring, further solidifying their reputations as reform-focused states. In fact, the states that scored third through sixteenth in Round One all made it in the finalist list for Round Two (Delaware and Tennessee, the Round One winners, ranked first and second, respectively).

But there were some surprises. Arizona, which ranked 40th in Round One with 240 points, made it into the Round Two list of finalists. According to news reports, all Round Two finalists scored above 400 (out of a possible 500), which means that Arizona gained at least 160 points between the first and second rounds. Unfortunately, the Department of Education has not yet made score breakdowns for each state available so we don’t know what about Arizona’s new proposal improved its score so significantly.

Wild card California also made it on the Round Two finalist list, despite a Round One score of 336, placing the state 36th. However, California’s Round Two application differed significantly from its Round One application. The state chose to focus on a few large school districts including Los Angeles Unified, rather than seeking to gain more universal buy-in from its more than 1,000 school districts. Secretary Duncan specifically ok’d this plan for California, inspiring some vocal dissent for the plan.

Hawaii and New Jersey are also unlikely finalists. Both states scored below 400 in Round One, ranking 18th (New Jersey) and 22nd (Hawaii). Maryland, which didn’t apply in Round One, also made the list. And there are some states that didn’t make the cut, like Utah and Oklahoma, which were expected to make it through in Round Two.

Of course, without further details on how each state scored in this round, we cannot speculate one who the final 12 or so winners may be. And the Round Two Race to the Top process is far from over. States still need to present their proposals to the judges, which could further change rankings from where they currently stand.

Similarly, Secretary Duncan will have to determine how he will negotiate the distribution of funds among states to maximize the impact of the program. For example, if large states like California, Florida, and New York all receive grants (at a maximum of $700 million each), there will be far less left for the smaller states. Conversely, if none of these states receive a grant, there will be a lot more to go around for the smaller finalists like DC, Hawaii, and Rhode Island.

Luckily for the finalists, the entirety of the current Race to the Top funding is likely to remain intact – cuts to the program passed in a House spending bill were rejected by the Senate. And Race to the Top may continue past the current competition as well – both the House and the Senate Appropriations subcommittees included some amount of Race to the Top funding in their 2011 bills.

Check back with Ed Money Watch more details on Race to the Top.

Earlier this week, Ed Money Watch provided details on the Labor-Health and Human Services-Education Appropriations Subcommittee bill for fiscal year 2011. In total, the subcommittee provided $72.0 billion for Department of Education discretionary spending. But the subcommittee also released another document detailing an entirely different kind of discretionary spending – Congressional earmarks.

Earmarks are funds Congress provides to projects and programs under a budget account that do not require a formula-based or competitive allocation process. Essentially, this means that members of Congress can direct specific funds provided under certain programs to projects of their liking, most often within their Congressional district. Earmarks are sometimes referred to as “Congressionally Directed Spending Items,” but many stakeholders call them “pork barrel spending.”

This year, Congress included $355.9 million in earmarks in the fiscal year 2011 appropriations bill split among several different accounts, less than one-half of one percent of the total Department of Education funding. This includes $95.5 million in “Presidentially Directed Spending Items.” Earmarks range anywhere from $70,000 (for the Eastmont Community Center in Los Angeles, CA) to $33.3 million (for Alaska Native Educational Equity) but the majority of earmarks goes to local programs ranging between $200,000 and $700,000.

The majority of individual earmarks are made under two programs, the Fund for the Improvement of Education (FIE) and the Fund for the Improvement of Postsecondary Education (FIPSE). There is a reason for this. These two programs are so broadly defined in their scope and mission that nearly any program a Member of Congress could think up can fit under them. In other words, they have become earmark slush funds.

For 2011, the House subcommittee provided $27.6 million in FIE earmarks and $30.4 million in FIPSE earmarks. For example, Rep. Rosa Delauro (D-CT) requested $325,000 for the Connecticut Technical High School System in Ansonia, CT under FIE. Rep. Henry Brown (R-SC) requested a $250,000 earmark under FIPSE for Trident Technical College in North Charleston, SC.

Admittedly, the House has shown some restraint in the earmark process so far this year. For fiscal year 2010, the House passed version of the Labor-HHS-Education bill included $77.6 million in earmarks for FIE, $50 million more than this year, and $132.9 million for FIPSE, $102.5 million more than this year's subcommittee bill (which hasn't yet been considered by the full house).

A few larger earmarks are made under a few of the Department of Education’s National Projects accounts. These larger earmarks tend to be for existing programs or organizations that typically receive federal support like Teach for America (which was provided a $20.0 million earmark). For example, House members requested $141.6 million in earmarks under the Innovation and Improvement National Projects. This includes $10.6 million for the National Board for Professional Teaching Standards requested by Rep. Bob Etheridge (D-NC). Under the School Improvement National Project Account, House members requested $71.6 million in earmarks including $5.0 million for New Leaders for New Schools requested by George Miller (D-CA).

