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Happy Holidays from Ed Money Watch!

December 23, 2010

Ed Money Watch will be taking a break for the holidays. We hope everyone has a great holiday season and new year. Check back for new posts on the on-going federal appropriations process and its affect on the Pell Grant program, new developments in the American Recovery and Reinvestment Act of 2009 and the Education Jobs Fund of 2010, and reauthorization of the Elementary and Secondary Education Act, starting Tuesday, January 4th.

Counting Pell Grant Chickens Before They Hatch

December 22, 2010

It started out as a precarious year for the Pell Grant program and it looks like the year will end that way too. Despite media reports to the contrary, Congress just left town without providing any funding for the program in the 2011-12 school year. Congressional staff and the news media have done a major disservice to students and parents by claiming that the program is now in the clear. Here’s why:

Pell Grants are funded mostly through the annual appropriations process, which is supposed to be completed by the time the fiscal year starts on October 1st. This deadline is rarely met, so Congress funds programs subject to appropriations a few weeks or months at a time at the prior year’s levels until it can pass a year-long funding bill. Congress still has not passed a year-long funding bill for fiscal year 2011, which started months ago. The “continuing resolution” lawmakers passed last night temporarily funds programs through March 4th, 2011, and the new Congress that arrives in Washington in January will get the final say on fiscal year 2011 funding.

It’s a mistake to assume that the new Congress won’t cut funding for any number of programs – including Pell Grants – when it finalizes 2011 spending. Consider that House Majority Leader John Boehner (R-OH) has vowed to take appropriations funding back to 2008 levels – about 15 percent below this year’s levels.

But what about the media reports and congressional press releases claiming 2011 Pell Grant funding and a $5,550 grant is in the bag? The timing just doesn’t add up. The fiscal year 2011 appropriations bill will finance the Pell Grants that students get in the 2011-12 school year. But the temporary continuing resolution now in place expires on March 4th, 2011, five months before the first Pell Grant will be awarded for the 2011-12 school year. To be sure, the temporary appropriations bill does provide funding for a maximum Pell Grant of $5,550 for the 2011-12 school year. But it doesn’t matter. Every cent of that funding expires before the school year even starts and before any of it can be spent.

Parents, schools, and students needn’t worry about the Pell Grants awarded for the current school year though. Grants for the 2010-11 school year are overfunded by $7 billion dollars thanks to a one-time infusion of cash from the Health Care and Education Reconciliation Act that Congress passed back in March.

Now all eyes are on the new Congress and how it will fund the Pell Grant program for the 2011-12 academic year. If House Republicans are serious about cutting spending when they finalize fiscal year 2011 appropriations early next year, Pell Grants certainly aren’t the place to start.

Senate Uses Omnibus to Sneak in Change to School Improvement Grants

December 21, 2010

Last week Democratic leaders in the Senate proposed and then retracted an omnibus appropriations bill that would have funded all federal education programs subject to the annual appropriations process through fiscal year 2011 (which began on October 1st). Though the bill was never brought to a vote, and Congress looks set to put a decision on fiscal year 2011 funding off until early next year, it does give us some insight into things to come for education policy. For example, Congress buried language in the bill that would overturn a key Obama Administration rule affecting the School Improvement Grant program.

The School Improvement Grant program provides funds to school districts to help turn around schools that have repeatedly failed to meet Adequate Yearly Progress according to No Child Left Behind. The Obama Administration released new regulations governing the program in 2009 because of the dramatic increase in funding available for the program through the American Recovery and Reinvestment Act of 2009. These regulations created four models school districts can use in their turn around efforts. These models include turnaround, restart, closure, and transformation.

The proposed omnibus bill would have overturned a requirement set out by the Department of Education in late October to limit the number of schools that employ the transformation model for their school improvement efforts. The transformation model is considered the least intrusive of the four strategies defined by the Department of Education for school improvement efforts. According to Ed Week, school districts overwhelmingly chose the transformation model over the other models available, likely because it was the least disruptive.

While the transformation model does require that school districts replace the principal, it does not require them to fire any teachers. In comparison, the turnaround model requires school districts to fire at least 50 percent of existing teachers, the restart model requires districts to reopen the school as a charter, and the closure model requires them to shut down the school entirely. In drafting the regulations, Secretary Duncan likely chose to limit the number of schools for which districts could use the transformation model to ensure a certain level of rigor in the school improvement process.

