Frequently Asked Questions (FAQs)
The U.S. Department of Education recently announced additional guidance to school districts and states regarding the American Recovery & Reinvestment Act (ARRA), commonly referred to as the stimulus law. The guidance helps address questions about implementation efforts, such as respective funding allocations, distribution guidelines, clarification about maintenance of effort for state fiscal stabilization funding, additional consideration for existing programs (e.g. Title I, special education, education technology), supplement not supplant allowances or clarification, and time periods for obligation and use of funds.
General Questions Regarding Federal Funding for Education
Questions Regarding State Fiscal Stabilization Funds
What is the timeline for distributing funds from the American Recovery & Reinvestment Act?
As of March 7, U.S. Secretary of Education Arne Duncan announced that $44 billion in stimulus funding from the American Recovery & Reinvestment Act (ARRA) will be available to states in the next 30 to 45 days.
By the end of March, governors will be able to apply for 67 percent of the State Fiscal Stabilization Funds (SFSF) for education and discretionary SFSF for education and other government functions, totaling $32.5 billion. These funds will be released within two weeks after approvable applications are received.
Guidelines posted by the Department of Education on March 7 also authorize the release this month of half the Title I, Part A stimulus funds, amounting to $5 billion, and half the funds for the Individuals with Disabilities Education Act (IDEA), amounting to $6 billion, without new applications from state and local education agencies.
In April, funding for various programs, including education technology grants and Impact Aid grants for school infrastructure repairs and modernization, will be available.
The remainder of funding for Title 1, IDEA, and State Fiscal Stabilization Funds, as well as monies for other programs (approximately $35 billion) is scheduled for distribution between July 1 and September 30.
The U.S. Department of Education released a chart that outlines a timetable for distributing economic stimulus funds to states over Fiscal Years 2009-2010. Please refer to the descriptions below for clarification about each column:
- Column One = name of grant program (includes both K-12 and higher education programs);
- Column Two = name of program (either formula grants that flow through the states to school districts or competitive grants);
- Column Three = amount of funding provided for each program (reflects increases for existing programs and funding for new programs--State Fiscal Stabilization Fund and "Race to the Top" grants--in millions [e.g. $3 billion for School Improvement Grants and $250 million for Statewide Data Systems]);
- Columns Four-Nine = percentage/amount of funds to be distrubuted to states during specified months (e.g. 40 percent, or $40 million, of the $100 million allocation for Impact Aid Construction funding is scheduled for distribution in February/March 2009. The remaining 60 percent, or $60 million, is scheduled for distribution in September/October 2009);
- The last row categorizes the programs as either "direct reform related" or "reform influencing," based on the Administration's priorities for education.
Is there a specific timeline for use of funds and the overall length of the ARRA?
The Department of Education has announced that funds are intended for use over the next two school years (2009-10 and 2010-11). Funds distributed through the State Fiscal Stabilization Fund are available for obligation at the state and local levels until September 30, 2011.
What is the overall goal of the State Fiscal Stabilization Fund (SFSF)?
The primary purpose of funding to states and school districts under the SFSF is two-fold: job retention/creation to help avoid layoffs of teachers and personnel, and school improvement/student achievement. The SFSF allocations to states and local school districts are to be distributed quickly to help stabilize budgets and to help fulfill long-term goals for student achievement and school improvement in four areas: enhanced standards and assessments, including those for English language learners and for students with disabilities; establishment of pre-K to college and career data systems that track academic progress and foster continuous improvement; teacher quality and equitable distribution of qualified teachers, particularly for at-risk students; and increased support and interventions for schools in need of improvement.
Describe the funding components of the State Fiscal Stabilization Fund (SFSF).
The ARRA provides a total of 53.6 billion for the State Fiscal Stabilization Fund. Of this amount, $48.6 billion will be available to states, school districts and institutions of higher education through two types of grants – formula grants for education (81.8 percent of a state’s allocation) and flexible block grants (18.2 percent of a state’s allocation) that can be used for government services, such as education and school modernization, public safety, social services, etc. The remaining funds available through the SFSF will be awarded on a competitive basis by the Department of Education through a new “Race to the Top” program ($4.35 billion) to help states and schools districts continue improvements in student achievement, and a new “Invest in What Works and Innovation” fund ($650 million) to provide incentives to school districts and/or nonprofit organizations that have made significant progress in closing achievement gaps.
Does the ARRA provide funding for school infrastructure repairs and modernization?
