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A Blog from New America's Federal Education Budget Project

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Friday News Roundup: Week of December 19-23

December 22, 2011

Texas schools grapple with big budget cuts

In-state University of New Hampshire system tuition set to go up again

Colorado Governor Hickenlooper wants to restore $89M for education

Michigan Governor Rick Snyder says school cuts may be over

Texas schools grapple with big budget cuts
State funding for Texas schools was cut by more than $4 billion in the 2012 school year, precipitating teacher and staff layoffs of over 12,000 employees and cuts to academic programs and transportation. To help school districts cope with the tight budgets, the state has offered waivers to around 7,000 schools statewide to raise class sizes. Next year, schools could see even deeper budget cuts. The cuts totaled around 6 percent this year; in fiscal year 2013, that number is expected to grow to between 8 and 9 percent. But in spite of the tough fiscal climate, the state has at least $5 billion in a rainy day fund which it has not yet used. The state is now embroiled in a lawsuit; more than 300 districts have sued to restore the funding and alter the state’s funding formula to ensure equity between poor and wealthy school districts. More here…

In-state University of New Hampshire system tuition set to go up again
Only a year after the University of New Hampshire system raised tuition after the tuition rate had already been set, students across the system will see tuition, fees, and room and board increased. A vote this week approved a tuition increase of about 6 percent at the University of New Hampshire, Keene State College, and Plymouth State University. Granite State College intends to raise tuition by around 3.6 percent per credit hour. All of the hikes will go before the board at its January 24 meeting for final approval. Out-of-state students will see a less dramatic increase in tuition because their tuition rates are already much higher than in-state students. UNH is also working to increase out-of-state enrollment from 45 to 50 percent of undergraduate students in order to raise additional tuition revenue for the schools. More here…

Colorado Governor Hickenlooper wants to restore $89M for education
Colorado economists altered projections they had made in September this week, revealing that state revenues will exceed expectations in fiscal year 2012 by $231 million. Governor John Hickenlooper proposed using the funds to restore the $89 million that had been cut from K-12 education to balance the fiscal year 2013 budget. Additionally, he suggested reducing cuts to higher education by half, from $60 million to $30 million. About $25 million of the restored higher education funding would be earmarked for financial aid. Experts in the statehouse predicted less of an increase in revenue over expectations than the governor’s staff, but said that restoring the funds for education would still be manageable. More here…

Michigan Governor Rick Snyder says school cuts may be over
Michigan Governor Rick Snyder stated this week that his fiscal year 2013 budget proposal would probably not include deeper cuts to public education. His fiscal year 2012 budget cut public school funding by about 2 percent (around $1 billion), and higher education institutions were cut by 15 percent. The cuts to higher education necessitated tuition hikes at many schools, often by almost 7 percent. However, the governor said that he does hope to link at least some K-12 public education funding to student achievement beginning next year;  the metrics to determine which districts would earn extra funding will be decided in conjunction with the state legislature. Governor Snyder will present his budget proposal in February, and lawmakers will begin work on it shortly thereafter. More here…

Friday News Roundup: Week of December 12—16

December 16, 2011

$1 billion in California budget cuts to kick in soon

Utah governor unveils $12.9B budget proposal

Illinois could shoulder debt from faltering tuition program

Oklahoma Education Board requests $158 million budget increase

$1 billion in California budget cuts to kick in soon
A budget plan passed by the California legislature in June established a system of automatic cuts to state programs should tax revenue fail to meet expectations. Now, those cuts have been triggered, necessitating almost $1 billion in state spending reductions in Governor Jerry Brown’s fiscal year 2013 budget proposal, which he plans to release next month. The K-12 public school budget will drop by around $330 million from 2012 levels, including a $248 million cut to support for transportation services for students. The University of California and California State University system budgets will be cut by $100 million each. Given that each system’s budget was cut by $650 million already this year, university officials warned that tuition increases and academic program cuts might be necessary next year to fill the shortfall. Community colleges are planning to raise student fees by $10 per unit to cover the state funding gap. More here…

