Innovation in the i3 Competition

The Investing in Innovation Fund (i3), a $650 million federal grant program created in 2009 to encourage innovative school reforms, announced its first-round winners in August 2010 (giving those applicants an additional month to raise the matching private sector funds needed to implement their plans). The program, created through the administration’s stimulus program and administered by the Department of Education, distributed 49 grants to LEAs and nonprofits based on their descriptions of plans to design and execute novel proposals to reform K-12 education. But how ground-breaking were the reforms that earned federal dollars? A new report from Bellwether Education Partners finds that the program may not have gone far enough in meeting the goals of the fund.

One of the biggest limitations, the report’s authors found, centered on eligibility requirements the Department of Education selected. Awardees selected through the grant competition must have “a record of improving student achievement, attainment or retention,” according to the final regulations issued for the Round One competition. Though the Department actually toned this down from the initial regulations (wherein applicants would have to demonstrate their successes in meeting or exceeding No Child Left Behind achievement standards), it still excluded an entire class of innovators who did not yet have the capacity to prove their reforms could work.

The Department also instituted strict limits on the categories of applicants who were eligible for awards. The stipulation allowed for local education agencies (LEAs), nonprofits, and institutions of higher education to collaborate in applications, but strictly forbade for-profit organizations from receiving federal money. The limitation tied the hands of LEAs – especially when coupled with the requirement that they establish partnerships, and raise matching funds from, the private sector. Applicants had a relatively shallow pool from which to raise money and form joint ventures, given the Department’s limitations on finding qualifying partners.

The authors make a valid point: For the grant competition to reach truly innovative projects, the Department needs to be willing to take a risk on applicants with new ideas that are not yet established. And to encourage private sector participation in (and solicit its funding for) those projects, Department regulations for the competition will have to provide some incentives to businesses that have the capacity to support these projects, rather than simply locking them out of the process.

The authors of the report also explain the distinctions among the three types of grants that the Department can award under i3 – development, validation, and scale-up – and urge the Department to acknowledge each category’s differing needs and potential. In particular, the report says, the application process should treat each grant category according to its specific needs, rather than attempting to design a method of direct comparison for all of the applications.

To some extent, the Department has taken these concerns into account. Applications for the $150 million Round Two competition are due next week, and the Department has made some substantive changes. Winners of the competition will be required to raise private sector funds in staggered amounts (15 percent for development awardees, 10 percent for validation awardees, and 5 percent for scale-up awardees), rather than a flat amount for all applicants as in the previous round. The peer reviewers will have somewhat more flexibility in evaluating applications, and won’t be required to simply reduce applications to numbers on an arbitrary scale. And the new regulations place a premium on applications that focus on rural schools or STEM programs, ensuring that their needs are met.

But as the authors point out, the administration’s inflexibility does not serve the program’s stated goal of “invest[ing] in small scale projects with big scale potential.” The bulk of the funding has already been committed to the original 49 grantees. But now that Congress has set the precedent of funding i3 annually through the appropriations process (the program was initially funded under the 2009 American Recovery and Reinvestment Act as a one-time program), the Department has the opportunity to better direct that money by focusing on the shortcomings of the program as is. To take on the massive issues that confront public education, the Department of Education will need fresh ideas. Innovations cannot take hold if the administration automatically rejects an entire category of potential participants with out-of-the-box, original ideas.