School Finance

At Ed Money Watch, we discuss and analyze major issues affecting education funding. In our Friday News Roundup, we try to highlight interesting stories that might otherwise get overlooked. These stories emphasize how federal and state policy changes can affect local schools and districts.

District of Columbia Public Schools Face $30 Million Special Education Budget Shortfall

Texas Budget Shortfall Will Likely Cost Schools Millions

Michigan Higher Education Institutions Will See 2.8 Percent Budget Cut in Fiscal Year 2011

South Carolina Bans New Construction at Colleges with Large Tuition Increases

District of Columbia Public Schools Face $30 Million Special Education Budget Shortfall
The District of Columbia’s public schools may be facing a $30 million budget shortfall for fiscal year 2011, which starts October 1, 2010. D.C. Chief Financial Officer Natwar Gandhi this week announced that his office had conducted an analysis of planned spending for special education and found that teachers’ aides and support services provided by specialists would cost $85.9 million in fiscal year 2011, $31.7 million more than the budgeted $54.2 million. Schools Chancellor Michelle Rhee argued that Gandhi’s analysis is premature, but vowed to take “any actions necessary” to balance the budget. Cuts would likely have to come in the form of layoffs – around 300 jobs could be on the chopping block. More here…

Texas Budget Shortfall Will Likely Cost Schools Millions
Texas is facing a $21 billion budget shortfall in the coming two year budget cycle, and officials say cuts are likely to come from the public schools budget. State Commissioner of Education Robert Scott has suggested over $260 million in cuts from the state’s $40 billion two-year education budget. The cuts would come largely from funds slated for new science labs, textbooks, and teacher development. The cuts would also force the state to roll back a new requirement that high school students take four years of science classes. At the same time, local tax revenues are dropping, forcing school districts to dip into reserves to keep up with costs as enrollment continues to rise. More here…

Michigan Higher Education Institutions Will See 2.8 Percent Budget Cut in Fiscal Year 2011
Public colleges and universities in Michigan will see a 2.8 percent cut in state aid in fiscal year 2011 compared to 2010. The state’s 2011 budget, which passed the legislature on Tuesday and is awaiting Governor Jennifer Granholm’s signature, allocates $1.567 billion for higher education, down from $1.612 billion in fiscal year 2010. The cut to higher education funding is part of the state’s effort to close a $484 million budget deficit. University officials are relieved that the cut is less than the predicted 3.1 percent, but say they will still likely have to raise tuition or cut programs to absorb the cuts. However, the approved budget does include about $100 million in scholarship and financial aid, an increase from fiscal year 2010 when Michigan Promise Scholarships were cut from the prior year’s level. More here…

South Carolina Bans New Construction at Colleges with Large Tuition Increases
South Carolina’s State Budget and Control Board this week instituted a ban on new construction at public institutions of higher education that significantly raised tuition this year. Four-year colleges and universities that raised tuition by 7 percent or more and two-year colleges that raised tuition by 6.3 percent or more are subject to the ban. To remove the ban, these schools must certify to the board that they will hold tuition at or below current levels for the spring 2011 semester. The ban does not apply to projects that have already been fully approved, deferred maintenance projects, or projects that deal with health and safety. More here…

Briefly Noted

• Indiana paid nearly $94 million to local school districts for 16,315 students no longer enrolled in the public school system in 2009.

As Ed Money Watch readers know, the fiscal year 2011 appropriations process for federal education programs has been complicated and drawn out – and it looks like we will have to wait until December for any resolution.

Fiscal year 2011 starts tomorrow, October 1st, 2010, but Congress has yet to pass any of the 12 separate fiscal year 2011 appropriations bills that will fund about one-third of the U.S. government for the next year. Democratic leaders in Congress have decided to bring up the bills in a lame-duck session after the November election. In the meantime, the House and Senate sent to the President for his signature, a Continuing Resolution which provides temporary fiscal year 2011 funding through December 3rd, 2010 for all programs and agencies that receive appropriations funding. Nearly all federal education programs are funded through the annual appropriations process.

The recently-passed Continuing Resolution (CR) temporarily funds all federal education programs subject to annual appropriations at fiscal year 2010 levels, a total of $63.6 billion. The bill does not make any legislative changes to the functioning of any education program. This means that programs like Title I Grants for the Disadvantaged and Individuals with Disabilities Education Act Grants to States will continue to function as they did during fiscal year 2010 and at the same funding levels. However, the CR does not preclude Congress from increasing or reducing final funding levels when the fiscal year 2011 Labor, Health and Human Services, Education appropriations bill is ultimately passed.

