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House Budget Committee Lays Out Options on Pell Grants

  • By
  • Stephen Burd
May 5, 2011

Some clues are emerging about how House Republican leaders plan to deal with the budget crisis in the Pell Grant program in fiscal year 2012. In the report accompanying the fiscal year 2012 budget resolution that the House of Representatives approved last month, the House Budget Committee lays out policy options for lawmakers to consider as the appropriations process moves forward.

Perhaps most significantly, the budget committee’s Republican members make clear that they want to deal with the program’s budget crisis with both cuts to the maximum award and targeted changes within the program to lower costs. This blueprint stands in stark contrast to the approach that President Obama laid out in his fiscal year 2012 budget request, which aims first and foremost to keep the maximum award at its current level of $5,550.

Here are some of the options that the Budget Committee says are worth considering (remember these aren’t actual legislative proposals, as budget resolutions are not legislation; they merely provide a framework for spending bills Congress will consider later this year):

  • “Adopt a sustainable maximum award level”: They say that the current level of $5,550 is “more generous” than the government can afford. While they do not specify how big a cut is needed, they have said elsewhere that they want to “return Pell Grants to their pre-stimulus levels.”   Prior to passage of the “America Recovery and Reinvestment Act” in 2009, the maximum grant was $4,731 resulting in a total cost of $16 billion. That’s less than half of today’s total program cost of $34 billion.
  • “Set stricter lifetime limits”: They recommend reducing the number of years students can receive the grants from nine years (18 semesters) to six years (12 semesters), or the equivalent for part-time students.
  • “Roll back certain recent expansions to the Need Analysis to ensure aid is targeted to the truly needy”: They call for reversing changes that Congress made to the eligibility formula for Pell Grants under the College Cost Reduction and Access Act of 2007. The law increased the income threshold from $20,000 to $30,000 in the formula that automatically qualifies an applicant for the maximum grant award, and allowed applicants to exclude more of their income when applying for a grant. These changes were meant in part to help financially-needy students who were working their way through college remain eligible for federal financial aid.
     
  • “Eliminate administrative fees paid to participating institutions”: They recommend eliminating the $5-per-grant payment that colleges receive from the government for administering the Pell Grant program. “Schools already benefit significantly from the Pell program because the aid makes attendance at these schools more affordable,” they state.
  • “Consider a maximum income cap”: They note that the Pell Grant program does not have a “fixed upper income limit” for students to qualify for the grants. According to the U.S. Department of Education, about 1.1 percent of Pell Grant recipients come from families making over $60,000.
  • “Eliminate eligibility for less than half-time students": They argue that “funding should be reserved for students with a larger commitment to their education.”
  • “Terminate eligibility for those who currently receive the minimum award”: They note that Pell-eligible students with the least financial need are eligible to receive a minimum grant of $278, “which is unlikely to have much, if any, impact” on their ability to afford college. Funding, they say, “should be more effectively targeted” to those “who need it the most.”

As the report accompanying the House-passed fiscal year 2012 budget resolution shows, the House Republicans have much different priorities than the Obama administration. While the White House is committed to maintaining the current maximum award with a combination of spending increases, eligibility changes, and cuts to other student aid programs, the Republican leadership in the House does not support maintaining the maximum grant and current funding levels. Instead, the lawmakers would deal with the growing costs by reducing the size and cost of the program overall, making it less expensive and less generous.

As the fiscal year 2012 appropriations process gets underway, this promises to be a huge battle that could bring the biggest changes to the Pell Grant program since its start nearly forty years ago.

Issues:

FY 2012 Appropriations Debate Begins

  • By
  • Jason Delisle
May 3, 2011

On April 14th, Congress finally passed a fiscal year 2011 appropriations bill that funds federal education programs subject to the annual appropriations process. After the drawn out process involving seven Continuing Resolutions (CRs), Education policy stakeholders are no doubt suffering from budget fatigue. That’s why many of them haven’t yet realized that the fiscal year 2012 appropriations process is already well under way. Fiscal year 2012 starts October 1st, 2011. What’s more, there are some early portents that the fiscal year 2012 appropriations process will be as messy and drawn out as the 2011 process. Here’s a look at a few of the key numbers that are already shaping the debate.

