States' Intended Use of Federal Stimulus Funding

The U.S. Department of Education (USDOE) has now approved the applications for initial federal stimulus funding under the American Recovery and Renewal Act of 2009 (ARRA) for 49 of the 50 states, plus the District of Columbia. Pennsylvania, which has been involved in a protracted dispute with federal officials over funding for state-related universities, is the only state whose application is still pending approval. The information the states have submitted raises serious questions about whether the stated purposes of the Act --- stabilizing education funding, facilitating the continuation of equity and adequacy formula adjustments and promoting education reforms to boost student achievement --- are being met. The goal of boosting student achievement is to be promoted through commitments from each state to promote four essential areas of reform: 1) improving teacher effectiveness; 2) making progress toward college and career-ready standards and rigorous assessments; 3) enhancing data systems to track educational practice; and 4) improving achievement in low-performing schools.

Only the first of these three goals appears to have been achieved. Virtually all of the states have stabilized their funding levels for FY 2010 at the previous year’s level, with the application of the federal stimulus funds. (In many instances, however, this “flat funding” will nevertheless result in substantial cuts in educational services since mandatory cost increases will not be covered.)

Stabilization may in some cases have been unduly emphasized at the expense of the equity and reform goals of the ARRA, as some states apparently increased their anticipated education deficits upon learning that substantial federal funding for education was in the offing, in order to limit planned cuts in other areas of the budget. Although some officials might argue that such maneuvers represented prudent budget planning, from the perspective the intent of the ARRA and the constitutional pre-eminence given to education in most state constitutions, such maneuvers clearly raise serious legal issues. Secretary of Education Arne Duncan indicated his grave concerns regarding such strategies in a letter he sent last month to Pennsylvania’s governor, expressing his concern about that State Senate’s apparent intention to reduce the share of the state budget for education and use the federal funding to fill the deeper budget hole that they had dug.

The extent to which the momentum of existing equity and adequacy advances has been maintained is, however, less clear. Although a number of states have used the federal money to fund existing statutory funding increases, at least five states have acknowledged that they will not meet statutory formula funding levels, even with the addition of the federal stimulus aid. In at least several of these cases, equity and adequacy enhancements called for under existing state statutes clearly are not being funded. Most of the small amount of funds that will be left after stabilizing the FY 10 budgets, will be used to stabilize funding for the FY 11 fiscal year, leaving little if any money for new initiatives in the priority reform areas to boost student achievement.

A detailed discussion of these issues, including a chart that summarizes information thus far submitted by the states can be found on the website of the Campaign for Educational Equity. The Campaign’s “Stimulating Equity? Project” intends to analyze closely each of these issues over the coming months.