Additionally, the CR provides for the continuation for all programs authorized by the Child Nutrition Act including the School Lunch Program and other nutrition programs. This is somewhat unusual because the Child Nutrition Act is a mandatory program that is not subject to appropriations. As a result, it is not included in the annual appropriations process. Congress has included the continuation of the Child Nutrition Act in the appropriations CR because they have not yet found consensus on the reauthorization bill. In fact, yesterday House leadership announced that they will delay a vote on the reauthorization of the Child Nutrition Act until after the autumn recess is over. Without language in the CR explicitly continuing the Child Nutrition Act, all programs authorized under the law would be shut down until reauthorization was complete.

The delay in the fiscal year 2011 appropriations process started this summer when a lack of consensus among lawmakers prevented both houses of Congress from passing a budget resolution. A budget resolution would have set total federal spending levels for fiscal year 2011 (also known as the 302(a) allocation) that guides the appropriations process. Although both the House and Senate did eventually determine suballocations for each Appropriations Subcommittee (also know as 302(b) suballocations), the process of passing each appropriations bill has been delayed due to a lack of consensus and the election calendar.

As it stands today, the Senate Appropriations Committee passed a Labor, HHS and Education Appropriations bill but has taken no further action. Similarly, the House Appropriations Subcommittee on Labor, HHS and Education has yet to even approve its bill, meaning that the House Appropriations Committee has yet to vote on it at all.

Hopefully, both houses of Congress will return from autumn recess ready to vote on and pass the remaining appropriations bills including the Labor, HHS, and Education bill. However, it’s likely that education funding could end up in a messy, end-of-year omnibus appropriations bill that encompasses many of the 12 individual appropriations bills. Check back with Ed Money Watch for further details on this process.

For a complete timeline of the fiscal year 2011 appropriations process click here.

For a detailed explanation of the fiscal year 2011 Congressional Budget Actions click here.

In early August, the U.S. Senate unanimously passed the Healthy, Hunger-Free Kids Act of 2010, a bill that would reauthorize the Child Nutrition Act. Now it is up to the House to pass the bill before the existing law expires on Thursday, September 30th. Although the Senate bill won strong bi-partisan support, things are not going so smoothly in the House mostly because of competing priorities for programs that address nutrition and hunger.

Currently, the Child Nutrition Act provides funding for school meal and after school food programs, benefits for low-income women and infants, and adult feeding programs. Most of this funding is distributed to states and school districts based on per student reimbursement rates.

The bill the Senate passed makes several changes to the existing Child Nutrition Act, particularly the School Nutrition Program. Perhaps most importantly, it compels the Secretary of Agriculture to implement new nutrition standards for school lunches and breakfasts. Under the law, schools that provide lunches that comply with these new standards will receive an increased reimbursement rate for every meal served. Additionally, the law would allow schools to directly certify students for free or reduced price meals using Medicaid data in addition to Temporary Assistance for Needy Families and food stamp data and would create a performance award program for states that reach benchmarks for direct certification.

The new nutrition standards will provide students with more healthful meals. The changes to direct certification will increase the number of students that receive free or reduced price lunches while also decreasing paper burden on schools. These changes are popular with many child nutrition organizations and other public policy organizations that have been seeking to improve the quality of federally-subsidized school meals and the bureaucracy surrounding enrolling students in the meal program.

In total, programmatic changes in the Healthy, Hunger-Free Kids Act would increase the cost of the School Nutrition Program by $4.5 billion over ten years. The Senate found $2.2 billion in offsets for this additional spending by eliminating increased American Reinvestment and Recovery Act Supplemental Nutrition Assistance Program benefits (SNAP - formerly known as the food stamp program) in 2013 rather than 2014, as set in previous legislation.

Unsurprisingly, this change is unpopular with anti-hunger advocates who believe that ending the increased SNAP benefits in 2013 will leave needy families without enough money for food. And this is not the first time that funding for SNAP benefits from ARRA have been pilfered for other programs.

The $10 billion Education Jobs Fund and $16.1 billion Medicaid reimbursement increase, which Congress passed in mid-August, was also made possible by offsets from the SNAP benefits increase in ARRA. Specifically, Congress created $11.9 billion in offsets by setting a 2014 end date for the ARRA SNAP benefits increase. While this offset was also unpopular with anti-hunger advocates, it was less controversial because the ARRA SNAP benefits increase was originally intended to end in 2014 anyway.