The final CR for fiscal year 2011 put total federal discretionary spending at $1.050 trillion, down about $38 billion from fiscal year 2010. This is the starting point for negotiations for the fiscal year 2012 process. It’s worth noting that despite this year-over-year spending reduction in the 2011 CR, Congress actually increased funding for the U.S. Department of Education compared to fiscal year 2010. To be sure, lawmakers eliminated some smaller education programs and cut funding for others, but a major increase in Pell Grant funding was enough to boost funding for education overall. (Final numbers are still not available from the Department of Education.)

Back in February the president released his budget request for fiscal year 2012 and put out his request for total appropriations funding: $1.122 trillion. That’s $72 billion more than fiscal year 2011 funding. (Adjusting for a change the president proposed to transportation funding makes the number $79 billion, apples-to-apples.) The president’s budget sets funding for the U.S. Department of Education at $77.4 billion. Keep in mind that the president released his budget request for 2012 before Congress had even finished the 2011 appropriations bill – an unusual occurrence.

The day after the U.S. House of Representatives passed the final 2011 CR, it also passed a budget resolution for fiscal year 2012. The House-passed budget resolution sets a limit on appropriations funding for fiscal year 2012 at $1.019 trillion. That is a $31 billion reduction in total appropriations funding compared to fiscal year 2011. The limit will govern the 2012 appropriations process in the House that is expected to get underway in the coming weeks. Unlike the president’s budget request, a congressional budget resolution does not specify funding levels for individual programs, so it does not provide a funding level specifically for the U.S. Department of Education.

At this time there are few clues about what number the Senate might support for fiscal year 2012 appropriations. It’s unclear whether the Democratic Majority in the Senate will release or vote on a fiscal year 2012 budget resolution, though Senate Budget Committee Chairman Kent Conrad (D-ND) says he will bring up a budget resolution that mirrors the plan proposed by the president’s fiscal commission and a second one that is a modification of that plan. For his part, Democratic Majority Leader Harry Reid (D-NV) plans to bring up the House-passed budget resolution for a vote in an effort to demonstrate that it doesn’t have the votes to pass.

In short, we know where the president would set the limit for fiscal year 2012 appropriations spending ($1.122 trillion), and we know where House Republicans stand ($1.019 trillion), but we are still waiting to hear from the Senate.

The limit on appropriations spending for fiscal year 2012 will certainly have implications for federal education programs. If Congress ultimately agrees to a further reduction in overall appropriations funding, the House and Senate appropriations committees will find it difficult to further boost funding for education programs – and the rising costs of the Pell Grant program aren’t likely to help matters.

We’ll have more on the fiscal year 2012 appropriations process in the coming weeks.

Note: Total appropriations figures are exclusive of emergency funding, funding for military operations in Iraq and Afghanistan, and other contingent adjustments that the House and Senate Budget Committees may make to those funding limits.

This post was updated and corrected on May 4th, 2011. 

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Friday News Roundup: Week of April 25-29

  • By
  • Jennifer Cohen Kabaker
April 29, 2011

Reconciling House and Senate Washington State budgets will take some work

North Dakota legislature approves higher education budget

New Pennsylvania tuition voucher bill would expand eligibility

Tuition at West Virginia public schools may increase

Reconciling House and Senate Washington State budgets will take some work
The Washington State House and Senate budget bills 2012-13 differ in some significant ways. One of the most challenging disparities is the way each bill makes cuts to the education budget. The Senate bill would cut K-12 teacher salaries by 3 percent, saving $250 million over two years. The House bill, on the other hand would cut three to five days from the school year. Senate bill proponents says that that House plan could end in a law suit over the constitutional requirement that the state provide full funding of basic education, which is defined as 180 days of instruction. House bill proponents say that the Senate bill is a non-starter because it would require districts to renegotiate teacher contracts. The two chambers have 30 days to settle their differences and produce a final bill. More here…

North Dakota legislature approves higher education budget
This week the North Dakota legislature passed a $754.4 million higher education budget for 2012. The budget provides several funding streams for the state’s higher education system including $15.2 million for equity and tuition affordability, which is $1.4 million less than in 2011. Campuses will receive the funding based on existing funding formulas. Previously, the legislature had provided separate funding streams for equity and affordability, ensuring that campuses would use some of the funds to reduce tuition costs. However, this budget provides a single funding source, meaning some campuses can choose to use the funding solely for equity purposes and not affordability. The budget bill does not include a 2.5 percent cap on tuition increases, as the governor had requested. This means campuses can raise tuition as they see fit. However, the Chancellor of the Board of Higher Education plans to recommend a 2.5 percent tuition cap. More here…

