More Information on the Expenditure of ARRA Funds

At Ed Money Watch we have been tracking the expenditure of funds from the American Recovery and Reinvestment Act of 2009 (ARRA) as closely as possible. Until now, the best source of information on this topic has been Department of Education accounting data that track the obligation and outlay of funds under each ARRA program. But this data only tells us when the ARRA funds leave the federal coffers and are disbursed to states. It doesn’t indicate when the school districts actually spend the funds.

Of course, there is also recipient reported data on ARRA spending which was mandated by the legislation. While these data do provide more information on expenditures at the district level, they lack the detail and reliability needed for in-depth analysis.

Today, however, the Center on Education Policy (CEP) released a new report that provides some new information on how districts have spent ARRA funds and what those funds have meant for school districts. The report, titled “Teaching Jobs Saved in 2009-10 But Teacher Layoffs Loom for Next School Year,” draws conclusions from a survey administered in the spring of 2010 to a nationally representative sample of 233 districts from 590 states. Luckily for us, the survey included questions about when districts expect to run out of ARRA funds, a question that we have thus far been unable to answer from the available sources.

The CEP survey found that 60 percent of school districts expected to spend all of the State Fiscal Stabilization Fund (SFSF) monies they have already received by the end of the 2009-10 school year. The SFSF is a new program under the ARRA intended to help states stave off budget cuts. Given that the 2009-10 school year ended in June, this means that 60 percent of the nation’s school districts could have already spent all of their SFSF. However, this does not account for districts that have not yet received their full allocation of SFSF. For example, some states have yet to have their phase two SFSF applications approved by the Department of Education. Districts in these states are likely to receive another, though much smaller, allocation in the coming months, providing them additional funds for the 2010-11 school year.

In all, it’s not surprising that a good proportion of districts have used all of their SFSF monies, particularly those in states facing significant budget shortfalls like California. Ed Money Watch’s previous analyses of Department of Education data show that these states tend to outlay their SFSF monies more quickly than those states facing smaller shortfalls.

An additional 37 percent of surveyed districts said that they expect to use all of their SFSF monies by the end of school year 2010-11 and only 4 percent said they expected to use all their funds by the end of school year 2011-12. School districts must spend all of the SFSF monies by September 30, 2011, the day before fiscal year 2011 ends (though one month into the 2011-12 school year). However, any SFSF monies not obligated by the states by September 31, 2010 must be distributed to school districts through the Title I funding formula rather than through a state’s primary education funding formula.

The story for ARRA Title I and ARRA Individuals with Disabilities Education Act (IDEA) is somewhat different than for SFSF. Only 21 percent of districts reported that they would spend all their ARRA Title I funds by the end of the 2009-10 school year, and only 19 percent reported they would do so with their IDEA funds. In contrast, the vast majority of school districts, 71 and 70 percent, respectively, reported that they would spend all of their Title I and IDEA funds by the end of the 2010-11 school year. All of the ARRA Title I and IDEA funds have been available to states since the summer of 2009, meaning that school districts should have access to all of them now.

Again, it does not come as a great surprise that school districts would not use all of their Title I and IDEA ARRA funds until the end of next school year. Department of Education data also show that states have been slow to outlay these funds, perhaps because they have greater restrictions on how they can be used. Additionally, school districts had to spend their regular 2009 and 2010 Title I and IDEA appropriations in the same time frame as their ARRA allocations of those funds. This double duty could have further slowed the rate at which the funds were spent.

The CEP report confirms what we have suspected. Some school districts will soon be running out of SFSF monies, leaving them in a tight budget situation for the coming school years. However, these same districts do have ARRA Title I and IDEA funds remaining to help support specific programs targeted at low-income and special education students. While these funds can help fill a budget void, school districts will have to start making some difficult decisions, like cutting teaching staff or programs, to make ends meet. Absent further federal support, the coming school year is going to be an exercise in flexibility and creativity for these school districts.