Friday News Roundup: Week of July 6-10

At Ed Money Watch, we discuss and analyze major issues affecting education funding. In our Friday News Roundup, we try to highlight interesting stories that might otherwise get overlooked. These stories emphasize how federal and state policy changes can affect local schools and districts.

Education Budget Higher Overall, but Other Districts See Cuts in Indiana

Budget Shifts in North Carolina

California‘s Governor’s Borrowing Plan Risks Stimulus Funds

Texas Stimulus Application for Education Draws Concerns

Indiana Education Budget Higher Overall, but Some Districts See Cuts
The recently passed state budget in Indiana includes a change to the school funding formula that appears to benefit suburban and charter schools more than urban and rural schools. While suburban schools will receive a 1.5 percent increase in funding and charter schools will receive a 19.2 percent increase, urban schools will only see an increase of 0.2 percent. This change reflects adjustments to the formula that phases out funding for schools when enrollment numbers drop, which occurs largely in urban and rural schools. Many lawmakers and stakeholders claim that the change will hurt poor and minority students more than wealthier students, creating a greater resource gap than already exists. But some, including Indiana’s governor, think the new formula will force schools to limit non-teaching staff and focus more spending on students. More here…

Budget Shifts in North Carolina
The North Carolina Senate recently passed a state budget with significant funding cuts for some popular public education programs. For example, the state’s More at Four pre-K program stands to lose $40 million in annual funding and would be shifted out of the State Department of Public Instruction and into the Department of Health and Human Services. The budget also would raise the average student-teacher ratio by two students for every grade, undoing the current 18:1 ratio in grades K-3. Finally, the plan would eliminate some of the standardized end-of-course tests given to students in many grades. The House is considering the budget now and has warned that even further cuts to higher education may be necessary to balance the budget. More here…

California‘s Governor’s Borrowing Plan Risks Stimulus Funds
Governor Schwarzenegger’s plan to borrow $2 billion from local governments to fund education may violate the Maintenance of Effort provision of the State Fiscal Stabilization Fund under the federal American Recovery and Reinvestment Act. The provision requires state governments to maintain a certain level of state funding for education in order to receive federal economic stimulus funds. By borrowing money from local governments, California will no longer meet the requirement and could lose $10 billion in federal support. Analysts are currently exploring ways to work around the provision, such as using the borrowed funds for health and human services while maintaining state education funds. At the same time, the governor is also proposing a suspension of Proposition 98, which guarantees minimum education spending levels in the state. More here…

Texas Stimulus Application for Education Draws Concerns
Some officials in Texas are concerned that the state’s State Fiscal Stabilization Fund application will not be accepted due to a $1.9 billion allocation of the funds to fulfill an $800 salary increase for teachers and other school staff. Additionally, some claim that the proposed allocation of the federal economic stimulus funds is questionable because it replaces state dollars with federal dollars without drawing on Texas’ large rainy day fund. Despite these concerns, many experts are certain that the Department of Education will approve the application, providing the state with nearly $4 billion in additional funds. More here…

Briefly Noted

• Campus Progress at the Center for American Progress launches Students Over Banks a new campaign that will focus on passing the President’s proposal to reform the federal student loan programs and use the $87 billion in savings over ten years to increase aid to low and middle income students.