On Friday, August 13th, the U.S. Department of Education released the application for the Education Jobs Fund, shortly after the President signed the program into law. Since then, many states have been scrambling to get their applications approved so they can begin to use this new source of federal funding.
The Education Jobs Fund provides $10 billion in formula-based federal grant aid that is distributed to states based on their school age and total population. To receive the funds, governors were required to submit a simple application by September 9th in which they committed to using the funds appropriately and maintaining state education spending at certain levels. Once a state has received its Education Jobs Funds, it must distribute the funds to its school districts via either the state’s primary education funding formula or based on each district’s share of Title I Funds. School districts can only use the funds to support costs associated with employment including salaries and benefits to save jobs that would have otherwise been eliminated or rehire teachers that had previously been laid off.
According to the Department of Education website (online press releases and spending reports), ED officials have approved Education Jobs Fund applications from 47 states and the District of Columbia. Texas’ application was rejected because it does not qualify for the funds under a strict maintenance of effort provision included in the law that targets Texas.
Wyoming and South Carolina, on the other hand, did not apply for the Education Jobs Fund at all. Wyoming, which had to layoff very few teachers for this school year, decided not to apply for the funds after ED denied its request to use the additional funds for school construction. South Carolina declined to apply after the state discovered that it was not eligible for the funds because it had cut its current higher education budget too much. Interestingly, neither state has posted any readily-accessible official statement about their decision not to apply for the funds on their websites. According to the Education Jobs Fund legislation, the Secretary of Education can redistribute the funds these states would have received to other states.
Although all eligible states now have access to the new $10 billion Education Jobs Fund, ED financial spreadsheets show that no states had actually outlaid (distributed funds to school districts for expenditure) any of the funds as of September 10, 2010. While this could be a symptom of slow bureaucratic processes involved in the distribution of federal funds from states to school districts, it does not bode well for school districts that needed the funds to restore important teacher positions that had previously been eliminated. California, for example, was the first state to submit its application and receive approval because of the urgency of its need for the funds, but has yet to outlay any of its $1.2 billion.
Many states, however, have been making a big deal about the Education Jobs Fund and what it means for school districts and teacher jobs. In fact, several have publicly posted spreadsheets detailing how the funds will be distributed among school districts. These states, including California, North Carolina, New Jersey, and Ohio, appear to be continuing the focus on transparency that accompanied the distribution of funds through the American Recovery and Reinvestment Act (ARRA).
Other states, according to news reports, are taking a less straightforward approach to using the funds. CNNMoney reports that Governors from Rhode Island, Arkansas, and South Dakota plan to reduce state aid currently committed for education and replace those funds with the new Education Jobs Fund monies. The newly freed-up state funding would then be applied to other state expenditures like public safety. This move will mean that federal funds intended to boost education funding and save jobs will instead enable governors to fill budget holes in other programs, leaving education funding essentially unaffected.
The maintenance of effort provision in the Education Jobs Fund legislation is intended to prevent state governors from manipulating their budgets in this way. Accordingly, states that receive Education Jobs Funds must (1) maintain K-12 and higher education spending at 2009 spending levels; (2) maintain K-12 and higher education spending levels at the same proportion of state spending as they did in 2010; or (3) if state tax revenues in 2009 were lower than in 2006, maintain K-12 and higher education spending levels at either 2006 levels or in the same proportion of state spending as they did in 2006.
States that qualify under the third option, but where state education spending has not yet been lowered 2006 levels, will have more flexibility to manipulate their budgets and shortchange education. Though the current maintenance of effort provision is stronger than the one included for the State Fiscal Stabilization Fund (the precursor to the Education Jobs Fund in the 2009 ARRA), it will ultimately allow some states to engage in budgetary trickery.
Check back with Ed Money Watch for further coverage on the Education Jobs Fund and how states actually use the funds.