And the Education Jobs Fund is Back…Again

Earlier today, legislation that would provide aid to states and local government cleared a key procedural hurdle in the U.S. Senate. The measures would provide $16.1 billion to extend increased Medicaid funding and $10 billion for an Education Jobs Fund. Sixty-one senators – including Republicans Olympia Snowe and Susan Collins – voted to cut off debate on the pending measures. This latest development means the Education Jobs Fund may soon be a reality if it ultimately passes in the Senate. (The House has already passed its own version.) The Education Jobs Fund, which first appeared in House legislation back in December 2009, would provide $10 billion to states to help pay for salaries and benefits for K-12 teachers and staff. Many believe that this extra assistance will stave off 140,000 potential teacher layoffs before the coming school year.

The latest version of the Education Jobs Fund was presented yesterday as an amendment to the FAA Air Transportation Modernization and Safety Improvement Act, also called H.R. 1586. Earlier this week, Senate Democrats hoped to pass the program as part of bill to support lending to small businesses. But a last minute message from the Congressional Budget Office indicating that the bill would not be budget neutral – it would cost an additional $5 billion on top of the offsets included in the previous legislation – stopped them in their tracks because many Senators refused to pass any bill that would increase the deficit. (See below for a full timeline of the Education Jobs Fund legislative process).

This new version of the bill, however, will not increase the deficit over the next ten years. According to the most recent CBO cost estimate, the Education Jobs Fund and Medicaid spending increase would be offset by a $2.0 billion decrease in funding for Medicaid pharmacy reimbursements (called Average Manufacturers Price) and a $11.9 billion funding cut for the Supplemental Nutrition Assistance Program (SNAP). The bill would also modify the Earned Income Tax Credit, saving another $1.0 billion. These offsets will occur gradually over a period of 10 years, while the Education Jobs Fund and Medicaid spending increases will primarily occur over the next two fiscal years.

The Education Jobs Fund is also offset by some rescissions in department of Education programs. Specifically, the bill includes a $50 million rescission from the Striving Readers program, a $82 million rescission from Student Aid Administration, and a $10.7 million rescission from the Ready-to-Teach program, all from fiscal year 2010 funding.

These rescissions are new to this latest version of the Education Jobs Fund and were meant to avert controversy. A previous version included a $500 million rescission to the Race to the Top program, a $200 million rescission to the Teacher Incentive Fund, and a $100 million rescission to the Charter School Grants program, all of which proved unpopular with the president, Senators, and stakeholders.

Now that the Education Jobs Fund has cleared the 60 votes needed to stop a filibuster in the Senate, it seems politically viable, but must still pass in the Senate and then the House. Unfortunately, the House is already on summer recess, potentially postponing a final vote until after Labor Day. However, Senator Harry Reid (D-NV) is already in discussions with Speaker of the House Nancy Pelosi’s (D-CA) staff about bringing the House back to vote on the bill so money will be available before the school year begins. Check back with Ed Money Watch for updates on this process.