But the Senate Omnibus bill attempted to reverse this regulation. After specifying that 2011 funding for the School Improvement Grant program would be $545.6 million, the same spending level as 2010, the bill states:

Provided further, That the grants provided in accordance with the previous proviso shall not be subject to the requirement published by the Secretary in the Federal Register on October 28, 2010 (75 Fed. Reg. 66368) that a local educational agency that has 9 or more tier I and tier II schools not implement the transformation model in more than 50 percent of those schools.

The Obama Administration has significantly strengthened the School Improvement Grant program with its rules, much to the chagrin of many members of Congress and many local stakeholders. By specifying four specific models that districts can use to improve their schools, the Obama Administration has made the program much more prescriptive and rigid. Members of Congress on both sides of the aisle have decried these changes as favoring federal control over local control of schools. Similarly, the models that require firing existing teachers or turning schools over to charter operators are wildly unpopular with teachers unions.

Though it’s impossible to determine the origin of the language in the fiscal year 2011 omnibus bill that would have overturned the Obama Administration rule, it’s pretty clear that its inclusion was intended to make the School Improvement Grant program less offensive to the teachers unions and appease members of Congress who believe the program is a federal intrusion into local education policy. Such political wrangling is not unheard of in appropriations bills, though it is disappointing to find such a policy shift buried in this last-minute appropriations bill. We hope this isn’t a sign of what’s to come with the reauthorization of the Elementary and Secondary Education Act.

Friday News Roundup: Week of December 13-17

December 17, 2010

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.

Oklahoma Superintendent Asks for $381 million Increase in State Aid

Nebraska Lawmakers Propose Deep Cuts to K-12, Higher Education

Montana Governor Says Tax Revenues are Better than Expected

Oklahoma Superintendent Asks for $381 million Increase in State Aid
Oklahoma state schools Superintendent Sandy Garrett this week asked for a $381 million increase in state aid for education in her budget request for fiscal year 2012. The budget increase would bring the total state education budget to $2.6 billion and would replace $139.5 million in federal stimulus funds from the American Recovery and Reinvestment Act of 2009 and $201 million in state funds that were cut in fiscal year 2011. It would also cover increases in program expenses, including a new program to provide remediation for students who fail the state’s high school graduation exams. More here…

Nebraska Lawmakers Propose Deep Cuts to K-12, Higher Education
Nebraska state lawmakers this week released a report outlining options for potential budget cuts for the coming 2012-13 fiscal biennium that would total about $400 million in each year if enacted. The state’s budget forecasters project a $986 million shortfall over the next two years. Under the plan, the largest cut would come from the state’s K-12 education budget, which would be trimmed by $134 million in each year from 2009-10 levels. Having already made spending cuts in previous years as a result of state budget cuts, school districts may have to rely on increased property taxes to balance their budgets. The proposal would also cut $49 million per year from the state’s higher education budget. This would likely lead colleges and universities to raise tuition and fees. More here…

Montana Governor Says Tax Revenues are Better than Expected
Montana Governor Brian Schweitzer announced this week that the state budget picture is better than expected due to improving revenues. He predicts that the state will have $120 million more than expected to spend in fiscal year 2012. Governor Schweitzer encouraged the state legislature to use these extra funds to support the budget proposal he submitted in November that would cut business taxes, give homeowners a tax rebate, and increase state aid for education. Republicans in the state legislature are hesitant to support Governor Schweitzer’s budget and are considering making cuts to the state education budget, claiming that Governor Schweitzer’s plan is balanced by pilfering from state infrastructure projects and other areas to pay for his spending increases. More here…

UPDATED: Latest Developments for Fiscal Year 2011 Federal Education Funding

December 15, 2010

Yesterday we wrote that the fiscal year 2011 appropriations process is coming to a close and funding levels for federal education programs could be finalized in the next few days, albeit nearly three months late. Earlier this year the U.S. House and Senate made halfhearted attempts to pass a Labor-HHS-Education Appropriations bill, but neither chamber ever brought a bill up for debate or a vote. As the 111th Congress gets set to adjourn in the next few days, the pressure is on to pass some sort of fiscal year appropriations bill for education programs – and all the other federal programs and agencies subject to annual appropriations.

