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Proposals To Restrict Chapter 2 Spending are Spurring Debate

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WASHINGTON--A three-way debate is shaping up in the halls of the Congress over the future of Chapter 2, the highly popular block-grant program that provides $500 million a year for states and local school districts to spend on programs of their own choosing.

Chapter 2 is scheduled to expire next year, and the Congress is in the process of drafting a five-year reauthorization law for the program.

Key Congressional leaders, eager to launch a number of new education initiatives this year, are increasingly viewing Chapter 2 as a vehicle for funding those efforts in an era of fiscal austerity. Toward that end, bills have been introduced in the House and Senate to impose restrictions on how state and local school officials can spend their Chapter 2 funds.

Representatives of the major education groups, though wary of efforts to limit state and local flexibility, seem willing to compromise. They appear united in their opposition to the Senate measure, while giving a qualified endorsement to the less-stringent House proposal.

On the third side of the debate, however, the Reagan Administration is flatly rejecting any such spending limitations. In fact, the Education Department wants to loosen existing restrictions that prevent local officials from using their Chapter 2 money to pay for state-mandated reforms.

Considerable Discretion

At stake is the only major pool of federal money not earmarked for a specific purpose or for a particular group of students. Since 1981, when the Congress melded 28 smaller, "categorical'' programs into the block grant, state and local authorities have enjoyed considerable discretion over how they use their Chapter 2 funds.

The only stipulation imposed under current law is that spending be limited to activities authorized in the original 28 "antecedent'' programs and about 20 others that were also repealed by Chapter 2's authorizing legislation. That definition has been defined so broadly by the Education Department that it permits virtually all instructional expenses.

Widespread Support

Education officials have responded enthusiastically to the flexibility of the block grant, which they say allows them to redirect funding in response to changing needs and priorities. A recent survey by the Association of School Business Officials International found that educators have an "overwhelmingly positive'' opinion of the block-grant program, according to John R. Curley, a New York State education official who conducted the survey.

Mr. Curley, writing in the February issue of School Business Affairs, said that 55 percent of those polled favored additional consolidation of the remaining federal categorical programs.

Administration officials have cited the popularity of the Chapter 2 reforms to support their call for a more limited federal role in education. "I don't think anyone will deny that the program is achieving what it was designed to achieve,'' said Bruce Carnes, the department's deputy undersecretary for planning, budget, and evaluation, in Congressional testimony earlier this year.

But the same flexibility that has made Chapter 2 so popular with educators has also spurred criticism from some interest groups--including districts that received desegregation aid under one of the antecedent programs--who feel their constituents were shortchanged in the redistribution of funds that followed the creation of the block grant.

Even some education leaders agree that the deregulation pendulum may have swung too far, at the expense of program accountability and effectiveness.

"We understand the concerns that some members of Congress have about the lack of accountability,'' said William Pierce, the outgoing executive director of the Council of Chief State School Officers.

And, he said, "we also understand that there really isn't any other kind of 'free' money available for Congress to spend on their own priorities.''

'Trading In'

With Democrats now firmly in control of both the House and Senate, those priorities are quickly taking concrete form in the shape of new programs to deal with dropouts, "at risk'' students, foreign-language instruction, and a host of other perceived education needs.

Sources of funding for those efforts, however, have been much slower to materialize. The pressure to reduce huge budget deficits, combined with a bipartisan consensus on the need to increase funding for other domestic programs, has led many education-minded Democrats to talk of "trading in'' old programs to pay for the new ones.

A bill introduced by Senator Claiborne Pell, Democrat of Rhode Island, would essentially accomplish that end. Mr. Pell, chairman of the Senate subcommittee on education, arts, and the humanities, has long been skeptical of the block-grant approach.

"Chapter 2 dollars,'' he said in introducing his bill, "are spent on general education programs, and are not targeted to needy populations or needy areas of concern. To my mind, this is inconsistent with the long-standing federal role in education--that of providing for the needs of the underserved.''

Mr. Pell's bill, which he also introduced in the last Congress, would require states and school districts to focus their efforts in five general areas--dropout prevention, literacy training, basic-skills development, library resources, and programs for the gifted and talented.

Administrators' Reaction

While most education groups have not taken a formal position on Mr. Pell's proposal, lobbyists for several major administrative organizations have made it clear that they do not favor it.

"We have taken the position that we would like to see Chapter 2 unchanged if possible,'' said Bruce Hunter, associate director of the American Association of School Administrators.

Mr. Hunter and other education lobbyists said that if changes are to be made, they would prefer the proposal drafted by Representatives Augustus Hawkins, Democrat of California, and William Goodling, Republican of Pennsylvannia.

Mr. Hawkins, chairman of the House subcommittee on elementary, secondary, and vocational education, and Mr. Goodling, the panel's ranking minority member, would allow local officials to spend Chapter 2 money on school-improvement efforts identified in the body of reasearch on "effective schools.''

While the Goodling-Hawkins bill would require state education agencies to spend at least 25 percent of their Chapter 2 set-aside on effective-schools projects, local officials would retain their freedom to spend money where they see fit, within the same general guidelines laid down in the current law.

"This ... proposal retains the current flexiblity in Chapter 2, while specifying more clearly the major goals,'' Mr. Goodling said in a statement.

E.D. Priorities

While continuing to support the block-grant approach, Mr. Carnes and other Education Department officials contend that the existing list of authorized programs is not sufficiently focused.

The department would like to see all of the Chapter 2 money directed towards a new list of activities that includes a number of the education reforms that have already been adopted in many states--including controversial merit-pay and career-ladder systems.

Department officials claim the proposal would still allow local officials to choose the programs they wish to fund, while eliminating such abusive practices as using Chapter 2 money to pay for clerical support, building maintainance, and other non-instructional costs.

"We want to see the money directed to the classroom and the students,'' Mr. Carnes said. "That's where we think it belongs.''

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