Published Online: February 17, 2009

Stimulus Aid to Schools a Management Challenge

The $787 billion economic-stimulus bill that President Barack Obama signed into law today presents an unprecedented opportunity—and an unprecedented management challenge—for new U.S. Secretary of Education Arne Duncan.

Cash-strapped states, districts, and schools are eager for their shares of federal support under the measure, which includes some $115 billion in precollegiate and higher education aid. That sum includes substantial increases for Title I grants to help disadvantaged students, an increase in special education money, and a nearly $54 billion fund to help make up for dramatic cuts in state-level support to schools.

Secretary Duncan—who has not yet filled top political jobs at the Department of Education, including a deputy secretary and undersecretary—will have to make sure all that money is sent to states, and in turn, to districts, in a timely fashion. Aides to Democrats in the U.S. House of Representatives say they hope a sizable chunk will make its way to states before July 1.

Mr. Duncan also is in the enviable but high-pressure position of overseeing $5 billion in discretionary grants that will be given to states, school districts, and nonprofit organizations for school improvement.

That money, which Mr. Duncan has dubbed the “Race to the Top Fund,” includes incentive grants to states that have made progress in raising their standards, closing achievement gaps between poor and minority students and their more-advantaged peers, or ensuring that highly qualified, effective teachers aren’t concentrated only in wealthy suburban areas.

Mr. Duncan will also have wide latitude in awarding up to $650 million in “innovation grants,” which will go to districts, groups of districts, and nonprofits that are making gains in student achievement. Mr. Duncan said the money can help “scale up what works.”

But the grant process for those two pots of money could present some political pitfalls, said Margaret Spellings, who served as U.S. secretary of education during President George W. Bush’s second term.

“The opportunity for misdeeds and so forth is high with this big amount of money. It just is,” she said in an interview before the stimulus bill became final. There must be “strict grant criteria to wring the politics out of the process,” she said. “If I had a nickel for every member of Congress who called me up and said, ‘Won’t you look kindly on [a particular grant application]?’ … A good administrator has to guard against that.”

Ms. Spellings, now a private consultant in Washington, spoke highly of her successor’s capabilities, but pointed out that he doesn’t yet have his team in place.

“As hard-working as the department’s career staff are, the people who are ultimately accountable are the political appointees,” she said.

Hurdles Loom

Secretary Duncan appears well aware of those challenges.

“We have to implement and execute this in an absolutely impeccable manner,” he told about 500 people from education organizations during a Feb. 11 conference call. “We’re going to be very closely scrutinized.”

And, in an interview with Education Week last month, he said he was looking for good managers to serve in top roles at the Education Department. ("Education Aid in Stimulus Raises Eyebrows," Feb. 4, 2009.)

Meanwhile, school districts and education organizations already are pressing for more details on how much money they will receive and when. Some advocates for districts are worried there aren’t explicit provisions in the legisation, known as the American Recovery and Reinvestment Act, that require states to get the money out quickly to districts.

Secretary Duncan said in a separate conference call with reporters last week that the department plans to be “very fast, but also be very smart” in allocating the money and will give states “real guidance around speed.” He wasn’t specific about what those guidelines might look like.

Under the new law, the secretary is given authority to waive so-called “maintenance of effort” provisions, which require states to keep up spending at the level of fiscal 2006 to be eligible for money from a $53.6 billion state fiscal-stabilization fund. That fund is intended to help states shore up their budgets and restore education funding cuts.

The measure allows Secretary Duncan to waive the requirement for states in particularly dire economic circumstances, but it will be up to the Education Department to determine just which states are eligible for such an exception.

Some states, including Florida, which faces a yawning budget deficit, have already signaled that they will be asking for waivers. In the conference call with reporters, an Education Department consultant said that federal officials will examine states’ specific circumstances and don’t want to issue a “one-size-fits-all” blanket waiver.

Accountability Demands

And Secretary Duncan will have to hold school officials accountable for following through on “transparency” requirements in the stimulus measure, which call for schools to give public notice, on the Internet, of how the funds are being used.

Some pieces of the stimulus package may be tough for the department to enforce. For instance, to be eligible for all of the money in the $53.6 billion stabilization fund, states must assure the department that they will make progress in key education reform areas, including improving student assessments and teacher effectiveness. But there’s nothing in the legislation that spells out penalties for failing to make progress.

The Education Department consultant, who spoke on condition of anonymity, acknowledged as much, but pointed out that the education secretary’s $5 billion discretionary fund could be an enticing carrot. The secretary is supposed to award the grants based on progress made on those key education assurances. If a small number of states make big progress on those goals, they stand to gain an sizable additional chunk of money.

“All of these provisions are really powerful,” the adviser said.

Education Week Assistant Editor Michele McNeil contributed to this story.

Vol. 28, Issue 22

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