The American Recovery and Reinvestment Act of 2009 provided funds to increase the value of SNAP benefits until annual inflation adjustments to SNAP reached ARRA levels – believed at the time to be in 2014. But low levels of food cost inflation in 2009 and 2010 slowed down that timeline, meaning that SNAP adjustments wouldn’t meet ARRA levels until 2018. Although the 2014 deadline for the ARRA funds meant that SNAP benefits would likely drop from 2014 to 2018, the perceived urgency of the Education Jobs Fund and Medicaid increase made the offset politically viable.

Will advocates of the Healthy, Hunger-Free Kids Act be able to justify these additional cuts to the ARRA SNAP benefit increase and pass the bill before the current law expires? Or will the House delay a vote further to try to find alternative offsets for the improved School Nutrition program before they pass the bill? Check back with Ed Money Watch for updates.

At Ed Money Watch, we discuss and analyze major issues affecting education funding. In our Friday News Roundup, we try to highlight interesting stories that might otherwise get overlooked. These stories emphasize how federal and state policy changes can affect local schools and districts.

Texas Files Lawsuit over EduJobs Money

Alabama School Systems Borrow Money to Make Ends Meet

Oregon Emergency Board Votes to Avoid Cuts to Education

Montana School Districts May Not See the Expected Bump in Funding from EduJobs Money

Texas Files Lawsuit over EduJobs Money
Texas officials are suing the U.S. Department of Education (ED) for its $830 million share of federal stimulus finds from the Education Jobs Fund after ED rejected its application for the funds. The state’s application was denied because it did not comply with a special provision U.S Representative Lloyd Doggett, a Texas Democrat, inserted into the law requiring Texas Governor Rick Perry to promise to maintain certain education spending levels through 2013. Governor Perry claimed that such a promise would violate the Texas constitution, which does not allow money to be appropriated more than two years ahead of time. The U.S. Department of Education encouraged Texas to reapply for the funds. Federal officials suggested that if Texas were to remove the section of the application explicitly refusing to violate the constitution, it might be possible to approve the application. More here…

Alabama School Systems Borrow Money to Make Ends Meet
Alabama education officials announced this week that 35 of the state’s 132 school systems had to borrow money in September to fulfill their payroll obligations. Last week, Governor Bob Riley ordered a 2 percent across-the-board cut to the state’s budget, causing budget holes for many districts. The reduction was caused by shortages in state revenue due to the BP oil spill. BP refused to immediately pay the state’s $148 million claim, leaving the state unable to fulfill its obligations for September, the last month of fiscal year 2010. It is not yet clear whether similar cuts will be necessary in fiscal year 2011. More here and here...

Oregon Emergency Board Votes to Avoid Cuts to Education
Oregon lawmakers on the Legislature’s Emergency Board voted unanimously this week to spend almost $18 million from the state’s emergency funds to mitigate the effects of an eight percent across the board cut to agency budgets for the 2009-11 budget biennium. The Emergency Board made available $7 million of the $18 million for K-12 education, along with an additional $118 million in federal stimulus dollars. According to the Board, this should prevent most schools from making cuts to their budgets between now and January, when the new legislative session begins. State leaders say they will allocate an additional $34 million in the new session to prevent teacher layoffs or a reduction in the number of school days for the current 2010-11 school year. Lawmakers expressed concern that this is a temporary fix given that state revenue doesn’t appear to be rebounding and state reserve funds are mostly depleted. More here…

Montana School Districts May Not See the Expected Bump in Funding from EduJobs Money
Montana received $31 million in federal stimulus funds through the Education Jobs Fund of 2010 last week, but school district officials are concerned that they won’t see an increase in state aid as a result. The money was intended to prevent districts from laying off teachers whose jobs were previously supported by federal stimulus funds through the American Recovery and Reinvestment Act of 2009. However, Governor Brian Schweitzer plans to distribute the money through the state’s basic school aid formula, supplanting the state funds that would have otherwise gone to schools. This would violate the intent of the law – which was to save teacher jobs in the 2010-11 school year by boosting total education funding. However, Governor Schweitzer’s plan would not actually violate the law, which allows states receive the funds as long as they maintain certain education funding levels. More here…

Earlier this week, the Government Accountability Office (GAO) released “Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States’ and Localities’ Uses of Funds.” The new report examines how states and local education agencies (LEAs) are using federal stimulus funds from the American Recovery and Reinvestment Act of 2009 (ARRA) for K-12 education. On the whole, the GAO finds that LEAs have used ARRA funds primarily to retain jobs, preventing them from engaging in much reform activity.

