NSBA Issue Brief: Federal Funding for Education
BACKGROUND
Federal funding for elementary and secondary education programs has remained nearly flat from FY 2005 to FY 2007 because of a shift in budget priorities and a perpetual gridlock of recent Congressional appropriations processes. Although this premise applies to a number of programs for FY 2008, Congress increased funding for Title I grants for disadvantaged students by $1.1 billion, which is significant compared to recent fiscal years. Two federal programs are the largest sources of federal funding to school districts and also operate as mandates:
- Title I grants: the main source of federal funding for the No Child Left Behind [NCLB] Act
- IDEA grants: special education funding under the Individuals With Disabilities Education Act (IDEA)
An overarching premise to consider—Congress and the Administration enacted laws intended to foster higher levels of school performance and academic achievement but have failed to fund the laws to the levels authorized when Congress created the programs. Therefore, a greater portion of the cost of compliance to the mandates has shifted to local school districts and states. From compliance with Adequate Yearly Progress (AYP) under NCLB (Title I) to health mandates and special education services under IDEA, the failure to provide federal funding increases has impacted school districts, encroaching upon local and state budgets. For example, the cumulative six-year shortfall in federal funding for Title I exceeds $43 billion, when comparing the amounts of funding Congress authorized or promised to provide for NCLB from FY 2002 to FY 2007. A shortfall of similar magnitude for IDEA also illustrates an increasing gap between authorized and appropriated funding levels each year for fiscal years 2002 through 2007.
NCLB (Title I): Congress has not appropriated funding to match the levels specified in authorizing legislation for either program. For Title I funding, the ever expanding annual gap between the authorized and appropriated levels was roughly $10 billion for FY 2006 and $12 billion for FY 2007. The authorized level increased by $2.25 billion between FYs 2006 and 2007, but Congress increased appropriations only slightly. Since NCLB expired on September 30, 2007, there is no current authorized funding level for Title I; and, the level appropriated for FY 2008 ($13.9 billion) was done in anticipation of NCLB reauthorization for 2008 that could result in greater requirements and costs to districts.
IDEA: For IDEA, the gap between authorized and appropriated levels has expanded by about $2 billion each year, while the appropriated level has remained roughly constant over the past several years. Congress promised to pay an amount equal to 40 percent of the average per pupil expenditures rate (which is approximately one-half the excess costs of services required by IDEA). The current funding level of $10.9 billion is roughly 18 percent (instead of the 40 percent promise)—or less than one-half of the 40 percent federal share that Congress promised to fund when passing the federal law as a mandate for local governments in 1975. To reach the full funding goal of 40 percent, Congress committed itself to a funding schedule beginning in FY 2005. Under this schedule, Congress authorized $19.2 billion for FY 2008; but again, only provided $10.9 billion (or about 58 percent of the amount needed to stay on schedule).
Additional challenges for education funding
Additional factors may also pose challenges to school districts and states for education funding, including mandatory set-asides for Title I funding at the state level and declining property values in a number of states.
Mandatory state set-asides for Title I funding: During a nearly three-year freeze on Title I funding, the state set-aside for school improvement grants (i.e., state intervention in schools not making AYP for a series of years) was increased from 2 percent to 4 percent off the top of local Title I grants to school districts. Hence, many districts that could have received more money as a result of enrollment increases did not in order to fund the set-aside—while overall funding to the state was flat. In the 29 states listed below, the total amount available for the school improvement set-aside still falls short of the required 4 percent. Of these states, the 22 states noted with an asterisk were unable to reserve the full 4 percent for the previous year as well (school year 2006-07). This means that if level funding continues, districts with enrollment increases won’t get an offsetting increase next year while other districts may lose funds as a result of those enrollment increases.
