Financial-Rescue Measure Includes Provisions for Rural Schools, Facilities

By Alyson Klein — October 03, 2008 3 min read
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Congress has approved a $700 billion plan aimed at stabilizing credit markets that also included an authorization of long-sought funds for rural school districts.

The financial-assistance package includes a reauthorization of the Secure Rural Schools and Community Self-Determination Act, which provides federal aid to make up for diminished timber-tax revenues in districts that are home to national forests. The House of Representatives approved the measure today by a vote of 263-171. The Senate approved the measure Oct. 1 by a 74-25 vote.

The rural schools measure would renew the program through 2011, at a cost authorized at about $400 million a year.

Congressional leaders included the rural-schools program renewal as part of $150 billion in additional provisions, mostly aimed at extending energy, business, and other tax cuts, to win support from members of the House, which rejected an earlier version of the financial-rescue bill Sept. 29, on a vote of 228-205.

Debate over a federal response to the upheaval in the financial system came as school officials were worrying about the impact of the turmoil on districts’ borrowing. (“Districts’ Borrowing May Face Hit From Continued Financial Crisis,” Oct. 1, 2008.)

The addition of the rural schools language, and other programs aimed at educators and school districts, helped congressional leaders pushing the financial-assistance bill garner support—and lobbying help—from education organizations.

For instance, the 3.2 million-member National Education Association had not taken a position on the financial-assistance bill until the rural schools program and other school provisions were added to the legislation.

Late last week, the NEA was urging lawmakers to support the measure, said Randall Moody, the chief lobbyist for the teachers’ union.

Robert P. Grimesey, the superintendent of the 2,800-student Alleghany County, Va., school district, also contacted members of Congress in support of the bill. His district has an annual budget of about $30.9 million and receives about $84,000 from the rural schools program, roughly the equivalent of two teachers’ salaries, without taking benefits into account.

That may not sound like a lot of money, Mr. Grimesey said, but the district is facing rising fuel costs and other expenses.

“We’re quite desperate to get whatever dollars we can out of this measure,” he said.

Funding Extension

The financial rescue package also includes an extension for two years of the Qualified Zone Academy Bond program, which provides $400 million a year in tax credits to holders of bonds used for school renovation and repair projects and certain other school costs. The credits are meant to cover the costs of interest on the bonds.

And the bill includes a two-year extension of a $250 income-tax credit to help teachers purchase books and other supplies for their classrooms. Without the extension, both the school construction and teacher tax provisions will expire at the end of 2008.

Meanwhile, President Bush on Sept. 30 signed a bill, known as a continuing resolution, that extends funding for most federal programs, including those in the Department of Education, at fiscal 2008 levels through March 6, 2009. Fiscal 2009 began Oct. 1, but lawmakers have not completed the appropriations bill that finances the Education Department.

The continuing resolution includes, on paper at least, an extension of funding for the $393 million Reading First program, which was slated for zero funding in two fiscal 2009 funding bills approved by House and Senate spending panels this year. (“Congress Eyes Modest Increases in FY 2009 Education Spending,” July 16, 2008.)

Created as part of the No Child Left Behind Act, which became law in January 2002, the Reading First program was financed at about $1 billion annually until fiscal 2008. Congress slashed the funding to $393 million after a series of reports by the Education Department’s inspector general suggested that conflicts of interest had occurred among officials and contractors who helped implement the program in its early years.

School districts do not receive money under the Reading First program until July 1, so the extension will not matter if Congress chooses to eliminate funding for the program when lawmakers convene early next year.

A version of this article appeared in the October 08, 2008 edition of Education Week as Financial-Rescue Measure Includes Provisions for Rural Schools, Facilities


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