The economic stimulus does not include a dedicated source of grant funding for school infrastructure repairs and modernization. However, the law allows districts to use funding received from their states through the State Fiscal Stabilization Fund (SFSF) for school modernization and repairs.
The ARRA also provides $24.8 billion in bond authority to states and local governments through a new Qualified School Construction Bond program ($11 billion for 2009 and $11 billion for 2010) and through the Qualified Zone Academy Bond program ($1.4 billion for 2009 and $1.4 billion for 2010).
Proceeds from the new Qualified School Construction Bond program can be used for the construction, rehabilitation, or repair of public school facilities or for the acquisition of land on which a public school facility will be constructed.
Proceeds from Qualified Zone Academy Bonds (QZABs) can be used to finance school renovations, equipment purchases, developing course material, and training teachers and personnel at a qualified zone academy. In general, a qualified zone academy is any public school (or academic program within a public school) below college level that is located in a federally designated empowerment zone or enterprise community, and is designed to cooperate with businesses to enhance the academic curriculum and increase graduation and employment rates.
What if voters in my community approved a bond issue for school construction, which was before the economic stimulus was enacted and the new "qualified school construction bond" program became available?
If voters had approved a bond issue for school construction and modernization before the economic stimulus was enacted, the local government/school district can still take advantage of these two bond programs as long as the ballot language did not specify a certain type of bond (e.g. tax-exempt bond, private activity bond, etc.).
This situation may apply to a number of school districts/local governments that are putting together bond deals approved last November that may decide wait for an announcement from the U.S. Treasury and U.S. Department of Education regarding the new bond authority allocations to states and school districts before moving forward.
As an issuer of a qualified school construction bond, the school district/local government would pay the principal only to the bondholder. This is a zero-interest bond program that allows the bondholder to receive a return on investment as a credit against its federal tax liability.
How can I find out how much money my district will receive from the stimulus law?
You may visit the House Education and Labor Committee website for estimates from the Congressional Research Service (CRS). The amounts provided by CRS are only estimates and may not reflect actual funding allocations.
The Department of Education has provided more accurate estimates of the funding allocations for each school district for Title I.
You may find links to both websites at www.nsba.org/economicstimulus.
Are the funding estimates in the stimulus law for one year or two years?
It is uncertain at this point. The General Education Provisions (GEPA) regulations regarding spending of federal education funds for a five year period may apply. However, the stimulus law requires that funds be obligated by September 30, 2010, with the exception of State Fiscal Stabilization Fund, which allows obligation of funds at the state and local levels until September 30, 2011.
Are the funding estimates in the stimulus law for one or two years for state fiscal stabilization funds?
The State Fiscal Stabilization Fund allows obligation of funds at the state and local levels until September 30, 2011.
What are the supplement/not supplant requirements for IDEA and Title I/NCLB?
Existing requirements under IDEA and NCLB will apply for the supplement/not supplant requirements that school districts must meet currently under NCLB and IDEA. For example, under IDEA school districts can reduce the amount of local funds for special education up to 50 percent of any increase in federal funds for a fiscal year, as long as the local funds are used for any purpose under NCLB. NSBA will continue to work with Congress and the Administration to provide greater flexibility that allows the additional federal funding to offset a greater level of local funding for school districts to meet the requirement of the federal law.
What are the Maintenance of Effort (MOE) requirements?
In order to receive grants from the State Stabilization Fund, states must agree to maintain their respective funding for education at FY2006 levels or greater. However, the primary purpose of the fund is to stabilize education funding and prevent cuts from current fiscal year funding levels. FY2006 is a threshold. There is language under the State Stabilization Fund that allows state education agencies and school districts to apply to the Secretary of Education to waive or modify any requirement relating to maintaining fiscal effort if there is a significant fiscal challenge.
It reads as follows:
“A wavier or modification under this section shall be for any of the fiscal year 2009, fiscal year 2010 or fiscal year 2011, as determined by the Secretary. The Secretary shall not grant a waiver or modification under this section unless the Secretary determines that the State or local educational agency receiving such waiver or modification will not provide for elementary and secondary education, for the fiscal year under consideration, a smaller percentage of the total revenues available to the State or local educational agency than the amount provided for such purpose in the preceding fiscal year.”