In all, earmarks account for less than one-half of one percent of the Department of Education’s fiscal year 2011 discretionary budget under the subcommittee’s bill. But they do represent some of the most targeted spending that will occur in the annual budget process. Moreover, they are never subjected to the type of performance reviews that other federal programs would be and they help to fuel lobbying on Capitol Hill. Check back with Ed Money Watch as we keep a close eye on the earmarks as the budget process continues.

Last Thursday the House Appropriations Subcommittee on Labor, Health and Human Services, and Education passed its fiscal year 2011 funding bill – the first step in the annual appropriations process that will determine funding levels for all but a few federal education programs. Fiscal year 2011 begins October 1st, 2010. Overall, the chairman’s mark included total funding of $176.4 billion, $1.5 billion less than the president’s 2011 budget request. This includes $72.0 billion for the Department of Education, $1.5 billion less than the president’s request and $7.7 billion more than the current year funding level.

The Subcommittee’s mark up provides more funding for education programs than the fiscal year 2010 appropriations bill in all but a couple occasions. The largest increase (in terms of percent of funds) went to the Promise Neighborhood program, which the subcommittee provided $60 million up from $10 million in 2010. However, the Promise Neighborhood increase provided in the mark up dwarfs the president’s requested funding level of $210 million for the program.

The subcommittee mark up also includes a significant increase for Innovation and Improvement programs, which would receive $2.4 billion in 2011, up from $1.4 billion in 2010. The Innovation and Improvement increase over 2010 levels can be attributed almost entirely to Race to the Top and the Investing in Innovation fund, which received no appropriation in the 2010 fiscal budget. These programs, which were created by the American Recovery and Reinvestment Act of 2009 and funded at a combined $5 billion, have become favorites of the Obama Administration for their emphasis on education reforms. The president requested $1.5 billion for Race to the Top and $500 million for Investing in Innovation for fiscal year 2011. However, the subcommittee mark up provides $800 million for Race to the Top in fiscal year 2011 and $400 million for Investing in Innovation.

Innovation and Improvement programs also include teacher-centric programs like the Teacher Incentive Fund, school choice programs like Charter School Grants, and subject-specific programs like Teaching American History grants. The president’s budget request included a substantial reorganization of these programs including several consolidations and a few eliminations which would have brought total Innovation and Improvement spending not include Race to the Top and the Investing in Innovation fund funding to $4.5 billion. The relatively low appropriation for these programs included in the subcommittee-passed bill suggests that the Democratic majority on the subcommittee has chosen to ignore the President’s proposed program consolidations in this budget cycle, likely so they can be considered during the reauthorization of the Elementary and Secondary Education Act next year.

The subcommittee mark up also includes $23.1 billion for Pell Grants, $5.7 billion more than the 2010 appropriation. In contrast, the president requested $0 in discretionary spending for Pell Grants because he proposed making it a mandatory spending program. Congress rejected this proposal. But the $23.1 billion in the mark up is not enough to maintain the current maximum grant level of $4,860. Congress also passed a reconciliation bill earlier in 2010 that provides an additional $13.5 billion for Pell Grants. Combined with the $23.1 billion in 2011 spending, these funds will cover the full $35.1 billion cost of the program.

Title I Grants to School Districts and Individuals with Disabilities Education Act (IDEA) Grants to States also received increases in the subcommittee mark up. Title I would be funded at $14.9 billion under the chairman’s mark, $400 million more than in 2010 and than the president’s requested level. IDEA would be funded at $13.0 billion, $412 million above the 2010 level and $153 million more than the president’s request.

The subcommittee mark up also provides $5.3 billion for School Improvement Programs, $30 million less than the 2010 funding level but $2.2 billion more than the president’s requested level. School Improvement Programs include Improving Teacher Quality State Grants, Educational Technology State Grants, State Assessment Grants, and other programs aimed at improving education services. The president’s budget request made dramatic changes to these programs including some consolidations and eliminations that would have resulted in a total appropriation of on $3.1 billion. However, the subcommittee’s mark up maintains near 2010 spending levels for these programs, suggesting that they have chosen to ignore the president’s requested changes.

Unfortunately, the subcommittee has only made a summary table of its mark up available to the public – instead of the full text or a comprehensive table. The summary includes very few program-specific funding levels, making it impossible to determine how much a program like the Teacher Incentive Fund would receive in 2011 based. That said, the House subcommittee mark up represents a large increase in education funding for 2011 over 2010 levels, though it does not quite reach the president’s request. This increase is sure to be unpopular with deficit-sensitive legislators once the bill reaches the full Appropriations Committee and is later considered on the House Floor (which might not be until after the November election). Check back with Ed Money Watch for updates on this process.