New Pennsylvania tuition voucher bill would expand eligibility
Pennsylvania Senate Republicans have introduced a new private school tuition voucher bill that would expand eligibility for the program but delay implementation. The new bill also places a smaller cap on state spending for the voucher program - $163 million by 2015-16 instead of $250 million. The bill would provide state money to families that choose to send their children to private schools. It would start with students who attend failing schools and are living under 130 percent of the poverty line. However, by 2015-16, any student who lives at 350 percent or below the poverty line would be eligible. Opponents of the bill favor increasing tax credits for business that support education grants. Currently that program provides $75 million annually in credits to businesses. More here…

Tuition at West Virginia public schools may increase
Today, the West Virginia Higher Education Policy Commission will review and vote on tuition increases for the state’s public institutions of higher education for the 2011-12 school year. Proposed increases range from 3 percent at Fairmont State University to 9.5 percent at Concord University and Glenville State College. Last year, the Governor requested tuition freezes at all state universities. The Commission will not vote on increases at Marshall and West Virginia University because those institutions are currently allowed to determine their own tuition prices. Marshall will increase tuition by 6.8 percent and WVU by 4.9 percent. Next year, however, the Commission will also have jurisdiction over tuition increases at these schools due to a recently passed law. More here…

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Budget Cutters Take Aim at TRIO and GEAR UP

  • By
  • Stephen Burd
April 28, 2011

Has the federal government reduced its commitment to supporting programs that aim to prepare and motivate low-income students for college?

That’s a question that some champions of the government’s main college outreach and early intervention programs are asking now that the dust has settled on the final spending bill for the remainder of the 2011 fiscal year. With so much attention on Pell Grant funding and the programs that were eliminated, little notice has been paid to the fact that the Obama administration and Congress agreed to make significant reductions to the budgets of the federal TRIO and GEAR UP programs -- deeper cuts, in fact, than either program has sustained over the last decade.

The TRIO programs are the government’s oldest college readiness programs, with some of them dating back to the mid-1960s. In general, the seven programs that make up TRIO aim to provide low-income middle school and high school students with the guidance, support, and academic help they need to apply to, enroll in, and graduate from college, as well as pursue post-baccalaureate opportunities.

The aim of GEAR UP, which was created in 1998, is to provide counseling, mentoring, academic support, and college outreach services to entire grades of disadvantaged students during regular school hours, starting in middle school. The program is primarily made up of school-college partnerships that are required to serve whole classes of middle school students by seventh grade and to continue working with them through high school graduation.

Under the final fiscal year 2011 budget bill, the TRIO programs were cut by $25 million to $828.4 million, and spending on GEAR UP was reduced by $20 million to $303 million. In addition, both may see their budgets shrink by another million dollars or so as a result of an across-the-board budget cut that was included in the final spending bill.

TRIO supporters are up in arms that the Obama administration and Congress agreed to pare the program's budget back to the level it was at in the 2003 fiscal year. In an alert to its members, theCouncil for Opportunity in Education, which lobbies on behalf of the program, focused its anger on the White House. The budget deal “makes clear that TRIO is not among the core education priorities of the Obama administration,” the group wrote. “It is now up to us to change this stance.”

The council has long argued that TRIO is underfunded, noting that only about 5 to 7 percent of students eligible for the programs are able to take advantage of them. In its alert, the group wrote that the budget cuts “will cause 90,000 students to be kicked out of TRIO programs this year.”  The Department of Education has not confirmed these numbers, and, therefore, it is hard to know whether or not they are accurate.

GEAR UP supporters have been far less vocal about their disappointment with the cuts, which will bring its budget back to the level it was funded at from 2005 to 2009. Over the last two years, the program received small bumps up, reaching $323 million in 2010. But even with these increases, the total number of school-college partnerships supported by the program declined from 209 in 2005 to 169 in 2010. In addition, the program has only been able to finance seven new partnerships since 2009.

