Educational Effect of the Stimulus, Through Rose-Tinted Glasses

The White House Domestic Policy Council (DPC) with the U.S. Department of Education (ED) this week released the report “Educational Impact of the American Recovery and Reinvestment Act.” The report paints a rosy picture of the effect of American Recovery and Reinvestment Act (ARRA) funds on state education spending and reform.

ARRA funds have no doubt helped states make ends meet during the economic downturn. But our work (here and here) suggests that, despite a positive impact on education spending, the full effects of ARRA remain to be seen due to the slow rate at which states have disbursed funds to school districts.

Avoiding Shortfalls
According to the report by DPC and ED, the State Fiscal Stabilization Fund (SFSF), a new program created by the ARRA, helped states avoid significant funding cuts for K-12 teachers, principals, and support staff, as well as higher education personnel. As of September 30^th, $35.4 billion of the $48.6 billion SFSF appropriation had been made available to states. According to the report, states were able to restore nearly 100 percent of the 2008-09 budget gaps and a significant portion of the current 2009-10 budget shortfalls using the SFSF funding. The report also claims that the speedy availability of the SFSF allowed states to provide reliable budget numbers to districts for planning purposes.

The table below shows how much of selected state’s final education budgets can be attributed to SFSF dollars. It’s clear that in these states, the SFSF has significantly aided states in avoiding serious budget shortfalls.

The DPC and ED analysis of states’ preliminary quarterly reports suggests that 250,000[1] education jobs, including teachers, administrators, and support staff, were retained or created thanks to ARRA funds. These jobs were created or retained in rural, urban, and suburban areas of the country,[2] saving students from the detrimental effects of increased class sizes.

However, even though nearly 70 percent of ARRA funds have been made available to the states for spending, a very small percentage has actually been disbursed by the states to school districts. While states like California and Indiana had disbursed over 60 percent of their obligated funds by October 9^th, 2009, Alaska, the District of Columbia, and Delaware had each disbursed less than 6 percent of their funds. Thus, it is unlikely that the ARRA funds have had much effect on education spending in these states.

A complete table of obligated versus disbursed ARRA funds by state is available here.

The report also suggests that the speedy availability of the ARRA funds has allowed states to give school districts reliable budget figures with which to create spending plans for the current and upcoming school years. However, according to local news reports, some states and school districts are feeling just the opposite.

Reform
The DPC/ED report also finds ARRA funds are being used by districts for reforms aligned with the Obama Administration’s four priorities:

• Rigorous college- and career-ready standards and high-quality assessments that are valid and reliable for all students;
• Pre-K to college and career data systems that track progress and foster continuous improvement;
• Improvements in teacher effectiveness and in the equitable distribution of qualified teachers for all students; and
• Intensive support and effective interventions for the lowest-performing schools.

Citing reports from the media and direct accounts from districts, the DPC and ED go on to describe reform efforts in districts across the country that align with one or more of these priorities.

However, the anecdotal nature of these reports highlights an opportunity the Obama Administration missed. While there are, no doubt, serious reform efforts happening in several school districts across the country, there is no system by which they can report their efforts or findings to ED. Many states have implemented reporting requirements of their own, but they are not subject to the transparency requirements of the other federal reporting efforts in place which focus primarily on expenditures. Some states do not require this highly detailed reporting from school districts at all.

Additionally, the Administration has missed an opportunity to help school districts learn from each other as they undertake reform efforts. Given the lack of hard data on what works in school reform, ARRA-funded reform efforts could have produced a wealth of data on which approaches show promise – and which ones do not – an invaluable outcome for ARRA funds.

Conclusion
Federal economic stimulus funds from ARRA have certainly helped states stabilize their education spending. Without these funds, states and school districts would have been forced to make deep cuts to their education budgets. However, the DPC and ED report released this week leaves out vital pieces of information that suggest that much more needs to happen in states and school districts before ARRA can be deemed a sweeping success.

[1] This number is based on initial and preliminary reports. It is subject to change when reports are finalized on October 30, 2009.

[2] Information on where jobs were saved has not been officially submitted to the Department of Education nor certified by the agency because ARRA regulations require only states, not districts, to collect and report data on the use of these federal funds.