Conflicting Priorities under the American Recovery and Reinvestment Act

Bellwether Education Partners this week released a report, Conflicting Missions and Unclear Results: Lessons from the Education Stimulus Funds. The report examines how states and school districts used federal stimulus funds from the American Recovery and Reinvestment Act of 2009 (ARRA) and how federal lawmakers could have made their priorities clearer to stimulate reform. The authors found that, absent clear guidance from federal lawmakers and the U.S. Department of Education, many states and school districts simply used the funds to fill holes in their budgets from lagging state aid and property tax collections instead of investing in new funding structures and other reforms encouraged in the law.

When federal lawmakers passed the ARRA in February of 2009, their two stated goals for education related funds were to allow states to save teacher and educator jobs and to stimulate reform. They hoped that by tacking reform priorities onto the $100 billion in education-related federal stimulus funds, they could ensure that states and districts would use the funds to reexamine their funding structures as a whole and invest in reforms.

However, according to the report, a lack of clarity in the law and timeliness in the guidance that followed left states and school districts uncertain about how to use the funds, especially those provided through the $48.6 billion State Fiscal Stabilization Fund (SFSF). With a few notable exceptions discussed in the report, most states and school districts simply used the funds to fill budget holes, saving existing education jobs and continuing the status quo. Those school districts that bucked this trend – like Boston, MA, Charlotte-Mecklenburg, NC, and Prince George’s County, MD – all had strong district leaders who were already interested in reform.

The report’s authors find several lessons in their findings for future investments in education reform. Pointing to the $4.35 billion Race to the Top (RttT) program that is part of the ARRA, they note that even a relatively small investment can have dramatic effects on education reform across the country if the goals are clear and specific. The RttT clearly defined what states needed to do to be eligible for these funds, whereas the SFSF included vague reform priorities without specific parameters. Future legislation should include clear and concise priorities, and acknowledge that reform and stimulus can be competing priorities.

The authors also note that it may be more helpful in future legislation to define what states cannot use funds for, rather than how funds can be used. By clearly stating that the federal funds cannot be used to continue programs and policies that are ineffective, legislators could force recipients to invest in new ideas.

In addition, the report suggests that federal education policies should encourage states and districts to address the way K-12 education is funded. In many school districts, property tax revenues have been used to cover increasing costs for education. With the crash of the housing market, this is no longer a viable option. Instead of plugging the holes left in education budgets, federal funds should be used to develop a new, more sustainable funding structure.

Since its passage in 2009, the ARRA has helped states and school districts fill holes in their budgets caused by the economic downturn. However, it has not been as successful in helping school districts implement reforms and cut existing programs that aren’t working. With states and school districts facing the upcoming expiration of ARRA funds and staring the much-discussed funding cliff in the face, many will now have to face the unpleasant realities that ARRA funds allowed them to escape until now.