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Report Says Stimulus Spending Staved Off Layoffs

By Dakarai I. Aarons — July 15, 2010 5 min read

School districts have used federal economic-stimulus money to help ameliorate the effects of the economic recession and keep their teaching staffs employed, even as their overall budgets decreased.

But the looming end of that funding means 75 percent of the nation’s school districts expect to cut teaching jobs in the 2010-11 school year, according to a report published today by the Center on Education Policy.

The Washington-based center took at look at how school districts have spent money from the American Recovery and Reinvestment Act, the economic-stimulus law passed by Congress last year. The law is sending about $100 billion to education over two years.

“Education was buffered to a degree [by the stimulus], but even being buffered, school districts were reporting they had to lay off teachers and cut back on spending for textbooks and professional development,” Jack Jennings, CEP’s president, said in an interview.

The report is the second installment in a three-year research project the nonprofit research and policy group is conducting on the impact of the stimulus law. The first, released in December, found states were struggling to improve teaching quality and low-performing schools, and that their capacity to implement significant education reform was a serious problem. (“Stimulus Aid’s State-Level Impact Seen Mixed,” December 3, 2009.)

The latest report finds districts used much of the funding from the State Fiscal Stabilization Fund and the supplemental boost to Title I and Individuals with Disabilities Education Act to pay for having and creating teacher and administrator jobs in the past school year.

Even with the billions in economic-stimulus dollars flowing to states and school districts, the districts reported their budgets in the 2009-10 school year were lower than in 2008-09. Districts are worried about the upcoming “funding cliff” when the stimulus funds run out; 60 percent reported when surveyed this spring that their districts had spent or expected to have spent all of the funds received by the end of the 2009-10 school year.

And the stimulus wasn’t enough to stop layoffs—45 percent of school districts reported cutting teaching jobs in the 2009-10 school year.

“The stimulus money certainly was a blessing to school districts because, without it, the situation would have been worse,” said Daniel A. Domenech, executive director of the Arlington, Va.-based American Association of School Administrators, whose group has released several reports on the stimulus’ effect on education.

However, he said, “We are not over the recession. There is still no turnaround in real estate taxes or in state sales and income taxes. There is still a shortage of money to support schools at the state and local level.”

“That financial cliff is very much a reality.”

Focus on Reform

While districts spent the majority of the money on saving jobs, they also spent some of the money on making educational improvements favored by the Obama administration that were embedded in the economic-stimulus law.

The U.S. Department of Education required states carry out four types of education reform as part of receiving SFSF money, and districts had to sign memoranda of understanding agreeing that they would address the department’s priorities. Those improvement strategies, also known as “assurances,” are establishing longitudinal student data systems, developing strong standards and assessments, improving teacher effectiveness and equalizing the distribution of good teachers, and turning around low-performing schools.

According to the study, districts have put more emphasis on efforts related to standards, teacher efficacy and data use than on intervening in persistently failing schools.

Part of the reason, Mr. Jennings said, is that not every district has a school that would be labeled low-performing according to the federal guidelines, which focus primarily on the bottom 5 percent of schools.

Another reason is the lack of research demonstrating effective methods for turning around schools and disagreement among education practitioners and policymakers about which models work, he said.

NCLB Headaches

Adding to the economic complications for school districts is the No Child Left Behind Act, the federal accountability law for K-12 education. The law has a goal of all students demonstrating proficiency in math and reading by 2014.

Many states backloaded their accountability systems, requiring significant jumps in test-score gains in the next few years at a time when districts will have less state and local money to help schools improve, Mr. Jennings said.

Mr. Domenech of AASA says the conditions are ripe for the federal government to give schools a relief valve.

“There are things, frankly, the Department of Education could do to help. Right now, almost two years into this administration, every school district is still working on No Child Left Behind and having to meet all the requirements,” Mr. Domenech said. He has advocated that U.S. Secretary of Education Arne Duncan waive the provision of the NCLB law that requires school districts to set aside 20 percent of Title I funding for supplemental educational services or school choice.

The set-aside is “wasted money that could be better spent by districts, especially now with the shortfall,” he said.

That provision would be eliminated under the “blueprint” for reauthorizing the Elementary and Secondary Education Act the administration submitted to Congress, but there has been little movement on reauthorization as members face midterm elections. The NCLB is the most recent version of the Elementary and Secondary Education Act, or ESEA. (“Administration Unveils ESEA Reauthorization Blueprint,” March 17, 2010.)

Both Mr. Jennings and Mr. Domenech are hopeful Congress will pass a provision that would help avert some teacher layoffs. A version passed recently by the U.S. House of Representatives includes $10 billion to save an estimated 140,000 teacher jobs, but President Barack Obama has threatened to veto the legislation because of cuts made to some of his administration’s signature programs to pay for the jobs bill. The Senate is expected to take up the measure later this month.

“That’s the last hope for school districts to avoid a number of these cutbacks,” said Mr. Jennings, a former longtime aide to Democrats on the House’s education committee. “The amount of money they are talking about isn’t going to avoid all cutbacks. All it will do is minimize the pain.”

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