Letter to Senate Leadership: September 22, 2008

The Honorable Harry Reid Majority Leader United States Senate S-221 Capitol Building Washington, DC 20510	The Honorable Richard J. Durbin     Majority Whip     United States Senate     S-321 Capitol Building     Washington, DC 20510
The Honorable Robert Byrd Chairman Senate Committee on Appropriations S-131 Capitol Building Washington, DC 20510

Re:     Fiscal Year 2008 Continuing Resolution

Dear Majority Leader Reid, Majority Whip Durbin and Chairman Byrd:

The National School Boards Association (NSBA), representing over 95,000 local school board members through state school boards associations across the nation, strongly supports your leadership and efforts to continue funding for domestic programs until FY 2009 appropriations are enacted.

While most programs would be funded at existing FY 2008 allocations under the Continuing Resolution (CR), NSBA urges your strong support to include the following provisions in the CR that is scheduled for consideration this week. These are urgent priorities for which our school districts and communities need immediate assistance to help address fundamental operational responsibilities.

Secure Rural Schools and Community Self-Determination Act
NSBA urges the inclusion of $400 million in continued funding for the “Secure Rural Schools” program. The loss of this funding in June 2008 has significantly impacted many school district budgets, affecting nearly 7,000 teachers and personnel.

The “Secure Rural Schools” program is essential to 4,400 school districts and communities in 42 states with nontaxable federal forest lands that receive federal payments-in-lieu-of taxes. A number of affected counties have already issued pink slips notifying employees of potential layoffs because of the absence of funding.

In northern California, for example, the Del Norte County Unified School District has been relying on the funding it receives under this Act to maintain school facilities, including new roofs and boiler plants. Non-taxable federal and state lands make up 85 percent of the district, including the Smith River National Recreation Area, Six Rivers National Forest, and Redwood National Park.

In Virginia, for school divisions like Highland, Bath, Shenandoah and Alleghany, the revenue loss per pupil is quite noticeable. With this year’s spike in oil prices and cuts in state funding to local governments, the loss of funding provided by the “Secure Rural Schools” program is no small issue. A loss of $80,000 in “Secure Rural Schools” payments would be the equivalent of two lost teachers’ salaries in Alleghany County.

School Infrastructure Repairs and Modernization
NSBA urges the inclusion of $850 million for school repairs and modernization. This funding would help advance student achievement, provide contracting opportunities for businesses, and create an estimated 13,727 jobs throughout the country. This source of federal assistance would be very timely, given the national economy and fiscal conditions of 29+ states that have faced budget shortfalls of at least $48 billion.

Demands of today’s educational programs and services have overwhelmed the structural capacity of many school facilities across the nation. Approximately three million students attend public schools that require major renovation or replacement. Local school districts are delaying priority school infrastructure projects as they struggle to secure local and state financing, amid budget shortfalls and increased expenditures for transportation, utilities, school meals and homeless assistance to students affected by the national housing crisis, for example.

Homeless Assistance for Students
NSBA urges the inclusion of at least $36 million for the McKinney-Vento Homeless Assistance program. The housing foreclosure crisis has affected an estimated 1.8 million children; and, additional funding is needed as school districts grapple with limited resources to cover expenses for a range of needs including tutoring, school supplies, and counseling.

The $36 million would cover the gap between the FY 2008 funding level of $64 million and the $100 million authorization that was enacted in the recent Foreclosure Prevention Act of 2008 (H.R. 3221).

Implementation of recently adopted Federal 403(b) Regulations (IRS Revenue Procedure 2007-71)
An exemption is needed for a number of school districts. New requirements mandated by the recently adopted Federal 403(b) regulations should be mitigated, as they are costly and burdensome to publicly-funded schools. If this is unobtainable, at the very minimum, the starting date for these requirements should be delayed until start of the fiscal year for schools – July 1, 2009.

The new Federal 403(b) regulations are imposing significant fiscal and staffing burdens on a number of small school systems throughout the country. The IRS, as well as various vendors and associations, has prepared sample documents for school systems to implement these dramatic changes; but no funding has been provided for this federal mandate. Many school systems do not have legal counsel on staff to oversee implementation; and, the cost for legal services can be exorbitant as a growing number of school systems struggle to close budget shortfalls.

The potential for errors is a major concern as is the creation of new school system liabilities. Additional concerns are the staff time and expertise required to provide appropriate oversight and implementation. In these tight financial times, costs may have to be paid by the employees, therefore reducing their savings by this amount.

One school system in Maine with just over 3,000 students and 500 staff members indicated that if it does not contract with a third party administrator, it will need to hire a full-time employee to administer this program at a cost of more than $60,000 per year. With more than 45,000 employees in Maine school systems, for example, the cost to administer this could annually top several million dollars plus 55 basis points on total investments.

The required date to implement these new regulations is January 1, 2009. Yet most public schools with a fiscal year and contract year prior to that date need to implement the changes by Fall 2008. Nationwide, churches are allowed to start at the beginning of their plan year, which begins after December 31, 2009. It seems reasonable that public schools should be allowed a similar option if an exemption is not feasible. Therefore, the alternative requested is a deferred implementation until the start of school districts’ 2009-10 fiscal year.

Your leadership to ensure the enactment of the provisions stated above in the FY 2008 Continuing Resolution is greatly appreciated. NSBA will continue to urge Congress’ strong bipartisan support for these provisions that will provide immediate assistance to students and a growing number of school systems that are facing significant budget challenges.

If we can be of further assistance, please contact Deborah Rigsby, director, federal legislation, at (703)838-6208.

Thank you again for your leadership on these very important issues.

Sincerely,

Michael A. Resnick
Associate Executive Director

Cc:     Members, United States Senate