Still, it would probably be unfair to argue that the latest cuts to TRIO and GEAR UP are a sign that the government’s interest in supporting college outreach programs has waned. After all, it was only last year that Congress, as part of its student loan reform bill, chose to devote $750 million in mandatory funds over the next five years to the College Access Challenge Grant program. That program, which is being financed through savings the government derived from ending the Federal Family Education Loan program, provides matching grants to states to support efforts to prepare more low-income students to enroll and succeed in college.

This points to, however, one of the biggest problems with the federal government’s current college readiness efforts. The programs suffer from significant overlap and redundancies, wasting resources and undermining what should be a coordinated effort. The College Access Challenge Grants appear to be particularly problematic because they support such a wide variety of activities (including, but not limited to, promoting financial literacy; providing professional development for middle school and high guidance counselors; and offering student loan forgiveness to borrowers employed in high-need areas and professions) that it is unclear whether the program will be effective overall.

In reality, the Obama administration and Congress did not target TRIO and GEAR UP for public policy reasons. They were merely the victims of last minute budget dealing that was, in the area of higher education policy, focused almost entirely on finding the money to keep the $5,550 maximum Pell Grant in place. This shows the threat that the Pell Grant program’s continuing budget problems pose to the rest of the government’s higher education agenda. Until policymakers find ways to reduce Pell’s costs, no other federal higher education program that is financed through the annual appropriations process will be entirely safe.

Over the coming weeks and months, we at Ed Money Watch will take a closer look at the TRIO, GEAR UP, and College Access Challenge Grant programs. Stay tuned.

Issues:

Mining Ed Sector's Data on School Improvement Grants

  • By
  • Jennifer Cohen Kabaker
April 26, 2011

School Improvement Grants have become a point of contention in Washington and across the country. Many believe that the $4 billion program, which provides grants to help turnaround struggling schools, has become too rigid and represents intrusive federal meddling in local affairs. But few proponents or opponents of the program ever discuss in detail where the funds are actually being used and what the schools receiving them look like. Today, Ed Sector released a report, accompanied by a new data tool, which fills in some of those details. The tool, which provides an interactive map of School Improvement Grant (SIG) recipients, is based on a wealth of data on the 843 schools that have received SIG grants so far. In addition to the tool, Ed Sector has made these data available to the public so we can find out even more on our own.

The Ed Sector report, A Portrait of School Improvement Grantees, gives a great run down of the basics. Of the 843 grantees so far, more than half – 58 percent – are in urban areas. Of the remaining schools 18 percent are rural, 17 percent suburban, and 7 percent in towns as defined by the National Center for Education Statistics. Nearly half of the recipients are high schools – a new pattern for SIG recipients because most high schools do not receive Title I funds. Twenty percent are middle schools, 24 percent are elementary schools, and 6 percent are “other” types of schools like K-8 or 7-12 schools. And the vast majority of grantees – 73 percent – selected the transformation model for their improvement strategy. This model is considered the least rigorous of the options. Twenty-one percent chose the turnaround model, 4 percent are restarting, and 2 percent are closing entirely.

Using the data provided by Ed Sector, we can look deeper into these patterns. For example, we find that of the 19 schools that chose closure as their improvement model, 9 are high schools (47.4 percent), 8 are middle schools (42.1 percent), and 2 are primary schools (10.5 percent). Of the schools that chose the turnaround model, 67 are high schools (38.7 percent), 40 are middle schools (23.1 percent) and 60 are primary schools (34.7 percent). This shows that the distribution of schools within each improvement model varies significantly by school level.

The Ed Sector data also includes some information on the demographics of students who attend the SIG recipient schools (data are from 2008). The average free and reduced price lunch rate at high schools that received a SIG grant is 67.6 percent. This is significantly less than the FRPL rate at middle and primary schools, which is 80.0 percent and 81.2 percent, respectively. However, high schools typically under identify students eligible for free or reduced price lunch, which could explain why the FRPL rate at these schools is so much lower. Unsurprisingly, the FRPL rate was also higher at rural and urban schools - 71.2 percent and 76.0 percent respectively - than at suburban schools – 68.9 percent.

Finally, we can explore some details about the size of the SIG grants different types of schools will receive. For example, the average size of a total SIG grant is $2,409,716 for a high school, $2,376,471 for a middle school, and $1,972,235 for a primary school. Urban schools get the largest SIG grants, an average of $2,494,640, and rural schools get the smallest, an average of $1,708,965. Interestingly, this does not directly follow school enrollment patterns. While rural schools are by far the smallest – an average enrollment of 411 students, suburban schools are the largest with an average of 912 students.

