Federal stimulus funds will help shore up district budgets
04/09 -- The federal stimulus legislation will inject badly needed funding into school districts’ shrinking budgets, but key questions remain on when the money will be distributed and how it can be used.
The American Recovery & Reinvestment Act (ARRA), signed into law by President Obama Feb. 17, contains about $100 billion in education funding for states and school districts over a two-year period.
The ARRA “is crucial to helping our school districts maintain high-quality education services and sustain thousands of jobs for teachers and personnel,” says NSBA Executive Director Anne L. Bryant. “It will also provide the resources to create thousands of jobs and contracting opportunities for school modernization.”
The ARRA directs states and school districts to obligate funding for specific purposes by Sept. 30, 2010. When the law was signed, Obama said the goal was to get half the money to the states in 40 days, so there is a great deal of urgency for the federal government to issue guidelines. “The clock is ticking,” says Deborah Rigsby, director of federal legislation at NSBA.
It includes the following for schools:
• Title I grants. The law provides a $13 billion increase for Title I grants, which is in addition to the $14.5 billion in a fiscal year 2009 appropriations bill under consideration in Congress.
Of the $13 billion, $5 billion will be allocated through the Title I targeted grant formula. Another $5 billion will be allocated through the Title I Education Finance Incentive Grant formula. Both formulas provide higher allocations to districts based on increasing numbers and percentages of low-income children.
The remaining $3 billion under Title I will be provided to states for School Improvement Grants to help fund state and district efforts targeting schools identified as “in need of improvement” under NCLB.
• Special education. ARRA provides an increase of $12.2 billion for special education programs to be spent over two years. Of that amount, $11.3 billion will be made available for grants to states and school districts for students ages 6 to 21. Another $400 million is for grants for preschool students ages 3-5, and $500 million is for grants to families with infants and toddlers from birth to age 3.
• Other existing programs. The ARRA provides funding increases for a wide range of existing education programs, including technology grants ($650 million), assistance for homeless students ($70 million), impact aid ($100 million), pay-for-performance incentives for teachers ($200 million), and various early education programs ($4.1 billion).
• State fiscal stabilization. The law provides $53.6 billion to states to help avoid budget cuts to education. About $39.6 billion will be distributed by a formula for K-12 education, higher education, and preschool programs.
Another $5 billion is reserved for State Incentive Grants, which will be awarded competitively, based on states’ performance measures. The remaining $8.7 billion will be provided to governors for “other government services,” which includes education as well as transportation, public safety, and social services.
To receive state stabilization funds, governors must provide assurances that the state will maintain the funding level for K-12 and higher education that is at least equal to the level provided in FY 2006. This “maintenance of effort” provision is designed to prevent states from using the stimulus funds to offset further cuts in state funding.
But the ARRA allows waivers under certain circumstances. Florida’s congressional delegation has already requested a waiver due to the state’s “precipitous fiscal decline” and its loss of some 30,000 students since 2006, Rigsby notes.
States also must agree to achieve equity in teacher distribution; establish longitudinal data systems; enhance academic standards and assessments for students with disabilities and with limited English proficiency; and ensure compliance with corrective action and restructuring requirements for school improvement under No Child Left Behind.
Districts may use the stabilization funds for general support as well as activities authorized under the Elementary and Secondary Education Act, IDEA, the Carl D. Perkins Career and Technical Education Act, and for school modernization, renovation, and repairs.
At Education Secretary Arne Duncan’s discretion, $650 million of the $5 billion allocated for State Incentive Grants can be reserved for an Innovation Fund to recognize eligible entities -- such as partnerships among one or more school districts and nonprofit organizations -- that have made significant gains in closing achievement gaps.
To receive the incentive grants, states must show that they have made progress in:
• Improving teacher effectiveness and distributing highly qualified teachers equitably among low and high-poverty schools.
• Improving data collection through longitudinal data systems.
• Enhancing the quality of academic standards and assessments.
• Ensuring compliance with corrective action and restructuring sanctions for identified schools under NCLB.
Each state receiving State Incentive Grant funds must use at least 50 percent of the grant to provide school districts with subgrants based on their relative shares of funding under Part A, Title I of the Elementary and Secondary Education Act.
While districts can use the stabilization fund subgrants to modernize, renovate, and repair school facilities, they may not use the money to pay for maintenance, athletic facilities, vehicles, or non-educational buildings such as administrative offices.
• Qualified school construction bonds. The ARRA creates a new category of tax credit bonds for the construction, rehabilitation, or repair of public schools or to acquire land to build a facility.
Under this program, bond holders would receive a federal tax credit in lieu of interest payments from the school district.
The limit on the amount of qualified school construction bonds that may be issued by state and local governments is $22 billion ($11 billion allocated in 2009 and the remainder in 2010).
• QZABs. The law increases bond allocations for the existing Qualified Zone Academy Bonds program from $400 million annually to $1.4 billion for FY 2009 and $1.4 billion for FY 2010. QZABs are a form of tax credit bonds that offer the holder a federal tax credit instead of interest.
The bonds can be used to finance school renovation, equipment purchases, course material development, and training of teachers and personnel at a “qualified zone academy.” These are public schools located in a federally designated empowerment zone or enterprise community.
In planning how to use their stimulus funds, Rigsby urges district officials to consider several key questions: What is your district’s greatest need? Is it preventing teacher layoffs, or something else? What programs or projects can be undertaken quickly as soon as the money is available? How can you use these funds to build the capacity for long-term innovation?
For example, Rigby says the Nevada department of education has announced that some districts want to use stimulus funds to modernize schools incorporating “green building” concepts, and some districts in Connecticut are interested in using the additional Title I funds for a program to improve students’ writing skills.
In cases where governors said they would turn down stimulus funds, Rigsby said state legislatures can intervene by passing a resolution directing the state to accept the fund.
Reproduced with permission from School Board News. Copyright © 2009, National School Boards Association. Opinions expressed in this newspaper do not necessarily reflect positions of NSBA. This article may be printed out and photocopied for individual or educational use, provided this copyright notice appears on each copy. This article may not be otherwise transmitted or reproduced in print or electronic form without the consent of the Publisher. For more information, call (703) 838-6789.