Stimulus Response
Mar 1, 2010 12:00 PM, By Mike Kennedy (mkennedy@asumag.com)
Federal funds have helped schools and universities stay afloat, but states' education budgets remain in woeful shape.
If you're a “glass half-full” person, you may look at last year's federal stimulus package as a godsend for schools and universities: Billions of dollars in funding have enabled education institutions to save hundreds of thousands of jobs and many programs considered critical to providing students with high-quality instruction, and have subsidized building projects that otherwise might not have gotten off the ground.
A “glass half-empty” person looking at the same picture may wonder why, after the federal government dug itself deeper into debt to bring the finances of schools and universities closer to solid standing, the fiscal health of many education institutions remains precarious, and the threat of layoffs and shuttered facilities looms large.
Both views have validity: Stimulus funds unquestionably have helped many schools keep going through tough times, but for many institutions, the tough times aren't going away anytime soon. That is why, a little more than a year after Congress passed the American Recovery and Reinvestment Act and began allocating billions of dollars in aid across the nation, the so-called stimulus package gets a grade of “incomplete” on its key assignment: Putting a sickly economy back on the road to good health.
For education administrators, the scenario is too familiar. Any increase in funding is appreciated, but there always is a question of how long it will last, and inevitably it proves to be not enough to meet the ever-growing demands being placed on schools and universities.
Follow the money
The U.S. Education Department says the funding provided to schools and universities through the Recovery Act “played a significant role in stabilizing the nation's economy and in staving off a major fiscal crisis in 2009.”
The stimulus package allocated about $100 billion for education; about $69 billion of that was disbursed in 2009. The bulk of that went not to new programs or projects, but to replenish state coffers depleted by the economic downturn. The education department says more than $40 billion of the stimulus funding has been used to make up for state education shortfalls in fiscal 2009 and 2010.
Other large recipients of stimulus funds: $12 billion for Individuals with Disabilities Education Act programs; $10 billion for Title I programs; and $8.7 billion for student financial assistance.
Recovery Act funding “helped save or create an estimated 400,000 jobs, including 325,000 education jobs,” the education department says.
Some of the stimulus money is earmarked for programs designed to step up the drive toward education reform. The Race to the Top Fund has drawn the most attention, in part because its $4.35 billion represents the largest-ever amount of federal discretionary funding for education reform. States will compete for Race to the Top grants, and the education department will award them to proposals that offer reforms in four areas: adopting standards and assessments that prepare students to succeed in college and the workplace; building data systems that measure student growth and success, and inform teachers and principals about how they can improve instruction; recruiting, developing, rewarding and retaining effective teachers and principals; and turning around low-achieving schools.
Another incentive for pursuing education reforms is the Investing in Innovation Fund. The $650 million initiative has been established to support local efforts to start or expand research-based innovative programs that help close the achievement gap and improve outcomes for students.
The grants have three categories. Scale-up grants will focus on programs and practices with the potential to reach hundreds of thousands of students and that have strong evidence that they will have a significant effect on improving student achievement. Validation grants will go to programs that have good evidence of their impact and are ready to expand. Development grants will go to support new practices that need further study.
Reviving projects
No one can say with certainty how education institutions would have fared in the absence of the stimulus package, but it's not a stretch to say that the aid provided in the Recovery Act has enabled schools and universities to carry out projects and programs that would have been abandoned otherwise.
That is the case in the Maryville (Tenn.) district. For years, school officials had been working on plans to build an intermediate school for grades 4 to 6 to alleviate crowding in its elementary facilities. Work had begun on the construction site for Coulter Grove Intermediate School in fall 2008, but then the U.S. economy began its freefall.
The city of Maryville had planned to sell bonds to pay for the school construction, but in November 2008, city officials cancelled the financing plan after it determined it could not sell the bonds in such a poor climate.
The project was put on hold for the foreseeable future. Rather than abandon the project and the work already completed, Maryville decided to carry out a “mothball” plan to protect the grading, the completed building pad, utility installations and other site upgrades.
That's where the project stood until September 2009, when Maryville learned it would be able to use Qualified School Construction Bonds (QSCBs) to borrow the funds needed to build Coulter Grove. The Recovery Act authorized the federal government to issue $22 billion in QSCBs to subsidize school construction. The program provides tax credits to cover borrowing costs, so school systems can in effect sell their bonds and pay no interest.
Maryville applied to the state of Tennessee for authority to use the bonds. The state's School Bond Authority approved Maryville's request: initially the district received $20 million in bonding authority; subsequently it was reduced to $18.75 million because of the city's declining revenues.
With funding in place, district officials began the transition from mothball status to construction. Officials returned to the site in February to break ground again on Coulter Grove Intermediate. If the project stays on schedule, construction should be completed in October 2011.
In most cases, the effect of QSCBs is not as dramatic, but hundreds of school facility projects across the nation are moving forward at less cost because of the program, and in many states, districts have encountered strong competition for the bonds.
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