For the report, GAO researchers collected and reported data from 16 states and the District of Columbia from May 27, 2010 to September 20, 2010, representing about two-thirds of available ARRA funds. According to the report, these 16 states and the District of Columbia had drawn down 72 percent ($18.2 billion) of their awarded SFSF funds, 46 percent ($3.0 billion) of their ESEA Title I, Part A funds, and 45 percent ($3.4 billion) of their IDEA Part B funds as of August 27, 2010.

Even with federal stimulus dollars from the ARRA, the GAO reports that 2010 overall funding for K-12 education was lower in 34 states than it was in 2009, including 12 of the 16 states they surveyed for this report. In a typical year, federal funding makes up an average of 8 percent of an LEA’s budget, while state funds account for an average of 48 percent and local funds account for an average of 44 percent of an LEA’s budget. With state and local contributions lagging, the additional federal support was not enough to keep budgets steady. According to the report, 56 percent of LEAs surveyed expect to face further budget cuts in the 2010-2011 school year. However, this analysis was completed before the U.S. Congress passed the Education Jobs Fund of 2010.

According to LEAs surveyed in the 16 study states, they used large portions of the ARRA funds they received through SFSF, Title I, and IDEA to retain jobs. But the most significant source of funds for job retention was from the SFSF. The GAO estimates that 69 percent of LEAs in the country used over half their SFSF monies to retain staff, while 27 percent used more than half of their Title I ARRA funds and 25 percent used more than half of their IDEA ARRA funds to save jobs. Because SFSF monies are less restrictive and can be used for most operation expenses, LEAs were more likely to use them for staff retention. In comparison, Title I and IDEA funds must be used to serve disadvantaged youth and students with disabilities, respectively.

While the majority of SFSF monies were used to retain staff, LEAs used significant portions of their Title I and IDEA stimulus funds to build instructional capacity without creating recurring costs. Forty-seven percent of surveyed LEAs spent more than 25 percent of their Title I ARRA funds on purchasing computer technology, purchasing instructional materials, and providing professional development for instructional staff. GAO also reports that 40 percent of surveyed LEAs spent over 25 percent of IDEA ARRA funds on these items.

In the face of deep cuts to state budgets and dwindling local tax collections, LEAs have had little choice but to use federal stimulus funds through the ARRA to carry out day-to-day activities and plug holes in their budgets. These economic struggles have prevented many school districts from engaging in the reform activities outlined in the ARRA’s “four assurances” including improving teacher distribution, data usage, standard and assessment quality, and support for struggling schools. While this outcome is not surprising, it suggests that schools across the nation have opted to use these federal funds to maintain the status quo rather than make significant changes to education.

Check back with Ed Money Watch as we continue to cover new developments in the ARRA and the recently passed Education Jobs Fund.

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.

At Ed Money Watch, we discuss and analyze major issues affecting education funding. In our Friday News Roundup, we try to highlight interesting stories that might otherwise get overlooked. These stories emphasize how federal and state policy changes can affect local schools and districts.

Proposed Oregon Budget Would Mean Special Education Cuts

University of Missouri Braces for Ten Percent Budget Cut

California Colleges and Universities Will Receive Federal Stimulus Funds to Fill Budget Holes

Texas Projected Budget Shortfall Reaches $21 Billion

Proposed Oregon Budget Would Mean Special Education Cuts
Oregon state legislators this week announced a budget plan for the 2011 fiscal year that would plug most of the state’s $155 million education funding deficit with $118 million from the new federal stimulus aid bill and $34 million in state reserve funds. The federal funds would come from the Education Jobs Fund which was passed by Congress this summer. Even with this additional funding, the state will still be about $3 million short and will need to make service cuts. Lawmakers say the cuts will come from the state’s special education budget, reducing services for the state’s School for the Deaf and early intervention special education programs. If the cuts are approved, Oregon will fall out of compliance with the federal Individuals with Disabilities Education Act which requires state to maintain special education funding at a certain level. The state stands to lose $23 million in federal funds in the following fiscal year. More here…

University of Missouri Braces for Ten Percent Budget Cut
University of Missouri System President Gary Forsee this week announced that the state’s university system could lose up to $500 million in state aid in fiscal year 2012, about a 10 percent drop. If proposed budget is approved, the university system will have to raise tuition to make up for the funding loss, ending the system’s three-year tuition freeze for Missouri residents. Missouri law dictates that tuition at the state’s public universities cannot increase faster than inflation in a given year unless a waiver is granted by the state Department of Education. No final decisions on the budget cut or the tuition increase will be made until the state publishes a draft budget in January of 2011. More here…

