H.R.1 Economic Stimulus Bill and Education

The House version of the Economic Stimulus Bill contains a tremendous amount of cash for education programs. I won’t go into the merits of the bill as a whole, but I do agree with the basic economic concept of deficit spending in a time of economic downturn to promote employment. The bill is likely to pas the House in a similar form as presented here, but may see significant modifications in the senate. The highlights below are extracted from the House Appropriations Committee report on the pending legislation.

Teaching in California in a time of state budget woes, in a Title 1 district, in a Title 1 school, I can say that this bill is welcome news.


Education for the 21st Century: To enable more children to learn in 21st century classrooms, labs, and libraries to help our kids compete with any worker in the world, this package provides: • $41 billion to local school districts through Title I ($13 billion), IDEA ($13 billion), a new School Modernization and Repair Program ($14 billion), and the Education Technology program ($1 billion). • $79 billion in state fiscal relief to prevent cutbacks to key services, including $39 billion to local school districts and public colleges and universities distributed through existing state and federal formulas, $15 billion to states as bonus grants as a reward for meeting key performance measures, and $25 billion to states for other high priority needs such as public safety and other critical services, which may include education. • $15.6 billion to increase the Pell grant by $500. • $6 billion for higher education modernization.

Bill Report:

Subtitle C—Education
Title I Grants
Recovery funding: $13.000 billion

Title I Grants to local educational agencies (LEAs) provide supplemental education funding,
especially in high-poverty areas, for programs that provide extra academic support to help raise
the achievement of students at risk of educational failure or to help all students in high-poverty
schools meet challenging State academic standards. The Title I School Improvement Grants
program is a State formula grant program, that makes awards to States to provide assistance for
local school improvement activities for Title I schools that do not make adequate yearly progress
(AYP) for at least 2 consecutive years. Providing additional funding will assist the more than
50,000 Title I schools, which serve more than 20 million students.
Impact Aid Construction
Recovery funding: $100 million

These funds shall be used to support school construction in local educational agencies (LEAs)
that educate federally-connected students or have federally-owned land. Because school
construction is primarily financed from local funds, and because federally-affected LEAs cannot
tax certain lands, LEAs with large percentages of federally-connected students need
supplemental funds for construction. The grants, which are awarded by formula and competition,
enable eligible districts to undertake emergency renovations and modernization projects, which
may include replacement of heating, ventilation, and air conditioning systems; repair of electrical
systems; or replacement of faulty windows and roofs. These funds will assist an estimated 960
Impact Aid schools.
Education Technology
Recovery funding: $1.000 billion

The Enhancing Education through Technology program supports State, district, and school
efforts to integrate technology into curricula in order to improve teaching and learning. Funding
shall be used for technology hardware, software applications, professional development and
related instructional technology staff and services. These funds should be used to improve
student academic achievement and ensure that students are college and workforce ready by
ensuring that every student has 21st century skills and is technology literate. In addition, the
funds should be used to increase ongoing and meaningful professional development around
technology that leads to changes in teaching and curriculum and improves student achievement.
Education for Homeless Children and Youth
Recovery funding: $66 million

The Education for Homeless Children and Youth program provides formula grants to States to
assist schools and districts with providing services for homeless children and youth, including
meals, transportation and other needed support services. Fiscal constraints at the State and local
levels have made it difficult for many school districts to provide services for homeless children.
Further, the rising cost of food and transportation, which districts must provide to homeless
students, and an influx of homeless students as a result of the home foreclosure crisis will serve
to significantly stretch the already scarce resources available for these students. Estimates from
the National Association for the Education of Homeless Children and Youth indicate that
providing an additional $66 million over two years will allow an additional 205,000 homeless
students to receive services.
Credit Enhancement for Charter Schools Facilities
Recovery funding: $25 million

The Credit Enhancement for Charter School Facilities program provides assistance to help
charter schools meet their facility needs. Funds are provided on a competitive basis to public and
nonprofit entities and consortia to leverage other funds and help charter schools obtain school
facilities through such means as purchase, lease, and donation. Grantees may also leverage grant
funds to help charter schools construct and renovate school facilities. The economic recovery
funds for the Credit Enhancement program, when combined with FY 2009 funding already
available, will leverage an estimated $414 million, for a total of $460 million. These funds will
assist an estimated 276 schools with infrastructure projects, including the modernization,
renovation, and repair of these facilities.
Teacher Incentive Fund
Recovery funding: $200 million

The Teacher Incentive Fund (TIF) program provides competitive grants to encourage school
districts and States to develop and implement innovative ways to provide financial incentives for
teachers and principals who raise student achievement and close the achievement gap in some of
the highest-need schools. The increased funding for TIF would enable States and school districts
to develop and implement systems to attract and retain highly qualified teachers and principals,
and to align their pay with student performance. These funds will also help participating States
and school districts with budget shortfalls by providing significant assistance for teacher
compensation, recruitment, and retention.
IDEA, Part B State Grants
Recovery funding: $13.000 billion

