Redirecting ARRA Funds to Save Teacher Jobs

The Education Jobs Fund, a $23 billion fund requested in legislation in both the House and the Senate to help states pay for teacher salaries and benefits, appears to be dead due to lack of Senate support. But that House leaders and Appropriations Committee Chairman Dave Obey (D-WI) are looking for creative alternatives to the spending program. Yesterday, Politico reported that House leaders and Congressman Obey are exploring the possibility of redirecting “idle” funding provided under the American Recovery and Reinvestment Act of 2009 (ARRA) to help states avoid significant teacher layoffs.

The ARRA provided nearly $100 billion for education programs including a $48.6 billion State Fiscal Stabilization Fund (SFSF) to help states fill their education budget gaps. Though the SFSF provided funds that local education agencies can use to help avoid teacher layoffs, the other funds provided through programs like Title I and the Individuals with Disabilities Education Act are more restrictive. Based on the Politico report, it sounds like Obey would like to repurpose some of the unspent ARRA funds into a program like the SFSF that states could use specifically to support teacher salaries and benefits. However, the mechanical and political details of such a move are still quite unclear.

Technically, it would be easiest to use appropriations legislation to redirect the unobligated ARRA funds under programs like Title I grants and IDEA into a program like the SFSF specifically for teacher salaries and benefits. Assuming Congressman Obey only intends to repurpose education ARRA funds, however, the vast majority of the non-SFSF ARRA funds have already been obligated to states and territories.

As of May 28, 2010, all IDEA funds had been obligated to states. The remaining unobligated ARRA funds include $1.4 billion for Title I, about $1.4 billion for Pell Grants, $250 million in Statewide Data Systems Funds, about $150 million in Teacher Incentive Grant Funds, and $38 million for Vocational and Rehabilitative Services. This total amount of unobligated funds, around $3.2 billion, doesn’t come close to the $23 billion requested for these purposes in previous version of House and Senate legislation.

To make up the rest of the difference, any legislation would have to redirect already obligated (but not outlaid) ARRA funds into a fund specifically meant for teacher salaries and benefits. Not including SFSF, about $21.9 billion in ARRA education funding has yet to be outlaid, including roughly $8 billion in both IDEA and Title I. This amount is much closer to the $23 billion that was requested for the Education Jobs Fund by the House and Senate.

If Congressman Obey is able win passage of a bill (or pursue some other measure) that would redirect already obligated funds, he would also have to find political consensus on how to redistribute them among the states. He could redistribute them based on total and school age population, much like the SFSF monies were originally distributed. This would give each state a pot of flexible funding they could use to support their teaching forces. However, it could also mean that the states that need the money the most, like California, New Jersey, Illinois, and Utah that have already used the vast majority of their SFSF monies, could end up with less money than they need to keep their school budgets afloat. Conversely, states that have spent very little of their SFSF funds, like Wyoming and Alaska, could get far more money than they need.

Or Congressman Obey could try to take the more challenging political route, and pursue legislation that would distribute the funds among states according to need. This, however, is unlikely to fly in Congress as some states could easily lose out on funds that were once theirs under the ARRA. While this method could have the best results for struggling states, it is the least likely to gain traction in Congress.

Of course, Congressman Obey has released almost no details about his plan to redirect “idle” ARRA funds and all we can do is speculate as to what he has in mind. It is clear, however, that he is looking into creative solutions to shore up state education budgets. Check back with Ed Money Watch for more details as they arise.