Ed Sector’s new data tool provides an important resource as the SIG discussion continues. It provides valuable information on which schools are receiving grants and their characteristics. Hopefully data will continue to be available on SIG grantees, continuing expenditures, and even measures of success. This is the information that should determine the future of the School Improvement Grant program, not complaints over federal intrusion.

To download a spreadsheet containing this data, click here.

Issues:

Friday News Roundup: Week of April 18-22

  • By
  • Jennifer Cohen Kabaker
April 22, 2011

South Carolina Senate committee defeats private school tax credit plan

Oklahoma House approves bill intended to generate savings for teachers’ pension plan

Kentucky State agency to consider tuition increases

Indiana State Senate approves school voucher program

South Carolina Senate committee defeats private school tax credit plan
This week the South Carolina Senate Education Committee defeated a bill that would provide tax credits to parents that send their kids to private school. The bill would have also provided scholarships to low-income students to attend private schools. Businesses or individuals that donated money to the scholarship fund would have also received tax credits. The average tax credit would have been $2,417 in the state, varying by school district depending on how much the state spends per public school student. Ultimately, the bill did not gain enough votes to pass because of the large cost to the state – annual revenue loss due to the tax credits would have reached $133 million by 2023-24, a cumulative $800 million over the next 13 years. More here…

Oklahoma House approves bill intended to generate savings for teachers’ pension plan
This week the Oklahoma House passed a bill that would require school districts to contribute 16.5 percent of salaries for part-time retired teachers into the state’s Teachers Retirement System. Currently, districts pay 9.5 percent for part-time retired teachers and 16.5 percent for full-time teachers. The increased contribution for part-time retired teachers would raise an additional $5 million in revenue for the pension fund. Currently the fund is only 47.9 percent funded, creating a $10.4 billion unfunded liability. School districts will have until July 1, 2012 to rework their budgets to accommodate for the change. Proponents of the bill suggest that districts hire more part-time teachers to generate savings. More here…

Kentucky State agency to consider tuition increases
Next week the Kentucky Council on Postsecondary Education will vote on a series of tuition increases for public institutions. These include a 6 percent tuition increase at The University of Louisville and the University of Kentucky, and up to a 5 percent increase at regional universities. Additionally, community colleges would be able to increase the amount they charge per credit hour by $5 to $135. These tuition increases would help the institutions cover a shortfall created by state spending cuts as well as merit raises for faculty and staff. Kentucky institutions have frozen salaries for the past three years. Opponents of the increases are upset that the tuition hikes would be almost three times the rate of inflation. More here…

Indiana State Senate approves school voucher program
The Indiana State Senate approved a school voucher program that would provide tuition vouchers for students attending private schools. Under the plan, families earning less than $41,000 per year would receive vouchers up to $4,500 for elementary grades and $4,964 for high school. Families that earn between $41,000 and $61,000 would receive vouchers up to $2,758 for all grades. The program would phase in slowly awarding 7,500 vouchers in 2011-12 and 15,000 for 2012-13. The bill will now be considered in conference committee to reconcile differences between the House and Senate versions of the bill. More here…

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Another Voice in the On-going Comparability Discussion

  • By
  • Jennifer Cohen Kabaker
April 21, 2011

Here at Ed Money Watch, we have written extensively about the Title I comparability provision. This provision seeks to ensure that Title I schools receive equitable state and local resources compared to non-Title I schools. Comparability has been a popular topic lately, from a recent conference at the Center for American Progress and a new bill that would strengthen the provision introduced in the Senate. The Fordham Institute recently added its divergent voice to the chorus of proposals related to comparability in its new ESEA Briefing Book. Instead of suggesting Congress strengthen the provision, Fordham suggests eliminating it entirely.

Current law allows school districts to meet the federal comparability rule through various methods that do not reflect the actual distribution of state and local funds between low- and high- income schools. These include student-teacher ratios and district-wide salary schedules. Even when districts use per pupil expenditures to demonstrate comparability, they can ignore variation in teacher salary due to years of experience, the most significant driver of teacher pay.

More experienced, and therefore higher paid, teachers tend to work in higher-income schools, while low-income, Title I schools tend to employ less experienced, lower-paid teachers. As a result, higher-income schools receive a greater share of state and local funds to pay for their teachers than low-income schools. But the current comparability requirements never show these inequities. This is known as the comparability “loophole.”