Utah governor unveils $12.9B budget proposal
This week, Utah Governor Gary Herbert proposed a 2013 budget that would funnel millions of dollars in new spending to the state’s public K-12 and higher education systems. State tax revenue is expected to increase to $5 billion from a low of $4.2 billion two years ago even though the plan does not include any tax hikes. Still, the $12.9 billion spending plan would include $2.5 billion for public education, a $111 million increase from 2012 levels. Of that, $41 million would cover the state’s rapid enrollment growth in public school districts. Under the plan, teachers would also receive their first salary increases since 2007. The state’s public colleges, which have seen state funding cut by 17 percent since 2007, would receive a $93 million funding increase from 2012 levels. But Democrats in the state legislature say the funding boost is not sufficient to cover the state’s needs, and are pointing to budget cuts in past years as evidence that the governor and Republicans in the legislature do not sufficiently value education. More here…

Illinois could shoulder debt from faltering tuition program
College Illinois!, a state-run pre-paid tuition program for the state’s public institutions, is struggling to meet its obligations. Illinois families pay into the system to lock in tuition rates at the current level; the program’s administrators are responsible for investing the money to ensure that, when the accounts are drawn down in the future, the money will cover tuition costs. But a new report released this week shows that the program is running a $559 million deficit. With confidence in the program shaken across the state, the program’s board put enrollment in the program on hold after September 30th. Though many members previously believed that the state guaranteed the pre-paid tuition plans, they have now discovered that is not the case. State legislators are now debating whether the state should guarantee families’ investments and cover any losses for payees, a big financial obligation for the state in challenging fiscal times. More here…

Oklahoma Education Board requests $158 million budget increase
The Oklahoma Education Board approved a fiscal year 2013 budget proposal this week that would restore public education funding to fiscal year 2011 levels, an increase of nearly $158 million over current-year spending. The budget, which totals $2.4 billion, includes $16 million to provide bonuses to teachers with National Board Certification (a program that was defunded in fiscal year 2012), as well as a new fund to provide scholarships for teacher certification. Nearly half of the budget increase will be allocated to school districts based on enrollment, and another quarter of it will cover health care for school employees. In addition, the budget would restore adult education programs, provide funds for remedial instruction for students who fail state exams, and implement incentives for schools to add Advanced Placement programs. More here…

Education Funding Details Emerge in 2012 Omnibus Bill

December 16, 2011

Late last night, Congress filed the conference report for the fiscal year 2012 omnibus bill which would provide appropriations funding for all federal agencies including education. The most recent version is currently available on the House Appropriations Committee’s website. Congress will vote on the bill today, as temporary fiscal year 2012 funding expires.

Though the comparable spending amount for the Department of Education will not be illuminated until the Department releases its congressional action budget table, the legislative text and joint statement provide many of the details. On the whole, it looks like the Senate and the Obama administration got much of what they asked for.

First, both Title I and Individuals with Disabilities Education Act funding will receive slight increases in support over 2011 levels. Though the Senate had previously proposed level funding both programs, the House proposed significant increases.

School Improvement Grants, a favored program of the Obama administration, will be level funded at $535 million, somewhat of a surprise given that the House wanted to defund the program entirely.

In another surprise, both Race to the Top and the Investing in Innovation fund will receive continued funding in 2012 of $550 million and $150 million, respectively. Though these amounts are below the Senate’s proposed levels, it appears that the administration spent significant political capital on ensuring both programs will persist. Interestingly, the bill also includes language that would expand Race to the Top to local education agencies in addition to states.

The Senate also won a victory over the Striving Readers program, which was defunded in 2011. The 2012 omnibus would provide the program with $160 million to support local literacy development programs.