“(d) Maintenance of Effort – Upon prior approval from the Secretary, a state or local educational agency that receives funds under this title may treat any portion of such funds that is used for elementary, secondary, or postsecondary education as non-federal funds for the purpose of any requirement to maintain fiscal effort under any other program, including part C of the Individuals with Disabilities Education Act, administered by the Secretary.
“Notwithstanding (d), the level of effort required by a state or local educational agency for the following fiscal year shall not be reduced.”
Under existing education program such as Title I and IDEA, Maintenance of Effort (MOE) is a federal requirement that requires grant recipients and /or sub-recipients to maintain a certain level of state/local fiscal effort (i.e. FY2006 funding levels for education) to be eligible for full participation in federal grant funding. Grant recipients or sub-recipients not meeting MOE requirements face loss of a portion of their federal funds. Elementary and Secondary Education Act (ESEA), as amended by “No Child Left Behind” (NCLB) MOE requirements can be found under 20 USC 7901, Section 9521 of the Act. The MOE requirements are located in Part E-Uniform Provisions of Title IX-General Provisions part of the act. This means MOE covers all the ESEA programs as defined as “cover programs” under Section 9101 (13) of ESEA of the Act. Essentially, MOE requirements will apply to all funding received through the ARRA.
How is Maintenance of Effort (MOE) impacted? If a district adds a program for two years and has no funds to continue the program at the end of the two years, will there be an issue with MOE?
The funding provided through the American Recovery & Reinvestment Act is temporary. While compliance with certain requirements is needed to ensure receipt of the temporary, two-year grants through the economic stimulus, these specific requirements will expire at the end of the stimulus. If a school district or state cannot sustain certain levels for programs after the economic stimulus expires, it is not required to do so. For example, the MoE requirements for Title I and IDEA for the 2011-2012 school year would reflect the initial requirements outlined in NCLB, provided there are no changes between now and the end of the economic stimulus.
One element districts are encouraged to incorporate into their planning for the use of stimulus funds is how a one-time investment(s) can be used to build long-term capacity for district priorities (e.g. data systems, classroom instruction materials / technology that can be effectively used for a number of years, professional development for teachers, school modernization needs such as lab renovations, pre-school accommodations, etc.).
What should I do if my governor is refusing portions of funding from the stimulus law?
Under the American Recovery and Reinvestment Act (ARRA), governors must certify their state’s intention to use state stabilization funds within 45 days of the President signing the bill, which was February 17, 2009. The state legislature may also certify the state’s intention to use funds not accepted for use by the governor under Title XVI, section 1607 of the law. Therefore, a resolution to certify a state’s intention to use the ARRA fiscal stabilization funds passed by a state legislature is an alternative.
What are some steps I can take now to prepare for implementation of the stimulus law?
Provide information to both your state education agency (SEA) and Governor’s office (e.g. district’s per pupil expenditure, losses or projected losses in local property tax revenues, budget impact data re: any projected lay-offs and/or cuts in services, priorities that are already underway or being planned for meeting requirements for data systems, teacher quality, assessments, etc., school modernization needs).
Work with your state school boards association to request regular meetings with your SEA and Governor’s office regarding implementation efforts.
If you have identified potential red flags and concerns about how your state will administer the funds, raise such questions/concerns with your state associations, SEA, Governor, state legislature, and members of Congress. Advocate for greater disclosure about the process, related timelines, decisions, etc.
What offices within the U.S. Department of Education are responsible for administering respective portions of the economic stimulus funding?
The U.S. Department of Education’s office for Academic Improvement and Teacher Quality Programs is identified as managing the State Fiscal Stabilization Fund.
The Office of Elementary and Secondary Education would be the general contact for the following grant increases under the economic stimulus: Title I, Impact Aid, Education Technology.
The Office of Special Education and Rehabilitative Services is the principal office for the IDEA grant increases under the stimulus.
We will continue to check with the Department to update our points of contact for the economic stimulus funding.
How will the State Incentive Grant funds be distributed?
Through the overall State Fiscal Stabilization Fund, the State Incentive Grants will be distributed on a competitive basis by the Secretary of Education to states. The states awarded a grant would then have to distribute at least 50 percent of the grant award to local education agencies, “based on their relative share of funding under part A of the Title I” grant program for the most recent year.
The legislation states that the Secretary’s discretion for awarding the grants will be based on the information provided in state applications regarding the state’s progress in achieving equity in teacher distribution, improving data collection and use, enhancing the quality of assessments (especially for English language learners and children with disabilities), and support for schools in need of improvement.