California Colleges and Universities Will Receive Federal Stimulus Funds to Fill Budget Holes
This week, California’s public colleges and universities announced that they will receive over $200 million for fiscal year 2011 in federal stimulus funds from the 2009 American Recovery and Reinvestment Act (ARRA). Officials said they will use the funds to admit more students, rehire faculty, and restore course offerings. The University of California and California State University will each receive $106 million in the final round of funding through the ARRA. The state’s community colleges will receive a total of $5 million, most of which will be used to restore support systems that help community college students stay on track to graduation. The federal stimulus funds afford some certainty for the colleges and universities as they wait for the state to pass a budget, which is currently stuck in a stalemate in the state legislature. More here…

Texas Projected Budget Shortfall Reaches $21 Billion
Texas state legislative staff this week announced a new estimate of the state’s budget shortfall, putting the shortfall at $21 billion for the coming two-year budget cycle. Citing lower-than-expected tax collections and unexpected growth in public school enrollment and Medicaid caseloads, staff raised the estimate from their previous projection of $18 billion. Democratic lawmakers in the state argue that Republican Governor Rick Perry failed to plan for falling revenues. However, a spokesperson for Governor Perry contended that the $21 billion estimate is not official and legislators won’t know the official amount until it is released by the state comptroller. More here…

States across the country are always trying to figure out how they compare to other states on educational outcomes. Which state does the best on the National Assessment of Education Progress? Which states spends the most on education? Which state gets the most return on each education dollar it spends? The Federal Education Budget Project, Ed Money Watch’s parent initiative, collects and analyzes data on exactly these kinds of questions. Today, we will take a closer look at how state graduation rates (as defined and calculated by the U.S. Department of Education) vary with state per pupil spending for the 2007-08 school year. While some states get a great return on their education investment – high graduation rates despite relatively low per pupil expenditures, some states seem to be getting very little for every education dollar, displaying low graduation rates and high per pupil expenditures.

One of the best ways to gain a quick understanding of the trends in education data is to create a scatter plot of the data of interest. This provides a visual depiction of the relationship between the two sets of data for each state where one data point of interest is plotted on the x axis and the other data point of interest is plotted on the y axis. This makes it easy to compare how each state fares on both indicators and to see trends in the data for all states. Below, we have created a scatter plot where per pupil expenditure is plotted on the x axis and graduation rate is plotted on the y axis.

Additionally, we have included a “trend line” in the scatter plot which shows the general pattern that the data points follow. The slight slope of the trend line suggests that states that spend more money per pupil tend to have higher graduation rates. For example, New Jersey has the highest per pupil expenditure in the country at $17,620 and the fifth highest graduation rate – 84.6 percent, following the trend. Other states follow the trend line almost exactly – North Carolina, Texas, Hawaii, Wyoming, and Rhode Island all fall very close to the trend line on the scatter plot, indicating that they are getting similar returns on their educational investments.

However, the small slope of the trend line indicates that the relationship between per pupil expenditure and graduation rate is not very strong. Several states do not follow the general trend, falling far below or far above the trend line.

In fact, there are many outliers (states that do not follow the overall pattern) on the scatter plot. These states typically have low graduation rates and high per pupil expenditures or high graduation rates and low per pupil expenditures. For example, Wisconsin appears to get some of the best returns on its education spending compared to other states – it has a relatively low per pupil expenditure ($10,791 – just over the national average) but the highest graduation rate in the country (89.6 percent). Iowa and Minnesota, with slightly lower graduation rates (84.6 percent for both), also buck the trend with lower than average per pupil expenditures ($9,520 in Iowa and $10,048 in Minnesota).

In contrast, New York has the second highest per pupil expenditure in the nation ($16,794) but one of the lowest graduation rates (70.8 percent). The disparity in the District of Columbia is even greater – it has the third highest per pupil expenditure ($16,353) but the second lowest graduation rate (56.0 percent).

Nevada, on the other hand, is an outlier of a different variety – it has both relatively low per pupil expenditures and an extremely low graduation rate. It falls significantly below the vast majority of states, suggesting that Nevada is getting worse returns on its education spending than any other state that spends a similar amount per pupil.