One program that did take a big hit, however, is the Teacher Incentive Fund (TIF). The omnibus bill would fund the program at $300 million, $99 million below 2011 levels. Additionally, the bill also specifies that the competitive grant program must go to support teacher compensation systems that include both measures of student gains and teacher evaluations. Though the Senate did ask for $300 million for TIF, its version of the bill also broadened the scope of the program to include other interventions besides performance-based compensation systems because “rigorous research released over the past year” shows that these systems “had no effect on increasing student achievement.”

The biggest news in the 2012 omnibus, however, involves funding for the Pell Grant program, which includes both eligibility changes and additional funds from a temporary repeal of a portion of the interest-free benefit for subsidized student loans. To learn more about these changes to the Pell Grant program, check out this Ed Money Watch post.

The table below shows some of the details we already know for 2012 education funding.

Pell Grant Funding Deal Ends Student Loan Benefit... Temporarily

December 15, 2011

Congress is finally poised to vote on an omnibus spending bill that covers multiple federal agencies and finalizes fiscal year 2012 funding for the U.S. Department of Education. The bill, which is posted on the House Rules Committee’s website here, is expected to pass. As we wrote earlier this week, the pending omnibus bill funds the Pell Grant program at a maximum grant of $5,550 in part by tweaking  eligibility rules for the program and by reallocating subsidies for student loans.  That latter provision was part of a Senate proposal floated earlier this year and has undergone a rather odd mutation in the final bill.

Specifically, the provision ends the interest-free benefit on Subsidized Stafford loans during an undergraduate borrower’s six-month grace period after leaving school. This change produces savings that the pending bill then reallocates (spends) to Pell Grants in 2012 and subsequent years. The version proposed by Senate Democrats earlier this year would have permanently ended that benefit on all newly issued loans, generating some $2.9 billion in savings over five years and $6.1 billion over ten years. All of those savings would have been allocated to Pell Grants, though not all in 2012. 

The provision in the omnibus appropriations bill Congress is set to vote on also ends the grace period interest benefit, but only for loans issued between July 1, 2012 and July 1, 2014. Loans issued after those dates would again qualify for the benefit. A temporary repeal of the benefit saves only about half as much over five years as a permanent repeal and saves nothing in later years. Subsequently, it allows for less spending to be reallocated to Pell Grants.

From a student’s point of view, the pending change is likely to sow a bit more confusion in an already-confusing set of loan terms and repayment rules. For example, a borrower who begins a four-year program in 2012 and borrows only Subsidized Stafford loans will have some loans that qualify for the 6-month grace period benefit and some that do not.

Some observers will defend the temporary repeal of the interest-free benefit as a way to get just enough savings to shore of the Pell Grant program in the near term without reducing student loan benefits any more than necessary in future years. In other words, the policy is meant to take only what is immediately needed. It’s also likely that the Senate proposed to repeal the interest benefit reluctantly earlier this year, and probably felt it had to pull back from a full repeal after conceding to the House on some Pell Grant eligibility changes in the final omnibus bill.

Regardless of the negotiating strategy, or how the short term funding compromises stacked up, the temporary repeal is bad policy. Congress should either leave it as is, and find savings to support Pell Grants elsewhere, or repeal it permanently. Besides, Congress is going to need all of the savings from a permanent repeal, and then some, when the temporary emergency funding for Pell Grants (including the 2009 stimulus, the 2010 Student Aid and Fiscal Responsibility Act, the repeal of year-round Pell Grants, and the 2011 Budget Control Act) finally comes to an end.

In 2014, Congress will need to appropriate some $31 billion to maintain the maximum Pell grant. That will make this year’s heroic effort to appropriate $22.5 billion feel like a very light lift. Congress should do what it can now to shore up the Pell Grant program for the long term.

Congress Reaches Pell Grant Funding Agreement for Fiscal Year 2012

December 13, 2011

This post was updated December 16th.

