Misperceptions in the Stimulus

The Stimulus bill has been the topic of news coverage, blogs, and dinner table conversations since it was first released by the House a couple of weeks ago. But amongst the din of discussion, some common misperceptions have developed, as multiple versions of the bill have been debated. Here at Ed Money Watch we aim to clear up such misperceptions and provide you with up-to-date information on federal education funding. As such, below is our list of the top five common stimulus misperceptions.

Top Five Stimulus Misperceptions

1. The Senate State Fiscal Stabilization Fund can be used for both education and non-education purposes. The State Fiscal Stabilization Fund consists of a State Incentive Grant Program, an Innovation Fund, and a general fund to be used to help states maintain 2008 levels of education funding. The recently passed Senate stimulus bill requires that all $31.5 billion of the State Fiscal Stabilization Fund ($39 billion minus $7.5 billion for the State Incentive Grant and the Innovation Fund) be used for purposes related to p-K through 16 education including activities authorized under NCLB, IDEA, or Perkins Career and Technical Education. Compare that with the House stimulus bill which allows a big piece (39 percent) of the Fiscal Stabilization Fund to be used for non-education purposes such as public safety. In short, the State Fiscal Stabilization Fund in the adopted Senate bill can only be used for education purposes.

2. The adopted version of the Senate bill does not include construction or technology money. Although the Senate bill originally included $19.5 billion in school construction funds ($16 billion for K-12 and $3.5 billion for higher education), the adopted version does not. However, the Senate maintained $1 billion in funding for Education Technology Assistance Grants under the School Improvement section of the bill. These grants provide funding to schools and states to use technology to improve student achievement. Additionally, the adopted Senate bill allows states to issue $10 billion in federal tax credit bonds for school construction that will save states $4.5 billion in interest payments over 10 years. Many organizations report the $4.5 billion federal cost of the credit rather than the $10 billion face value of the bonds. Additionally, the bill allows an increase of $1.4 billion to the total value of issued Qualified Zone Academy Bonds for charter school construction.

3. The adopted Senate bill provides $600 million less for Title I dollars to states and school districts than the bill reported out of committee or the House bill. The total amount of Senate stimulus dollars going to Title I did change from $13 billion to $12.4 billion in the amended version. However, the amendment did not change the total allocated to Title I State Formula Grants ($11 billion). Instead, it changed the allocation to School Improvement grants (money for schools in need of improvement or restructuring) from $2 billion to $1.4 billion. In short, the missing $600 million is explained by the Senate’s lower allocation to the School Improvement grants, not the Title I State Formula Grants.

4. Neither Stimulus bill provides additional funds for early education outside Head Start and the Child Care Development Block Grants. Both the House and Senate bills allow for IDEA funds to be used for Part C grants to Infants and Families ($500 million in the House bill, unspecified in the Senate bill). However, the Senate bill also requires that 15 percent of Title I funds and 15 percent of IDEA Part B funds be used for pre-school students. Additionally, the Senate bill extends the use of the State Fiscal Stabilization Fund to early education purposes.

5. The Senate bill includes no money to improve the quality and distribution of teachers. Although the Senate bill does not include the $200 million for Teacher Incentive Grants included in the House bill, it does provide $50 million for Teacher Quality Partnership grants. Additionally, it includes the State Incentive Grant program ($6.85 billion), part of the State Fiscal Stabilization Fund, a new initiative that provides grants to states that succeed in improving the equitable distribution of teachers, among other goals. However, the House bill provides more funds for both of these programs: $100 million for Teacher Quality Partnership Grants and $14.35 billion for State Incentive Grants.