To finalize fiscal year 2011 funding, last week the U.S. House passed a “continuing resolution” that would fund most programs at their fiscal year 2010 levels. It’s still unclear what might happen in the Senate. Yesterday a draft version of an omnibus appropriations bill – one that funds all federal programs subject to annual appropriations – was circulating in the Senate and it may have enough supporters to pass. If the Senate does pass the omnibus bill, the House and Senate will still have to come to an agreement on a final bill in the next few days.

But that shouldn’t be too difficult. The House continuing resolution provides total funding of $1.09 trillion according the official estimates, and the Senate omnibus provides $1.11 trillion, according to press reports. What’s more, at first glance, it appears education funding is nearly identical between the two proposals – at least that is the case for major programs like Pell Grants and Title I grants to school districts.

We will have more on the fiscal year 2011 education funding as new information becomes available. In the meantime, we’ve assembled the table below that compares fiscal year 2011 funding for education programs based on what information we currently have.

Congress in Flux Over 2011 Education Spending

December 14, 2010

The annual appropriations process may be coming to a close and it’s well overdue as fiscal year 2011 began on October 1st, 2010. Nearly all federal education programs are funded one year at a time through the annual appropriations process (student loans are the notable exception). As is the case almost every year, the new funding levels haven’t yet been set in law so Congress has instead funded federal education programs – and most other programs – temporarily until lawmakers adopt full-year funding. But time is running out. The current session of Congress isn’t likely to go past December 24th, so lawmakers need to decide fiscal year 2011 funding levels soon before adjourning.

To finalize funding, some in Congress are calling for an omnibus appropriations bill for fiscal year 2011, which would set the annual funding levels through one giant bill for every program subject to the appropriations process. Others want to continue the temporary funding levels in place now until the newly-elected Congress convenes in January. This would allow the new Congress to pass the funding levels it wants. A third option advocated by some would freeze programs subject to appropriations at the fiscal year 2010 level through fiscal year 2011.

Last week it looked like that latter approach was gaining traction when the U.S. House of Representatives passed a “full-year continuing resolution.” While most education programs would receive the same funding as last year under this bill, the continuing resolution (or CR) includes a number of exceptions for some key education programs. For example, the bill would provide $555 million for the Race to the Top competitive grant program that was created as part of the American Recovery and Reinvestment Act of 2009. No funding was provided for that program in the fiscal year 2010 appropriations law. The House-passed CR would also provide $23 billion for the Pell Grant program for undergraduate college students, compared to the regular appropriation last year of $17.5 billion. That move ensures the maximum grant will stay at the current $5,550 in the 2011-12 academic year.

The House-passed CR would also make minor cuts to some education programs compared to the prior year levels, though the legislative language is not specific enough to determine which programs are affected. (A press release from the House Appropriations Committee describing spending increases in the CR doesn’t discuss which education programs will face cuts.)

But now it looks like the House-passed CR may be moot. A draft version of an omnibus appropriations bill for fiscal year 2011 is circulating in the Senate today. The rumor is that enough Senators support the draft version of the bill to pass it and that the bill would likely pass in the House, too.

We’ll have more on those latest developments for the fiscal year 2011 education appropriations – including what the omnibus will mean for federal education programs – in our next post.

Friday News Roundup: Week of December 6-10

December 10, 2010

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.

Washington Supreme Court Rules that State Special Education Funding is Constitutional

Colorado Schools Will Likely See Cuts to Funding in 2012

Wisconsin State Agencies Request Increase in Funding

South Dakota Supreme Court Set to Hear Case on Education Funding

Washington Supreme Court Rules that State Special Education Funding is Constitutional
The Washington Supreme Court ruled this week that the state’s special education spending structure does not violate the state’s constitution, upholding a previous ruling by the Court of Appeals. A lawsuit filed by the Alliance for Adequate Funding of Special Education argued that state funding for special education was inadequate, forcing school districts to raise special education funds through school levies. However, the state’s Supreme Court found that the state allocated 193 percent of the cost of educating a basic education student for each special education student – slightly more than the 190 percent deemed necessary by expert witnesses in the case. More here…

Colorado Schools Will Likely See Cuts to Funding in 2012
This week, the Colorado Legislature’s Joint Budget Committee announced that K-12 education funding will likely take a hit in fiscal year 2012. Colorado Governor Bill Ritter included a $93.7 million increase for K-12 education in his fiscal year 2012 budget request, but Joint Budget Committee analysts say this is increase will still fall about $92 million short of fully offsetting increasing costs due to inflation and the projected 1 percent enrollment increase. In combination with expected revenue shortfalls in local support for K-12 education, this will amount to about a $40 decrease in per-pupil funding from 2011 levels. More here…

