Letter to Senator Max Baucus, Chairman, Senate Committee on Finance: January 28, 2008

January 28, 2008

The Honorable Max Baucus
Chairman
Committee on Finance
United States Senate
Washington, DC 20510

Dear Chairman Baucus:

On behalf of the 95,000 local school board members who represent the 49 million public school students in America’s school districts, the National School Boards Association (NSBA) appreciates your leadership in developing an economic stimulus package that will help boost America’s economy and provide timely fiscal relief and infrastructure assistance to local and state governments.

America’s local school districts are affected by the economic downturn and need immediate federal assistance for school repairs and modernization, as well as urgent assistance for continued reimbursement of rising healthcare costs for students under the Medicaid program. Because of the crisis affecting the housing market, local property tax revenues are expected to decline in many communities; thereby, affecting a major source of funding for our schools. Likewise, sales tax revenues are projected to decline, according to a study released by the National Governors Association (NGA). This decline in revenues—coupled with a greater share of costs for Medicaid—is prompting a number of states to explore options to shift budget priorities and possibly reduce funding in critical areas that could impact education. In fact, seven states were already in a recession as of early-January, according to NGA reports, which also project that if the current downturn follows the path of previous recessions, 35 to 40 states will face budget cuts in 2009.

NSBA’s specific recommendations for provisions in the pending stimulus package are noted below. Such provisions would help provide timely assistance to school districts to address revenue losses.

1.   School Repair and Modernization Grants / Extension and Expansion of the Qualified Zone Academy Bond (QZAB) Program
The infrastructure for a number of public school systems in America is inadequate, outdated, or even crumbling, thus affecting school and student performance. Approximately three million students attend public schools that require major renovation or replacement. Recent estimates place total school facility needs, including technology, at well over $300 billion.

Rationale:
Direct assistance to local school districts for school repair and modernization would provide the immediate federal assistance needed to ensure that the educational infrastructure for our school systems is conducive for a 21st century learning environment.

A provision similar to that of the Consolidated Appropriations Act 2001 (Public Law 106-554) would be very timely along with language allowing districts to expedite contracting and procurement policies in the most efficient manner. The Consolidated Appropriations Act 2001 appropriated $1.2 billion for “grants for school repair and renovation, activities under Part B of the Individuals with Disabilities Education Act (IDEA), and technology activities.”

Second, a multi-year extension of the Qualified Zone Academy Bond (QZAB) Program would continue to provide critical, cost-effective resources to school districts for infrastructure repairs and modernization, as well as curriculum development. Since its inception in 1998, the program has also strengthened public-private partnerships between school districts and businesses that have, in turn, contributed to innovative education programs and overall student achievement. Moreover, QZABs are a much-needed resource for schools in high-poverty communities—both urban and rural—with limited tax bases that need additional support for school modernization costs and classroom supplies.

Rationale:
Direct assistance to school districts for infrastructure repairs and modernization would create additional contracting opportunities for businesses, as well as additional jobs that would help alleviate unemployment in many communities.

2.  Continued Federal Reimbursement of Medicaid Claims
NSBA urges you to consider the economic impact of a recent regulation finalized by the Centers for Medicare and Medicaid Services that would cut billions of dollars from school districts’ budgets in the next few years. The rule on school-based administration and transportation reimbursement to schools that was finalized in the Federal Register on December 28, 2007, will have a devastating impact on state and local budgets, not-to-mention service delivery to our nation’s most vulnerable students. Therefore, we ask that during your efforts to address the economic issues facing our country that you permanently block the CMS regulation from taking effect and give states and local communities the certainty they need. If the rule becomes effective, the fiscal impact to school districts is likely to exceed $650 million for the 2008-2009 school year in unreimbursed healthcare costs.

Rationale:
NSBA appreciates steps taken by Congress to put in place a temporary moratorium on this regulation until June 30, 2008; however, this action does not go far enough in providing the financial assurance and stability that is needed at this critical time.

As states, localities, and schools prepare their budgets for the next fiscal year, the threat of these impending cuts to Medicaid reimbursement places a significant financial burden on these public entities.

3.  Reauthorization of the Secure Rural Schools Act
NSBA urges Congress to adopt the reauthorization of the Secure Rural Schools and Community Self-Determination Act as part of the economic stimulus package.

Rationale:
The uncertainty of whether the program will be continued is impacting state and local budget allocations for education funding. Further, the inclusion of payment-in-lieu-of-taxes provisions to local governments that will help offset losses in property taxes due to nontaxable federal lands within their boundaries would be a needed source of fiscal stability for many school systems that will already be affected by losses in local property tax revenues. Funding for the program is currently $229 million for FY 2008. A multi-year reauthorization of the program with provisions for subsequent increases commensurate with inflation and/or market conditions is needed.

NSBA appreciates the opportunity to provide suggestions for the economic stimulus that will be very helpful to the fiscal stability of the nation’s 15,000 public school districts. We look forward to working with you and your staff to address these issues as quickly as possible. Please contact Deborah Rigsby at (703) 838-6208 or via email at drigsby@nsba.org regarding the suggested provisions outlined above.

Thank you for your consideration.

Sincerely,

Michael A. Resnick