Most proposals to improve comparability include requiring districts to use actual per pupil expenditures, including variation in salary due to experience, to demonstrate comparability. They also want to increase the level of required equity from 90 percent to 95 or even 97 percent. These changes would ensure that Title I schools actually receive equal state and local funding as non-Title I schools.

Fordham also believes that current comparability provisions do not work and should be replaced. However, rather than strengthen the provision, Fordham suggests phasing out comparability entirely and instead requiring school districts to annually report school-level financial data including information on actual teacher salaries. This would provide local parents, teachers, and other stakeholders with the information they need to determine existing inequities and fix them. Strengthening comparability, on the other hand, would be an “enormous new federal intrusion into the operations of local school districts” and would be difficult to monitor.

While Ed Money Watch is the first to champion increased transparency in funding for public education, we can’t help but be skeptical about this proposal. Without a policy lever that requires districts to ensure equitable funding, it would likely be difficult to enforce the redistribution of state and local funds that stakeholders might demand as a result of increased transparency. We have long known that resources are not equitably distributed between high- and low-income schools and yet the inequalities remain.

Similarly, it is important to remember that the parents of students in low-income schools often have the least access to data and information, despite increased transparency. If only parents of students in higher-income schools are advocating for funding, how can we ensure that students in low-income schools will be fairly represented?

It is fair to say that the comparability provision – both the current version and any potential strengthened version – represent a federal intrusion into local operations. But sometimes that intrusion is a necessary means to an important end – ensuring that low-income students receive equitable state and local resources. Until we can ensure that, districts across the country will continue to use Title I funds to fill gaps in funding for low-income schools, instead of to provide the additional services their students need.

Issues:

Let's Not Forget About the Education Jobs Fund

  • By
  • Jennifer Cohen Kabaker
April 19, 2011

States have been very vocal about the coming end of the State Fiscal Stabilization Fund (SFSF), a $48.3 billion fund to help states fill budget gaps created by the American Recovery and Reinvestment Act of 2009. The SFSF expires at the end of this fiscal year (September 30, 2011). But few are discussing the Education Jobs Fund, a $10 billion program created in August 2010 to help states pay K-12 education employment-related expenses like salaries and benefits. The Education Jobs Fund expires at the end of fiscal year 2012, a full year after the SFSF. Though the Education Jobs Fund is much smaller than the SFSF, it has played a major role in keeping teachers and other school staff in their jobs, particularly in states that are facing large budget shortfalls. And as with the SFSF, states have opted to spend the funds at widely different rates.

According to data from the U.S. Department of Education, as of April 8, 2011, states had drawn down 42.3 percent of the $9.0 billion available through the Education Jobs Fund that had been obligated to states. The Department of Education has yet to obligate any funds to Texas or South Carolina, because neither has been able to qualify for the funds under the law’s maintenance of effort provision which requires states to maintain funding levels for K-12 and higher education funding.

However, a recent change to the program – made in the text of the 2011 final appropriations bill – will make it easier for Texas to qualify for the funds. The Education Jobs Fund originally contained a provision that specifically required Texas to guarantee that K-12 education spending in fiscal years 2011, 2012, and 2013 would remain at the same proportion of total state spending as was determined for fiscal year 2011.. Texas has been unable to make such a guarantee and as a result has been ineligible for the funds. The 2011 appropriations bill eliminates the Texas-specific provision so the state can begin to access the funds.

The Department of Education has obligated funds to Hawaii, Missouri, North Dakota, Vermont, and West Virginia, but none of these states have drawn down any dollars from the federal government.. However, this does not necessarily mean that these states have not spent any funds under the Education Jobs Fund. Instead, it means that they have not yet received reimbursement from the federal government for approved expenditures they may have made.

A whopping 22 states and territories have drawn down less than 25 percent of their Education Jobs Fund allocations. Some of these states, including Alaska, Colorado, Maine, and New Jersey, have drawn down less than 5 percent of their funds. There are several explanations for why these states have been so slow to spend the funds. It is possible that they are not facing large budget shortfalls or perhaps they are still using remaining SFSF monies to fill their budget gaps. However, it seems likely that many states are saving the Education Jobs Funds until fiscal year 2012 to stave off more severe shortfalls.