The House and Senate have reached an agreement on fiscal year 2012 funding for the U.S. Department of Education as part of an omnibus spending bill that covers multiple federal agencies. Many education supporters have been waiting to see how Congress will fund the Pell Grant program for fiscal year 2012 (which will support grants in the 2012-13 academic year) given that the House and the Senate had previously proposed very different plans for the program. Although both chambers proposed maintaining the current maximum grant of $5,550, a House draft would have made nearly a dozen changes to eligibility rules that reduced the cost of the program, while the Senate proposed redirecting money spent on student loan subsidies to Pell Grants.

The final bill includes the Senate’s student loan changes and a handful of the eligibility rules sought by the House. Specifically, the student loan provision, which would charge borrowers with subsidized Stafford loan interest during the six-month repayment grace period, would save $400 million that could be spent on Pell Grants in fiscal year 2012. Pell Grant eligibility changes in the final bill reduce the income allowable to qualify an applicant for a maximum grant under the “automatic zero” expected family contribution calculation; require Pell Grant recipients to have a high school diploma, a GED, or have been homeschooled; reduce the number of years a student can use Pell Grants from nine to six years; and require that a student be eligible for 10 percent of the maximum grant instead of 5 percent to receive the minimum grant.


Offical estimates of the omnibus appropriations bill show that the cost reductions from eligibility changes and the redirected student loan subsidies reduce the necessary total appropriation to maintan the maximum Pell Grant. Accounting for eligiblity changes and the reallocated savings from student loan changes and a reduction in the cost of the entitlement portion of the Pell Grant program, Congress needed to appropriate $22.8 billion to maintain the $5,550 maximum grant. That is slightly less than the $23.0 billion appropriated in 2011.

Of course, that isn’t the total cost of the program for fiscal year 2012. The Budget Control Act (the debt ceiling negotiation) provides a supplemental $10 billion for the program. A separate entitlement formula (one that doesn’t require annual appropriations) will kick in another $5.2 billion. The bill also redirects $612 million to the 2012 grant from student loan subsidy cuts and future savings under the entitlement portion of the Pell Grant program. After $2.5 billion is deducted to repay a shortfall in last year's grant, the Pell Grant program will cost about $36.1 billion in fiscal year 2012.

The attached table details the final cost estimate for fiscal year 2012 funding for the Pell Grant program.

Friday News Roundup: Week of December 5-9

December 9, 2011

New Mexico governor proposes $17 million in more spending to help kids read

Indiana Governor Daniels says state found untouched $300M

Florida governor calls for more education spending, less on Medicaid

University of Missouri Board of Curators talks tuition, system finances at December meeting

New Mexico governor proposes $17 million in more spending to help kids read
New Mexico Governor Susana Martinez proposed this week a new state reading initiative that would direct $17 million to identifying first- through third-grade students struggling to read, and providing them with intervention services and reading coaches. The bill would also require schools to hold back third-grade students reading below grade level from fourth grade for a year. The legislation, sponsored by state senators from the Democratic and Republican parties, will be introduced in the legislative session beginning in January. Governor Martinez offered two similar proposals last year; one passed the House but was never brought to the floor in the Senate, and the other didn’t receive a vote in either chamber thanks to a controversial summer school provision, absent from the latest proposal. More here…

Indiana Governor Daniels says state found untouched $300M
According to Indiana Governor Mitch Daniels, the state collected $300 million more in corporate tax revenue than the state’s general spending totals account for.  Beginning in fiscal year 2007, companies were able to e-file their taxes, though few initially chose to do so. Since then, more companies began e-filing, dramatically increasing the balance of the fund. But the state never transferred the accumulated funds to the state account from which legislators allocate funding for programs and departments, meaning the tax collections were never reflected in the general fund. Officials did not discover the error until after fiscal year 2011 had ended. Over the past two years, the legislature has cut education spending by about the same amount -- $300 million -- and the state has established a $1.2 billion surplus. If the money is added to the surplus, rather than spent, it will activate a plan pushed by Governor Daniels and passed earlier this year to provide taxpayer refunds. More here…