States Unable to Set-Aside the Full 4 percent for School Improvement
Alabama* Kentucky* North Dakota*
Arizona Louisiana* Oklahoma*
Arkansas* Maine* Oregon
California* Mississippi* Tennessee*
Colorado Montana* Texas*
Delaware Nebraska* Vermont*
Florida New Jersey* Virginia*
Georgia* New Mexico West Virginia*
Hawaii* New York* Wyoming*
Idaho* North Carolina
* Also had insufficient funds to meet the 4 percent set-aside requirement in 2006-07.
Declining Property Values: A second factor affecting education funding at the local level is the housing market. Real estate markets in a number of regions are experiencing a decline in property values, thereby triggering a decline in property tax revenues, which constitute a significant portion of local funding for education in many districts. Nevertheless, increased federal funding for education is sorely needed as many states and communities project sharp declines in fiscal conditions attributable to additional factors including greater funding demands for Medicaid and other healthcare costs; lower sales tax revenues; and investments needed for critical infrastructure. According to the Fiscal Survey of States, recently released by the National Governors Association and the National Association of State Budget Officers, many states have already begun drawing on their rainy day funds to address budget shortfalls caused by lower-than-anticipated revenues; and, the decline of total balances in fiscal year 2008 suggests this trend will continue.
NSBA POSITION
NSBA supports the provision of adequate funding and efficient procedures for financing federal public education programs and urges Congress to:
(a) make full funding of mandated public education programs the top priority in adopting the federal budget, and fully fund all federal public education programs;
(b) meet the funding levels authorized as part of the No Child Left Behind Act;
(c) oppose general budget reductions by formulations that circumvent Congress’ responsibility to set funding priorities among government functions.
*Excerpt from resolution on Federal Funding for Public Education adopted by NSBA’s 2007 Delegate Assembly on April 13, 2007.
NSBA urges Congress to provide an increase of at least $2.5 billion for Title I and for IDEA for FY 2009.
CONGRESSIONAL ACTIVITY
As of March 13, the House and Senate were debating their versions of a budget resolution for FY2009 to provide a blueprint for funding a number of priorities including education.
President’s budget request: Released February 4, the President’s budget request to Congress proposed virtually level funding for the U.S. Department of Education ($59.2 billion). Although the President’s budget request would provide small increases of $406 million for Title I grants for disadvantaged students and $337 million for special education, these increases would come at the expense of other programs that are slated for budget cuts or elimination, including Career & Technical Education (currently funded at $1.2 billion) and education technology grants (currently funded at $276.5 million).
House and Senate budget resolutions: The House and Senate budget resolutions that were being debated would provide increases ranging from $5 billion to $7 billion over the current FY08 funding levels for programs under the rubric of education and training. However, exact amounts proposed for elementary and secondary education programs are not addressed in the Budget Resolution, which provides a parameter or guideline for House and Senate Appropriations Committees to begin work on specific funding levels for programs in FY09.
The FY09 Budget Resolution is also slated to set aside a number of reserve funds for priority areas including a second economic stimulus that could include general assistance to state and local governments; the State Children’s Health Insurance Program (SCHIP) to continue coverage for roughly 6.7 million children, and provide coverage for an additional 4 million uninsured children; and, continued reimbursement to schools for related healthcare expenses under Medicaid.
As the budget and appropriations process moves forward, NSBA continues to urge strong support for an increased federal investment in discretionary funding for education programs, including:
- Increases of $2.5 billion for Title I grants for disadvantaged students and $2.5 billion for IDEA/special education--the two major programs that benefit a majority of districts.
- Rejection of the proposed cuts/eliminations to other programs such as vocational education and education technology.
- Rejection of any private school voucher proposals including: 1) Pell Grants for Kids Plan; 2) Washington, D.C. pilot voucher program; and 3) conversion of the 21st Century Community Learning Centers Program into a voucher experiment.
For additional information, please contact Deborah Rigsby, director of federal legislation at the National School Boards Association, at 703-838-6208, or by e-mail, drigsby@nsba.org.
March 2008