The IDEA Part B, Grants to States program provides formula grants to assist the States and D.C.,
Puerto Rico and the Outlying Areas in meeting the excess costs of providing special education
and related services to children with disabilities. Additional funding will assist States and school
districts with paying for the rising cost of special education for the estimated 6.8 million students
with disabilities. Although the number of students enrolled in special education programs has
remained relatively steady over the past 5 years, the severity of students’ disabilities has
intensified, particularly the number of students with autism, which requires a greater investment
of resources to provide an adequate education. As States begin tackling a projected 10 percent
budget shortfall for FY 2009, with larger increases expected in FY 2010, education is an area
that needs support. Although State funding for special education is mandatory, providing this
funding will assist States and school districts and prevent them from reducing funding for
general educational operations and allow all education programs to receive adequate funding
during difficult economic times. The additional funding provided in the economic recovery bill,
combined with the FY 2009 appropriation, will increase the Federal share for special education
to an all-time high of 27 percent.
IDEA Infants and Families
Recovery funding: $600 million

The Grants for Infants and Families program provides formula grants to the States, including
D.C., Puerto Rico and the Outlying Areas to assist them in implementing coordinated systems of
comprehensive programs and making early intervention services available to children with
disabilities aged birth through 2 and their families.
Vocational Rehabilitation State Grants
Recovery funding: $500 million

The Vocational Rehabilitation (VR) State Grants program supports VR services through formula
grants to States. VR agencies provide a wide range of services designed to help persons with
disabilities prepare for and engage in gainful employment to the extent of their capabilities.
Nationally, there are about 1 million individuals with disabilities in various phases of the
vocational rehabilitation process within the VR system. State VR agencies are facing numerous
challenges. If a State VR agency cannot serve all eligible persons, it must first serve those
individuals with the most significant disabilities under an “order of selection.” In FY 2007,
about half of the 56 general and combined State VR agencies were on an order of selection. The
increased funding will assist with the order of selection issue, and allow more individuals to
receive services.
Centers for Independent Living
Recovery funding: $200 million

The Independent Living Program, administered by the Department of Education, consists of
three separate programs: Independent Living State Grants, Centers for Independent Living, and
the Services for Older Individuals Who Are Blind program. Each of the programs is a State
population-based formula grant program. Independent Living State Grants provide funding to
improve independent living services, and to support the operation of State Independent Living
centers. Funding for the Independent Living Centers program is similar to the State Grants
program, except these funds support nonresidential, community-based centers that are designed
and operated within individual communities by individuals with disabilities. The Independent
Living Services for Older Individuals Who Are Blind program supports services to assist
individuals age 55 or older whose visual impairment makes employment difficult to obtain, but
for whom independent living goals are feasible. Increased funding for these programs will enable
States and local communities to continue providing needed support services for individuals with
Pell Grants
Recovery funding: $15.636 billion

Pell Grants provide need-based scholarships for undergraduate students. Under the economic
recovery bill, the (discretionary) maximum Pell Grant would increase by $500, from $4,360 to
$4,860 for the 2009-2010 academic year. With the additional $490 in mandatory funding, the
year shortfalls, is now $15.6 billion over two years, based on interim updated CBO economic
assumptions and applicant growth, as more students are applying and qualifying for more
assistance. These additional funds will provide immediate financial relief to an additional
800,000 students and their families who are struggling to pay for the cost of a higher education
during the economic downturn.
College Work-Study
Recovery funding: $490 million

College Work-Study provides funds to colleges, which must be matched with 25 percent non-
Federal funds, to support low and moderate-income undergraduate and graduate students who
work while attending school. In addition, each participating institution must use at least 7 percent
of its Work-Study allocation for payments to students employed in community service activities,
such as community-accessible childcare and assistance for disabled students. Providing increased
funding would increase the number of students working in local communities. The additional
funds in the economic recovery bill, when combined with institutional matching funds, will
result in a total of $613 million that will be available to support an estimated 200,000 new
students in fiscal years 2009 and 2010.
Student Aid Administration
Recovery funding: $50 million

The Department of Education administers an estimated $82 billion in Federal student aid
programs and policies, including Pell Grants, guaranteed and direct loans, and two new lender
subsidy programs authorized by the College Cost Reduction Act, which help more than 11
million students and families pay for college. The Department of Education is under severe
pressure to administer these surging student aid programs as more people seek a higher education
due to the poor economy. Additional funds will support the staff and resources necessary to
respond to the changing and complex student loan environment involving banks, colleges, and
lenders, and to service the surge in the Direct Loan program administered by the Department.
Teacher Quality Enhancement, State Grants
Recovery funding: $100 million

The Teacher Quality State Grants program is a competitive program which provides grants to
States to improve the quality of the teaching workforce. Among other things, States may use
grant funds to reform teacher licensing and certification requirements; provide alternative
methods of teacher preparation; and provide alternative routes to State certification. The funds
provided in the economic recovery bill will assist States in modernizing the teaching workforce,
address teacher shortages, and provide new routes to teaching for jobless individuals seeking to
enter the teaching field.