Florida governor calls for more education spending, less on Medicaid
Florida Governor Rick Scott issued a fiscal year 2013 budget this week that would increase K-12 education spending by $1 billion. He followed up the proposal with a statement that he would “not sign a budget that does not significantly increase state funding for education.” The rest of the budget is less generous, including cutting 4,500 government employees, raising healthcare premiums for some state employees and legislators, and capping Medicaid reimbursement rates. The education budget increase is a shift from last year’s proposal, in which Governor Scott suggested cutting spending for education by 10 percent (the legislature instead cut spending by 8 percent, about $1.35 billion). Senate budget committees began looking at the proposed budget this week. More here…

University of Missouri Board of Curators talks tuition, system finances at December meeting
The University of Missouri Board of Curators met this week to discuss the financial state of the system. Proposals debated at the meeting included a tuition hike of about 3 percent at the Columbia, Kansas City, and St. Louis campuses, on par with inflation; an inflation-plus-2-percent tuition hike at the Missouri University of Science and Technology; and course fee increases between 10 and 33 percent. A law already in place prevents public institutions of higher education from raising tuition above the inflation rate without a waiver, but there is no such cap on student fees. The Board did not vote on any of the proposals at the meeting; votes will be held when board members meet again in February. Missouri legislators are also expected to decrease state support for higher education next year, further stretching the system’s budget. According to the board, Missouri ranks 45th in the nation in per capita state funding for higher education, challenging the solvency of the system. The schools’ financial aid budgets in the 2013 school year will likely feel that pinch, necessitating the tuition increase. More here...

GAO Report Highlights Research Gap on Postsecondary Student Success

December 8, 2011

Over the past two years, the higher education policy discussion has been chock full of debate over for-profit institutions. Are they high quality? Do students gain valuable skills? Should the students who attend them be eligible for federal grants?

At the request of Congress, this week the GAO released a report that focuses on student outcomes at for-profit institutions compared to their non-profit and public counterparts. The GAO’s findings mostly conform to the criticisms leveled against the industry in recent years – students from for-profit schools tended to have lower bachelor graduation rates, higher unemployment, more student loans, and less success passing licensing exams – and that may well be how the headline gets written in what has become a very polarized debate in Washington.

But there is another headline buried in this latest GAO report.

There is a severe lack of rigorous research available on student outcomes by institution type.

Rather than conduct their own study of higher education outcomes, the GAO conducted a literature review using 11 studies concerning the efficacy of for-profit institutions on a variety of outcomes. But by using pre-existing studies, the GAO faced a series of limitations. For example, while many of the studies controlled for one or two student characteristics, such as race, gender, or socio-economic status, some did not control for all of the characteristics. Because academic outcomes tend to vary widely depending on these characteristics, not including all of them in a statistical model is problematic. Similarly, some studies did not differentiate between whether a school was 2- or 4-year or whether students transferred among programs, providing a limited picture of the context in which students are educated.

Additionally, GAO researchers studied whether students from for-profit institutions are more or less likely pass 10 different types of occupational licensing exams. While this did involve original research, the study still faces several limitations. For example, because it only examines students who enter professions that require licensing exams (nurses, lawyers, cosmetologists, etc…) it does nothing to address the success of students in other fields. Due to data limitations, the study does nothing to control for student characteristics when it considers outcomes. According to the GAO, for-profit institutions tend to attract more minority and low-come students than other types of schools. Though the study concludes that non-profit and public school students do better on all but one licensing exam, an analysis that controlled for student characteristics might show something different.

The lack of solid research on student outcomes by school type is not that surprising. Until recently, research was limited by data availability as most available datasets are old, limited in scope, or small. But this will not always be the case. As states begin to improve their higher education data systems, linking K-12 data with higher education and workforce outcomes, they will open up a world of rich student-level data. In the meantime, Department of Education datasets, like the National Postsecondary Student Aid Survey (NPSAS) and the National Student Loan Data System (NSLDS) provide ample opportunities for researchers looking to improve the quality of studies on these important questions.