Some states, however, have drawn down all or nearly all of their dollars from the Education Jobs Fund. Both South Dakota and Pennsylvania have drawn down 100 percent of their allocations. Georgia and Kansas have drawn down more than 99 percent, and California has drawn down 89.5. This makes sense in states like California and Georgia, both of which faced budget deficits of more than 20 percent according to the Center for Budget and Policy Priorities. Pennsylvania’s deficit was 16.2 percent. South Dakota and Kansas, on the other hand, faced deficits below 10 percent. This is surprising given how quickly these states spent their Education Jobs Fund allocation.

States have a little less than a year and a half to spend the remaining 57.7 percent of the Education Jobs Fund. For some states, there will be almost no money left when fiscal year 2012 rolls around, while others will just be beginning to scratch the surface of their available funds. Either way, states and the media should remember to include the Education Jobs Fund when they discuss federal support for public education and the ongoing economic downturn as they do with the State Fiscal Stabilization Fund.

To see a spread sheet of Education Jobs Fund obligations and outlays for every state, click here.

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Friday News Roundup: Week of April 11-15

  • By
  • Jennifer Cohen Kabaker
April 15, 2011

Oregon House approves schools budget amid cries that it’s ‘too little’ or ‘too much’

Future unsure for drive to grow Arizona tuition tax credit

Ohio public universities seek ways to hike tuition beyond Kasich’s cap

Illinois Senate OKs sweeping education changes

Oregon House approves schools budget amid cries that it’s ‘too little’ or ‘too much’
This week, the Oregon House of Representatives passed a 2011-12 schools budget bill that would provide $5.7 billion in state aid to schools. The state Senate passed the bill earlier this week and Governor John Kitzhaber announced that he intends to sign the bill even though it provides $150 million more than his proposed budget. Several state Democrats disapprove of the bill because they do not believe it provides sufficient funding for schools. This will be particularly hard, they say, when federal stimulus funds run out, leaving Oregon’s school budget as much as $1 billion short of current levels. Some Republicans also voted against the bill because they believe it provides too much funding for schools and does not make significant policy changes to teacher compensation and other areas. As a result of this split, the bill actually received bi-partisan support. More here...

Future unsure for drive to grow Arizona tuition tax credit
Arizona Governor Jan Brewer vetoed a bill that would have expanded the state’s private school tuition tax credit program. The bill would have eliminated credit caps for corporations and insurers and increased maximum tax credit amounts from $500 to $750 for individuals and from $1000 to $1500 for couples. Governor Brewer vetoed the bill because she feared it would have a negative effect on tax revenues in the state. The Governor is a school-choice advocate and does not disagree with the program’s policy. Had the bill been signed into law, it would have reduced state income-tax collections by $25 million and county and local severance tax collections by $29 million. Governor Brewer did state that she would reconsider the bill in the future when tax revenues are less precarious. More here...

Ohio public universities seek ways to hike tuition beyond Kasich’s cap
Officials at Ohio public universities are looking for creative ways to make ends meet in the face of tuition caps and budget cuts. Governor John Kasich’s budget proposal includes a 3.5 percent tuition increase cap for both the 2011-12 and 2012-13 school years. At the same time, the budget would cut state funding for public higher education by 13 percent. In an attempt bring in extra revenue, some universities are hoping to split up the total 7 percent increase over two years by frontloading increases. Other institutions are hoping to convince the state legislature to increase the tuition increase cap despite the Governor’s proposal. Governor Kasich has decided to leave this decision up to the legislature. More here...

Illinois Senate OKs sweeping education changes
The Illinois Senate unanimously passed a bill that would make significant education policy changes including lengthening the school day and making it easier to release bad teachers. The bill enjoyed bi-partisan support and many lawmakers believe that it will make Illinois top in education in the nation. However, it seems likely that the bill will be altered somewhat in the House of Representatives where bi-partisan support is less guaranteed. Governor Pat Quinn has already stated that he will sign the bill. More here...

Briefly noted:
Texas House budget writers vote to spend an additional $200 million for the public school trust fund on education every year.

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Final Budget Deal Leaves Maximum Pell Grant in Place, but at a Price

  • By
  • Stephen Burd
April 14, 2011

After months of drama, the White House and Congressional leaders found the money to keep the current maximum Pell Grant in place for the upcoming school year. But this victory did not come without a price -- Congress is on the verge of eliminating a popular policy that allows low-income students to collect two grants in a single award year with the second grant generally used to pay for summer school.