Statewide Data Systems
Recovery funding: $250 million

The Department of Education makes competitive grants to States to enable them to design and
develop statewide longitudinal data systems that use individual student data for reporting and
improving student achievement, and to facilitate research to improve student achievement and
close achievement gaps. Providing additional funding for Statewide Data Systems would enable
States to increase the capacity of their data systems, provide teachers the information they need
to tailor instruction to help each student improve, and give administrators the resources and
information to effectively and efficiently manage their data systems. A recent report released by
a group commissioned by Secretary Spellings, entitled, Harnessing Innovation to Support
Student Success: Using Technology to Personalize Education, maintains the Federal government
should invest further in Statewide Data Systems, including longitudinal data systems at the
school and district levels. The panel maintains that numerous States are experimenting with
online assessments that provide instant results for students and teachers, and that new computerassisted
assessment tools provide teachers with specific information on the areas where students
need help, and allow teachers to change their practices in response. Only 14 States currently
collect student-level college readiness scores, and only 18 States have the ability to match
teacher data to student performance.
K-12 Repair and Modernization
Recovery funding: $14.000 billion

The economic recovery bill includes $14 billion for school modernization, renovation, and
repair, to be allocated to States based on their FY 2008 allocation under Title I of the Elementary
and Secondary Act, after a one percent reservation of funds for outlying areas and Bureau of
Indian Affairs schools. State educational agencies would distribute these funds, less an
administrative set-aside, to school districts for school facility projects. Charter schools are
eligible to receive this assistance. Allowable projects may include health and safety repairs,
facility modifications to provide access for disabled students, and educational technology
infrastructure upgrades, as well as projects to improve energy efficiency.
The nation’s school infrastructure is aging; the average public school facility is more than 40
years old. Approximately one-third of public school buildings need extensive repair or total
replacement and two-thirds have environmental problems such as the presence of asbestos or
lead-based paint that are unhealthy for children. The Government Accountability Office has
estimated that the nation’s schools would need $112 billion just to take care of deferred
maintenance, building safety, and accessibility. Further, many school districts are unable to wire
aging school buildings for modern technology.

Higher Education Repair and Modernization
Recovery funding: $6.000 billion

The economic recovery bill includes $6 billion for institutions of higher education (IHEs) for
modernization, renovation, and repair projects. The funds would be distributed to States by
formula in proportion to the State’s share of full-time equivalent undergraduate students.
Funding will be allocated by States to institutions based on the demonstrated need of each
institution for facility modernization, renovation, and repair. Priority consideration shall be given
to institutions that serve high numbers of minority students, institutions impacted by a major
disaster; and institutions proposing to improve energy efficiency. The higher education
modernization grants would be used for the same purposes as the K-12 modernization grants,
including health and safety repairs, facility modifications to provide access for disabled students,
and educational technology infrastructure upgrades, as well as energy efficiency projects.
Pell Grants (mandatory)
Recovery funding: $1.474 billion

In addition to the shortfall for the discretionary part of the Pell Grant program, there is a
mandatory Pell Grant shortfall for the 2009-2010 award year. This funding, initially included as
part of the College Cost Reduction Act, enables a student’s Pell Grant award to be increased by
$490 each year. Providing this additional funding in the economic recovery bill will provide
additional financial relief to the estimated 7 million Pell Grant recipients and their families who
are struggling to pay for the cost of a higher education during the economic downturn.
Student Loan Limit Increase
Recovery funding: N/A ($30 million estimated savings)

There are statutory limits of how much funding students and their families can borrow through
the Federal Stafford loan program to pay for college. However, significant job loss, high tuition
prices, and poor credit are making it difficult for students and their families to borrow adequate
amounts through the Federal guaranteed loan program, and in some instances forcing them to
take out unsubsidized, private loans. The economic recovery bill includes a provision to increase
unsubsidized loan limits (loans for which the Federal government does not pay loan interest
while a student is enrolled in school) by $2,000 for undergraduate students. This action will help
students and their families avoid having to seek private loans which have significantly lessfavorable
terms for students.
Student Loan Lender Special Allowance Payments (SAP)
Recovery funding: $10 million

Under the Federal Family Education Loan (FFEL) program, the Federal government ensures
lender participation through a subsidy known as the Special Allowance Payment (SAP), which
includes a lender’s cost of borrowing money. The SAP is currently indexed to the Commercial
Paper rate (CP), which Congress intended to serve as a measure of the rate at which lenders were
able to borrow money. The recent economic crisis has left the CP rate artificially low, due to
limited trading. Language is included in the economic recovery bill to index the SAP to the
London Interbank Offered Rate (LIBOR), which is closer to the historical CP rates prior to the
economic crisis, for one quarter. Substituting LIBOR for CP will help lenders avoid significant
loss resulting from differences between the two rates, provide stability in the student loan
system, and help to ensure access to financial aid for college students in 2009.


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