Education Stabilization Funds Haven’t Stimulated Reform

Yesterday, Ed Week reported on a conference hosted by Teachers College at Columbia University and the Campaign for Educational Equity about the impact of American Recovery and Reinvestment Act (ARRA) funds on low-income students. The findings, Ed Week journalist Michele McNeil notes, were less than promising. Most researchers found that the use of ARRA funds has actually increased inequities in educational services in many states and will have significant consequences moving forward.

A study by Michael Rebell, Jessica Wolff, and Daniel Yaverbaum titled “Stimulating Equity? A Preliminary Analysis of the Impact of the Federal Stimulus Act on Educational Opportunity” focuses in part on the four reform goals (improving teacher distribution, student data systems, standards and assessments, and support for struggling schools) promoted by the State Fiscal Stabilization Fund (SFSF), a $48.6 billion fund to help fill gaps in state education budgets. Specifically, $39.8 billion of those funds — called Education Stabilization Funds – must be distributed directly to school districts through each state’s primary education funding formula. The study finds that few states, if any, have done anything to directly support the reform goals using Education Stabilization Funds. In fact, the authors state, “…our stark finding was that no state in fact reserved any of its ESF funding for new initiatives in the four reform areas.”

While this finding sounds significant and damning for Congress’ and the Department of Education’s attempt to stimulate reform through ARRA funds, it misses a key aspect of the Education Stabilization Funds: Department of Education guidance on the use of these funds specifically stated that all Education Stabilization Funds must be distributed directly to school districts and that governors could not, in any way, dictate how the funds were used at the district level.

Given this restriction on the use of funds, it is clear why no state reserved any Education Stabilization Funds for reform uses – they simply were not allowed to under regulations developed by the Department of Education. However, state governors could have used the remaining $8.8 billion of the SFSF, known as Government Services Funds, to support any of the reform goals. In fact, according to their Phase 1 SFSF applications, some states intended to do just that. Whether that promise will become reality remains to be seen.

It is increasingly becoming clear that the ARRA did not contain sufficient restrictions or requirements to compel states to put significant funds behind reform efforts. But as we’ve discussed before, reform was not the ultimate goal of the ARRA – saving jobs and maintain education services was.