Wisconsin State Agencies Request Increase in Funding
State agencies in Wisconsin this week submitted a request to Governor Jim Doyle for a $3.94 billion increase in funding over the next two years – a 6.2% increase from the current 2010-11 biennium. The requests totaled $67.4 billion in state and federal spending, and were made as part of a report released this week by the state’s Legislative Fiscal Bureau. Large increases would go to the state Department of Health Services for Medicaid and other health care programs, as well as the University of Wisconsin System, prisons, and aid to local governments. Governor-Elect Scott Walker is unlikely to fulfill all of these requests, especially as the state is facing as much as $3.3 billion revenue shortfall in the coming 2012-13 biennium. More here…

South Dakota Supreme Court Set to Hear Case on Education Funding
The South Dakota Supreme Court will hear arguments next month on a constitutional challenge of the state’s K-12 education funding system. The case, which has a handful of students and parents as the plaintiffs, but is supported by about 100 of the state’s 161 school districts, began in 2006. The plaintiffs contend that the state’s current system of funding for K-12 education violates students’ constitutional right to a free, adequate, and quality education. However, in an earlier ruling against the plaintiffs, Circuit Judge Lori Wilbur noted that the constitutional language does not include the word “quality.” Judge Wilbur contended that the current system does ensure that students can become responsible and intelligent citizens. More here…

Briefly Noted

FEBP Releases Issue Brief on the State Fiscal Stabilization Fund and Higher Education Spending

December 9, 2010


While many policy researchers and the media have focused their attention on K-12 education in their reporting on the American Recovery and Reinvestment Act of 2009 (ARRA), few have focused on the law's effect on higher education funding. Today, the Federal Education Budget Project, Ed Money Watch’s parent initiative, released an issue brief titled The State Fiscal Stabilization Fund and Higher Education Spending in the States that explores how state funding for higher education fluctuated as a proportion of total state spending during the implementation of the ARRA.

The ARRA was intended to stimulate the economy with $862 billion in new spending and tax cuts. The law included nearly $100 billion in one-time funding for new and existing education programs, a historic sum given that annual appropriations for federal education programs were approximately $60 billion in fiscal year 2009. The largest single education program included in the law was the State Fiscal Stabilization Fund (SFSF), a new $48.6 billion program that provided direct grant aid to state governments in 2009 and 2010. The program was designed to help states maintain support for both K-12 and higher education that they might have otherwise cut in response to budget shortfalls brought on by the economic downturn.

The SFSF was designed under the assumption that states would not be able to maintain then-current levels of spending due to the economic recession and would need federal assistance to maintain their education programs. As a result, the law includes a maintenance of effort provision that gives states flexibility to cut their spending on education to 2006 levels in 2009, 2010, and 2011, and use the SFSF monies to fill any gaps up to the higher of 2008 or 2009 levels.

But many stakeholders have expressed concern that some states would lower state expenditures on education by more than necessary to balance their budgets to take advantage of the federal funds. This issue brief draws general conclusions about how the ARRA may have affected state spending on higher education and whether policymakers’ concerns about the law were valid.

Using state budget data collected directly from the states, the issue brief concludes that 42 states and the District of Columbia chose to use SFSF funds to support higher education spending in 2009 or 2010. Of those, 23 cut the proportion of state spending dedicated to higher education in the first year they used the funds. While most of these 23 states made cuts to both higher education spending and total state spending, six appear to have cut their higher education spending while actually increasing total state spending. These states confirm the concern that the SFSF would lead some states – particularly those states with relatively stable tax revenue – to cut higher education spending during the economic downturn and use those funds for other purposes. Seventeen of the 42 states that chose to use Education Stabilization funds for higher education, on the other hand, actually increased the proportion of state spending on higher education.

The State Fiscal Stabilization Fund played an important role in maintaining higher education spending in many states. However, the program’s maintenance of effort provision appears to have allowed some states to cut funding for higher education by more than necessary to balance their budgets.

Now that Congress has passed the Education Jobs Fund, a program similar to the SFSF that provides funding only for K-12 education, states will be held to a new and stricter version of the maintenance of effort provision that also takes higher education spending into account. While the new provision is an improvement over the maintenance of effort provision in the SFSF, some states will likely continue to manipulate their higher education budgets to take advantage of the federal funds.

To download the issue brief, click here.

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