Education Funding

Debate Flares Regarding Aid Given to States

By David J. Hoff — January 21, 2004 6 min read
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It’s a $6 billion question: Are states letting federal money languish even as they complain they don’t have enough to spend on President Bush’s signature education program? Or are they slow to use the aid because they’re following accounting rules?

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Read the accompanying chart, “Differing Views.”

The snowballing debate started two weeks ago, when officials of the Bush administration, countering complaints that Republicans are inadequately financing the No Child Left Behind Act, began pointing fingers at the states. They said the states don’t spent all of the federal K-12 money available to them in a timely manner.

“It’s disingenuous to say No Child Left Behind is underfunded if they’re not maximizing the use of current federal funds,” said C. Todd Jones, the associate deputy secretary for budget and strategic accountability for the U.S. Department of Education.

State officials, though, retorted in a series of letters and public statements that they were spending the money bit by bit, as required by federal law, and that they would eventually use all of it.

“All of the money [allocated to Missouri] has either been spent or encumbered,” said Mary Still, the press secretary for Missouri Gov. Bob Holden, a Democrat, responding to a Jan. 2 news release from the office of Sen. James Talent, R-Mo. The release said Missouri had failed to claim $72.2 million in federal education aid allocated to it from fiscal 2000 through fiscal 2002.

“You can’t criticize [Missouri] for not using the money when we’re following your regulations for using it,” Ms. Still added.

The sparring over often-technical points of federal funding is a sign that Republicans are striking back against widespread criticism that the No Child Left Behind Act is costing states more money than the federal government is providing to carry out its mandates. Such exchanges also expose tensions between state and federal officials over its implementation.

A revision of the Elementary and Secondary Education Act, the 2-year-old law requires states to overhaul their testing and accountability systems in an ambitious attempt to raise the achievement of all public school students.

In this presidential-election year, the political overtones of the debate are clear.

In addition to Sen. Talent, other congressional Republicans have issued press releases in nine states detailing how much money each state has yet to spend of federal dollars allotted from fiscal 2000 through fiscal 2002. All of the states have Democratic governors, and many of them—including Iowa, Michigan, and Pennsylvania—are considered swing states in the Electoral College.

"[These states] have been the most vocal in complaining that we’re not sending enough federal education money to them,” said Josh Holly, a spokesman for GOP members of the House Education and the Workforce Committee, which is distributing the releases.

Texas Loses Aid

According to a separate chart provided by the Education Department, Texas left $12 million of pre-fiscal-2000 money unspent—aid that dates back to when President Bush was the governor. That is almost twice as much as any other state. That money— most of it from fiscal 1999, according to Mr. Jones—has reverted to the U.S. Treasury.

By contrast, the money that is the subject of the recent press releases remains available to states. Mr. Holly said that the GOP-controlled House committee plans to continue raising the issue of unspent funds, but has no plans to highlight the lapsed funding in Texas or any other state.

“This is totally political,” contended Ms. Still, the spokeswoman for the Missouri governor. “They’re using an accounting gimmick and misleading statements to direct attention” from the debate over funding.

Congressional Democrats are contributing to the political wrangling by arguing the Education Department has failed to give states the help they need implementing the No Child Left Behind law. (“Democrats Tout Their Plans for Higher Education,” this issue.)

The debate over whether the No Child Left Behind Act is adequately financed has simmered between Republicans and Democrats—and between state and federal officials—almost since President Bush signed the measure into law in 2002. Now the debate has emerged in the presidential campaign, as the Democratic candidates outline their plans to revise the law and dramatically increase its funding. (“‘No Child’ Law Faulted in Democratic Race,” Jan. 14, 2004.)

Under the law, states must have testing systems that assess students in reading and mathematics in grades 3-8 and once in high school. States also must measure whether schools and districts are making “adequate yearly progress” toward ensuring all students are proficient in those subjects by 2014.

Waiting to Be Spent

Until this month, federal officials have pointed to increases in Title I spending and new money to pay for testing as evidence that there is enough money to comply with the law. When President Bush celebrated the second anniversary of the law’s signing on Jan. 8, the Education Department issued a fact sheet saying “some states and school districts have not been able to take full advantage of these resources.”

As of Dec. 11, the sheet said, nearly $6 billion in K-12 funds from fiscal 2000 through fiscal 2002 was still in the Treasury waiting to be spent by states on Title I, special education, and other state-grant programs. By Jan. 6, Mr. Jones said in an interview, the amount had declined to $5.75 billion. Almost $5 billion of that was from fiscal 2002, he said.

Of those programs, only Title I and the school improvement block grant are part of the No Child Left Behind Act.

State officials say it’s not unusual that such amounts remain.

Federal rules allow states to spend K-12 money over 27 months from the time it’s available. Because most fiscal 2002 funds didn’t start flowing to states until July 1 of that year, and six months after the federal Law was signed, states have until Sept. 30 of this year to spend the money.

States can get waivers to extend payments for long-term projects.

“It’s a little misleading to suggest that we’ve had $40 million sitting in a filing cabinet,” Ted Stilwill, the director of the Iowa education department, said in an interview, referring to the House Republicans’ press release.

“Of the amount available,” he said, “we’ve already obligated all but $600,000 to $700,000.”

Still, Mr. Jones said that states would be able to cover costs under the No Child Left Behind Act if they would simply claim their money as soon as possible.

“The underreported story is that this is the normal course of business,” he said.

Mr. Stilwill said states use the spending leeway because Congress is often late in passing its appropriations bills. For example, even though fiscal 2004 began Oct. 1, Congress hasn’t finished the spending measure that covers the Education Department.

Mr. Stilwill added that states regularly reserve previous years’ funds to pay for current-year expenses. And because educators can’t collect money until shortly before they spend it, the money remains in federal Treasury accounts until the bills are due.

The new twist in the funding argument does not change the fact that states and schools must comply with the federal law.

Many are trying to leave politics aside while doing that, said Mr. Stilwill: “A lot of us are working hard to implement this law, and we’re trying to do it in a way that is not partisan.”

A version of this article appeared in the January 21, 2004 edition of Education Week as Debate Flares Regarding Aid Given to States

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