Published Online: June 16, 2009
Published in Print: June 17, 2009, as Stimulus Aid's Pace Still Slow

Stimulus Aid's Pace Still Slow

States Aim to Plug Holes, Application Review Shows

The flow of K-12 economic-stimulus money to states and local school districts remains slow, as governors and state legislators face the practical challenge of absorbing billions of dollars aimed at stabilizing their budgets, while satisfying the U.S. Department of Education’s requirements for that aid.

Already clear, however, is how states plan to use the federal money—once they get it.

According to an Education Week review of the 31 applications approved as of late last week for the State Fiscal Stabilization Fund—the largest piece of the education stimulus pie—nearly 90 percent of that money seems destined to backfill state cuts to education funding, with little left over. And, in general, K-12 education is winning big compared with higher education.

In the four months since Congress passed the $787 billion American Recovery and Reinvestment Act, U.S. Secretary of Education Arne Duncan and his team have managed to get $44 billion in overall stimulus funding ready for states to start spending, in areas such as special education and Title I aid for disadvantaged students.

Application Status

More than a dozen states had not submitted applications to the U.S. Department of Education for their share of the $48.6 billion state stabilization fund as of last week. The deadline to apply for the first round of that aid is July 1.

That also includes $24.5 billion that’s ready for states from the fiscal-stabilization fund, which is meant to help prop up state K-12 and higher education budgets in 2009 and 2010.

Yet states had drawn down only $5.6 billion of their total available education stimulus money, including $3.8 billion in fiscal-stabilization funds, as of the Education Department’s June 5 weekly stimulus-spending report. And with a July 1 application deadline looming for the stabilization fund, more than a dozen states had yet to submit their applications as of late last week.

To get the state’s share of the $48.6 billion stabilization fund, each governor must fill out a 45-page applicationRequires Adobe Acrobat Reader, which includes detailed worksheets to determine how much the state has spent on education as far back as 2006, and plans to spend as far forward as 2011. Governors must also commit to advancing education reform in four key areas: teacher quality, data collection, academic standards, and turning around low-performing schools.

The applications first became available April 1, and as of late last week, seven submitted applications were still pending at the Education Department. (Notably, South Carolina Gov. Mark Sanford, a Republican, turned in his applicationRequires Adobe Acrobat Reader to the Education Department two business days after his state supreme court ordered him to apply for stimulus funding, despite his objections.)

Secretary Duncan noted that his staff turns around applications in four to six days’ time. “We aren’t operating like a traditional federal bureaucracy,” he said last week. “We’re moving rapidly here, and we’re going to challenge districts and states to be equally as responsive.”

Advice Offered on Spending School Stimulus Aid

Education leaders and school finance experts from the district, state, and national levels discuss how money from the federal economic-stimulus package can be used to advance school improvement during a recent Education Week Leadership Forum on "Powering Through the Recession."

Speed a Challenge

But moving rapidly does have its risks. Education advocacy groups in New Jersey, New York, and Georgia complained in a letter to Mr. DuncanRequires Adobe Acrobat Reader that there’s no opportunity, or time, for public feedback on the stimulus applications. In fact, the Education Department only made each state’s submitted application public after repeated requests from advocacy groups and the media, including Education Week.

The initial disagreement raised red flags for some education advocates.

“The lack of basic procedures to ensure accountability, openness, and public participation by both states and [the department] is deeply concerning,” said David G. Sciarra, the executive director of the New Jersey-based Education Law Center.

Moving fast, as Mr. Duncan has advised others to do, appears to be a challenge as states slowly draw down the money, which then must be doled out to individual school districts.

“Everybody is antsy, because it’s billions of dollars, and we have to make a difference for kids,” said John D. Musso, the executive director of the Reston, Va.-based Association of School Business Officials International.

State officials from across the country point to several reasons for the delays. For one, states that already have access to their money say they’re waiting to make sure they, and school districts, understand all of the rules that govern spending; sometimes, states have to draft their own rules and applications for districts.

Discretionary Funds

Although most of the $48.6 billion State Fiscal Stabilization Fund is set aside for K-12 education, nearly $9 billion of it is for "government services"—meaning the governor can choose how to spend it. Of the 31 stabilization-fund applications approved so far, governors say they will spend the discretionary money on:

Also, a handful of states still hadn’t finished their fiscal 2010 budgets as of last week, according to Scott D. Pattison, the executive director of the Washington-based National Association of State Budget Officers. And many of those that have finished did so in the last couple of weeks, making it possible only now for governors’ staffs to complete the applications.

Tom Evslin, Vermont’s chief recovery officer, said despite this hurried push for stimulus funds, “we do have to follow the state constitution and appropriations process.” Vermont’s legislature just finished work at the end of May, and the state is working on its application, he said.

An official said Washington state took its time to submit its application because Gov. Christine Gregoire, a Democrat, took the education reform promises—or “assurances”— required in the application seriously. It was approved May 27.

The July 1 deadline applies to the first round, or 67 percent, of each state’s share of stabilization fund. To get the second portion of the money, set to go out this fall, states will have to provide specific data—or a plan to provide the data—on the department’s four specified reform areas. Such data includes the number of teacher-evaluation systems in the state that incorporate student-achievement data, for example.

Plugging Holes

The stabilization-fund applications that have already been approved confirm what school districts had feared: Much of this large infusion of money will be soaked up by states’ continued budget problems.

Overall, states on average are using about 87 percent of the stabilization funds to fill in K-12 and higher education cuts they already made in fiscal 2009, or cuts they would have had to make in 2010.

“We’re all disappointed,” Mr. Musso said. “How are we supposed to make systemic change if the dollars are just buying the same thing we’ve been buying in the past?”

A little over half the money is being used to help plug holes in 2010 K-12 and higher education budgets, and about one-third is being used this fiscal year, which for most states ends June 30. Higher education is slated to get about 15 percent of the money, with the rest going to K-12.

Seventeen states and Puerto Rico will have a little money left over, about 10 percent, after filling budget gaps—money that must be distributed to school districts according to the federal Title I formula, according to the Education Week analysis.

The applications also reveal that governors are choosing to spend the discretionary part of the stabilization fund—$8.8 billion that’s targeted at general “government services”—in vastly different ways. On average, states report using about 32 percent of their government services money for public safety, with K-12 coming in second at 15 percent. Yet about 45.3 percent will be spent in “other” and “undetermined” ways.

Barely 1 percent of the money is being used for modernization and repair of K-12 and higher education school buildings.

In their applications, some governors were very specific about projects that will benefit from the government-services money. Among the notable uses: Utah Gov. Jon Huntsman Jr.’s plan to use a portion of it for tax incentives for the movie industry to film in his state, Virginia Gov. Tim Kaine’s plan to use some of his money for smoking-cessation programs, and Connecticut Gov. Jodi Rell’s plan to use a small amount for education data collection and analysis.

Vol. 28, Issue 35, Pages 1,26

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