For Obama administration officials, this trade-off was a no brainer. With the Pell Grant program running huge deficits, and House Republicans threatening to significantly cut the maximum award and thereby reduce the grants’ purchasing power, providing two Pell Grants to students in a single year seemed to the administration to be a luxury the government could no longer afford.

But to some college officials -- particularly, but not exclusively, at community colleges and for profit schools -- this change, which was made without any meaningful public debate or discussion, is shortsighted. They say that ending the policy will be especially harmful to adult students who, because of their work and family commitments, don’t have the time to attend college on a traditional academic schedule.

More Popular Than Expected

Congress created year-round Pell in 2008 with the aim of helping low-income students move through college quicker. Since then, according to Education Department officials, demand for a second Pell has far exceeded expectations. As a result, they say, the “two Pells” rule accounts for 22 percent of Pell Grant program’s total cost increase since 2008.

In the program’s first year in 2009-10, 800,000 students obtained a second Pell, at a cost of about $1.7 billion. If the policy was allowed to continue as is, the Department estimates that participation would grow to 1.9 million students in 2012-13, at a cost of approximately $4.8 billion.

Year-round Pell supporters say the stronger-than-expected demand for the grants prove the policy’s worth.

But Obama administration officials have a different explanation for the program’s growth: they say the rules governing the policy are too lax. As a result, they say, students have been receiving these grants for summer courses that often do not accelerate their progress.

A Battle Over The Policy’s Purpose

The roots of this dispute go back to 2009 when the Education Department was drafting regulations to carry out this provision. That August, the Department proposed rules that would have required students to complete a full year of credit hours during their colleges’ traditional academic year before they could receive a second Pell Grant. “We are proposing these requirements to encourage a student to accelerate the completion of his or her program of study within a shorter time period than the regularly scheduled completion time, i.e., the published length of the program,” the agency wrote in the preamble to the proposed rules.

College leaders and lobbyists howled in protest over the Department’s stance, which they said ran contrary to intent of Congress. According to a 2009 report in Inside Higher Ed, the lobbyists said that the purpose of the year-round Pell was “not to help students finish college faster than is normal, but to help an individual student finish his or her program faster than he or she would have otherwise.” In addition, they said that Congress had not meant to exclude part-time students from the benefit, as the Department was proposing.

“All students should have access to year-round Pell Grants as long as they maintain satisfactory academic progress,” the presidents of the American Association of Community Colleges and the National Association of Student Financial Aid Administrators wrote in a letter to Education Secretary Arne Duncan at the time.

These lobbyists took their concerns to Capitol Hill. And, under pressure from lawmakers, the Education Department relented.

In defending the president's proposal in his 2012 budget request to end the “two Pells policy,” administration officials say that it was not directed at any one collegiate sector, as some, including our sister blog Higher Ed Watch, have suspected. They state that colleges in all sectors are using the grants too liberally. (In 2009-10, public 4-year colleges, community colleges, and for-profit institutions each received about 30 percent of the funds, according to the Education Department)

More Horse-Trading to Come?

In the end, growing costs doomed the year-round Pell policy. The administration and Democratic lawmakers were desperate to find  the money they needed to keep the maximum Pell Grant at $5,550 for the upcoming school year. Removing the second Pell option was the quickest and easiest way to reduce the cost of the program.

What’s most surprising, and potentially disturbing, however, is that this was all done without any meaningful public discussion or debate. Instead, the year-round Pell rule was horse-traded away in backroom budget negotiations that were taking place under the pressure of a possible government shutdown. This is hardly the best recipe for making good public policy.

The administration was probably right to favor eliminating the year-round Pell to maintain the maximum Pell Grant at its current level. But in the end this is just a short term solution, as the Pell Grant’s budget problems are far from over. Further steps will be needed to get the program’s costs under control and potentially to improve its effectiveness. It is still very possible that Congress will choose to reduce the maximum grant in the upcoming fiscal year (2012-13 academic year) given the current budget climate.

In the coming months, there should be a thoughtful debate that examines the benefits and pitfalls of potential policy options. Lawmakers shouldn’t decide the program’s future in haste, behind closed doors, and in the heat of another high stakes budget battle.

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