Details on the New House Version of the Education Jobs Fund

Last night the House Committee on Rules released a new amendment to a supplemental appropriations bill to fund overseas military operations. Democratic Leaders, including Appropriations Committee Chairman David Obey (D-WI), have been working to get a bill that can pass in the House after an early version failed to win support in committee when some Democrats balked at spending for domestic programs in the bill. (The Senate passed its version in May, without any of the contentious spending provisions.) The latest amendment includes a revamped version of the Education Jobs Fund.

The Education Jobs Fund, funded at $23 billion for the 2010-2011 school year in an earlier version of the bill, would have provided additional funds to help local education agencies and public institutions of higher education save jobs. This most recent version of the program is funded at $10 billion and only provides funds to local education agencies to help save K-12 education jobs, not colleges and universities. The mechanism by which it is distributed to local education agencies (LEAs) is also different – it can be distributed via primary state funding formula or based on each LEA’s share of a state’s Title I Part A allocation. And this Education Jobs Fund comes at a cost to other education programs – the new amendment includes $800 million in rescissions to other Department of Education programs.

The new version does include several provisions to ensure that the money is made available quickly, unlike its predecessor – the State Fiscal Stabilization Fund that was enacted under the American Recovery and Reinvestment Act of 2009, and earlier proposed versions of the Education Jobs Fund. For example, each state’s governor must apply for the funds, but the application cannot require more information than is necessary to ensure that a state is in compliance with the law. Similarly, if a governor does not apply for funds within 30 days of the law’s passage, the U.S. Secretary of Education can allocate the funds to another state entity like a state Department of Public Instruction. The U.S. Secretary of Education must award the funds within 45 days of the law’s passage. Additionally, local education agencies do not need to submit new applications for the funds if their State Fiscal Stabilization Fund applications have already been approved. All of these provisions appear to be in direct reaction to the way the U.S. Department of Education and the State Education Agencies administered the State Fiscal Stabilization Fund which likely slowed the rate at which funds were allocated and spent.

The new version of the Education Jobs Fund also includes a very different Maintenance of Effort provision than what was included in the State Fiscal Stabilization Fund (SFSF). Under that provision, states were required to maintain 2006 levels of spending for K-12 and higher education to receive SFSF monies. Under the proposed Education Jobs Fund, states can either maintain K-12 and higher education spending at 2009 spending levels; maintain K-12 and higher education spending levels at the same proportion of state spending as they did in 2010; or if tax collections in 2009 were lower than tax collections in 2006, maintain K-12 and higher education spending levels at either 2006 levels or in the same proportion of state spending as they did in 2006. While this gives states several options for complying with the Maintenance of Effort provision, the inclusion of higher education spending levels is somewhat counter-intuitive. If states cannot use the Education Jobs Fund to maintain higher education jobs, then why must they maintain higher education spending levels to receive the Education Jobs Fund monies?

But this new version of the Education Jobs Fund won’t be funded entirely through the deficit. Congressional Democrats needed to find $800 million in offsets (or cuts to other programs that have already been allocated funding but have not yet spent it) to gain political traction for the program. This includes a $200 million rescission in unspent funds from the Teacher Incentive Fund program, a $500 million rescission from the Race to the Top program, and a $100 million rescission from charter school grants under No Child Left Behind. The text of the amendment does not specify the fiscal year from which funds would be rescinded.

Clearly, House Democrats are willing to make some serious concessions to gain passage of the Education Jobs Fund. They have significantly lowered funding levels, narrowed the scope of the program, and sacrificed funding for the Obama administration’s favorite reform programs for the cause. But this fight is far from over. The House has not yet voted on the supplemental appropriations bill, or this latest amendment. Should the House pass the bill with the Education Jobs Fund intact, the program would still have to make it through conference committee with the Senate, and the Senate did not include any education funding in its passed version of the supplemental appropriations bill. Check back with Ed Money Watch for more updates on this process.