Hopefully researchers will see this GAO report as a call to action. The unknowns surrounding student outcomes at all school types are too great and the costs to taxpayers and students too large to leave these questions unanswered.

ARRA's Actual Per Pupil Expenditure Data Reveals Inequities in School Funding

December 7, 2011

A little-known provision of the American Recovery and Reinvestment Act of 2009 is starting to bear fruit.

Deep in the legislative text of the American Recovery and Reinvestment Act of 2009, Congress buried a school-level data collection requirement. Every state had to submit school-level data on state and local per-pupil expenditures for school personnel in 2008-09. Once collected, these data would show the degree to which school districts comparably fund their Title I and non-Title I schools, as required in the Elementary and Secondary Education Act.

The Department of Education completed the data collection a few months shy of its original goal and has just released a report on their findings. Though ED avoids drawing conclusions about the degree to which current comparability requirements are or are not working, the evidence put forth in the report is pretty clear. Current comparability requirements fall far short of ensuring that low income students receive equitable resources as their higher income peers.

As a refresher, teacher comparability refers to a current provision of Title I that attempts to ensure that school districts provide equitable state and local resources to both their low-income (Title I schools) and their higher-income (non-Title I schools). School districts can demonstrate comparability by showing that per pupil expenditures or student-teacher ratios at their low-income Title I schools are within 10 percent of the average in their higher-income non-Title I schools.

The kicker, though, is that the law allows districts to ignore any variation in spending per pupil related to a teacher’s years of experience. Conversely, a district can demonstrate comparability by showing that they have a uniform teacher salary schedule that all schools use. Regardless of how a district chooses to demonstrate comparability, the current methods allow districts to obscure the actual resources – dollars per pupil – in their Title I and non-Title I schools. Because teacher salaries are the largest school expense, this “loophole” undermines the intent of comparability and practically ensures that districts are able to inequitably fund low-income schools.

Because the ARRA data collection effort provides data on actual state and local personnel expenditures at the school level for all schools in America, it can be used to determine the degree to which schools are comparably funded. Using these data, ED calculated the number and percentage of Title I or higher-poverty schools that received below average per pupil personnel expenditures for their district by school grade level. Though the report presents the information rather matter-of-factly, the conclusions are cause for concern.

Though the report provides many ways to cut the data, the most telling analysis is also the simplest. The report shows that 15,749 Title I schools (43 percent of Title I schools in the study) received lower per pupil personnel expenditures than their district average in 2008-09. Of those, 11,228, or 31 percent, received per pupil expenditures that were more than 10 percent below the average – above the threshold for variation in resources currently set in the comparability requirement (though districts are not currently required to include actual spending per pupil). Though this number seems somewhat inoffensive – it is less than 50 percent after all – it is still far from zero, where it should be according to the intent of the law.

The average school in 2009 had 547 students. This means that more than 6 million students in this country (that’s roughly the combined student populations in Arizona, Missouri, Massachusetts, Tennessee, Washington, and Indiana), likely those that need additional resources the most, are attending schools that benefit from dramatically less state and local funding than federal law suggests they should.

Title I funds are intended to provide additional resources for low-income students. Given the wide gap in state and local support for these Title I schools, it is difficult to imagine that those funds are doing much more than bringing per pupil funding in these schools up to funding parity. Clearly, comparability as it currently stands is not doing what it should – ensuring that state and local funding provide a level playing field for the education of low-income students.

Luckily, Congress is considering legislation that would change all this in the Harkin/Enzi Elementary and Secondary Education Act reauthorization bill. Though that bill may be flawed in several ways, Congress should be sure to maintain the bill’s comparability language and do more to ensure that low-income students receive the support they need.

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