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Published in Print: November 21, 2001, as Repair Funds Jettisoned From Stimulus Package

Repair Funds Jettisoned From Stimulus Package

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Looking for a way to bulk up the Department of Education's budget, some education lobbyists and congressional Democrats had eyed an economic-stimulus plan in Congress as a prime vehicle. But the wheels came off that idea last week when Senate Democrats opted to downsize the spending side of their stimulus proposal, including excising about $1 billion that was to have gone for school repair.

"It's about a $15 billion [spending] package that deals only with homeland security," Senate Majority Leader Tom Daschle, D-S.D., told reporters early last week. "We have taken out any of those pieces that would not neatly fit in homeland security."

The Senate Democrats' overall $73 billion stimulus plan also contains a range of tax-relief measures and assistance for the unemployed. But whatever is in the plan, it will likely be subject to a major rewrite. And Senate Republicans blocked the legislation from even coming to a vote last week.

While both Congress and the White House agree on the need to give the faltering economy a boost, disagreements on how to do so abound. The Republican- controlled House approved a stimulus bill last month that is dominated by tax- related measures. And the White House has made clear that it also wants the stimulus to focus on tax relief.

Harkin's View Rebuffed

Even without tapping the stimulus plan, the Education Department's budget is likely to see a big—possibly a record-breaking—increase for fiscal 2002, which began Oct. 1.

The Senate spending bill for the department, approved Nov. 6, would provide an additional $6.5 billion in discretionary funding, for a total of $48.7 billion. The House version includes slightly more, about $49.3 billion in total.

But many Democrats have argued that with Congress close to final action on a separate bill, the reauthorization of the Elementary and Secondary Education Act, that would step up federal demands on states and districts to improve student achievement, more money still is needed for education.

So when members of Congress began to talk about passing an economic-stimulus package, it was viewed as another chance to bolster education spending. In particular, proponents of federal aid for school repair argued they had a good match: Spending on school renovation would not only help schools, but also create jobs and give the economy a needed kick.

Piggybacking school repair onto the stimulus package would potentially have freed up more money in the Senate's education spending bill for other programs, such as Title I, since that bill already earmarked $925 million for school repair. President Bush opposes the repair program; the House spending bill provides no money for it.

Last week, it became clear that Senate Democrats, aside from substantial unemployment assistance, wanted to devote additional spending in the stimulus package solely to homeland security, a prime concern since the Sept. 11 terrorist assaults. Sen. Tom Harkin, D-Iowa, made a pitch that school repair was still relevant.

Tom Harkin

"I made a strenuous argument [to Democrats] that we should put it back in," said Mr. Harkin, who has been a leading Senate advocate for federal school repair aid. "Our kids are vulnerable. On homeland security, we need to secure all the heating and ventilation systems in our public schools. They're all wide open.

"If you think the terrorist attack on the World Trade Center upset America," Mr. Harkin declared, "wait until one school, one school, is terrorized with anthrax or something like that." But his arguments did not appear to hold sway, and Democrats dropped the item from their plan.

"Though we all support [the school repair funding], it's hard to directly relate it to homeland security," said Sen. Joseph I. Lieberman, D-Conn., shortly after a Democratic caucus meeting where the issue was discussed.

Meanwhile, the stimulus legislation in both chambers appears likely to renew a modest measure that has directly benefited schools: qualified-zone academy bonds, known as QZABs.

In 1997, Congress first approved tax legislation creating QZABs, which support up to $400 million in school improvements each year. The bonds are designed to help schools raise money to renovate and repair school buildings, purchase equipment, develop challenging curricula, or train teachers.

The program substantially reduces or even eliminates interest payments that school districts would have to pay on such bonds by instead giving the bond-holder a federal tax credit approximately equal to the interest owed. Each state is allotted an amount of money that high-poverty schools may borrow using QZABs.

Joel Packer, a lobbyist for the National Education Association, said he was disappointed by Senate Democrats move to strip repair funding from their stimulus package, but he said the QZAB program has become a fairly popular way of helping schools.

He also said lawmakers could ultimately agree to add more tax benefits for schools. He pointed out that Rep. Charles B. Rangel of New York, the ranking Democrat on the House Ways and Means Committee and longtime advocate of a much broader program of federal subsidies for school construction bonds, will be part of any final negotiations on the stimulus plan.

"I would not completely rule that out in the final package," Mr. Packer said.

Vol. 21, Issue 12, Pages 18,20

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