While using scatter plots to infer trends in education data is imperfect, it does reveal some important patterns and clearly identifies the states that do not follow them. In this particular case, the scatter plot makes it abundantly clear that states are not guaranteed a certain graduation rate depending on how much they spend per student. Instead, how a state (and school district, and school) spends its money matters significantly more than how much money it actually spends.

Since the first round of Race to the Top winners were announced in March of 2010, many stakeholders have voiced criticisms of the grant application scoring process. They have claimed that the scores are biased or extremely subjective and that the winning states are not always the ones that are most deserving of the money. But the Department of Education stuck with the complicated five reviewer process for the second round of applications, eventually awarding a total of 12 states (including the round one winners) a total of nearly $4 billion to support reform-oriented activities. In the aftermath of the second round of awards, many critics still argue that the scoring process was flawed – how else could deserving states like Louisiana and South Carolina lose out on grants while Rhode Island and the District of Columbia walked away with millions of dollars?

The American Enterprise Institute recently released a new report in its “Education Stimulus Watch” series that provides an alternative method for calculating each state’s Race to the Top Round One score. Instead of relying on reviewer scores for some of the measures, the AEI report uses independent evaluations of states’ reform criteria. Essentially, the study’s author, Daniel Bowen, believes that these independent measures created by non-political research and policy organizations more reliably quantify a state’s performance on seven of the 30 criteria on the Race to the Top rubric. Bowen considers reviewers’ ratings on these seven criteria, which make up for 18 percent (90) of the total 500 allowable points, more subjective than the remaining 82 percent.

As can be expected, the results of AEI’s alternative scoring method are significantly different from the final Round One Race to the Top scores. In fact, according to the AEI method, South Carolina should have received the most points of the 16 RttT Round One finalists – 380.6. However, South Carolina didn’t even receive a grant in Round One or Two. Florida, which came in 4th place in the actual Round One competition, would have come in second with the AEI method. While Florida did eventually win a Race to the Top grant, it had to wait until the second round when the grant size limits were more strict.

The actual Round One winners, Delaware and Tennessee, did not fare nearly as well under the AEI method. Delaware would have come in 8th place according to AEI, rather than 1st and Tennessee would have come in 4th.

Even more interesting, however, are the comparisons between the rankings for the AEI method and the actual final RttT winners. While it’s not a perfect comparison because many of the states’ applications changed dramatically between the two rounds, the AEI method suggests that several of the final winners should not have been awarded grants at all. For example, according to the AEI method Rhode Island, which actually won a grant in Round Two, should have come in 34th place in the competition based on its Round One application. Similarly, DC should have come in 35th place, and Hawaii should have come in 23rd.

The AEI method certainly validates some concerns about the subjectivity of the Race to the Top scoring method. Outside evaluations of state education reform and success may provide more reliable measures in such a significant grant competition. And the Department of Education could likely provide better guidance for the grant scoring process in the future. But the role of outside reviewers in the grant making process cannot be discounted completely. These expert reviewers provide nuance and unique knowledge to an otherwise opaque and complicated process.

At Ed Money Watch, we discuss and analyze major issues affecting education funding. In our Friday News Roundup, we try to highlight interesting stories that might otherwise get overlooked. These stories emphasize how federal and state policy changes can affect local schools and districts.

Texas Loses Out on Edujobs Funds

Missouri School Districts Left Waiting for Edujobs Money

Oklahoma Higher Education Costs Set to Rise

Texas Loses Out on Edujobs Funds
The U.S. Department of Education this week denied Texas’s application for $830 million for the recently passed federal Education Jobs Fund because Governor Rick Perry could not guarantee that the state would not cut funding for education in the next three years. Texas Congressman Lloyd Doggett inserted a provision in the Education Jobs Fund legislation specifically requiring Texas to make the three-year education funding guarantee. No other governor or state was required to make such a promise. Congressman Doggett says he wrote the provision to prevent the state from using the federal Education Jobs Fund money to replace state funds for education and fill in budget gaps in other areas of the state budget, as it did with federal stimulus funds from the American Recovery and Reinvestment Act of 2009. Governor Perry contends that making such a guarantee would violate the Texas constitution. More here…

Missouri School Districts Left Waiting for Edujobs Money
Missouri is set to receive $189.7 million in emergency federal education funds through the Education Jobs Fund, but school districts in the state won’t see that money in time to save teacher jobs in the 2010-11 school year. The money, which could save about 3,300 teacher jobs in the state, cannot be distributed until the state legislature approves the supplemental appropriation. This won’t happen until legislators return to begin their session in January of 2011. Missouri plans to distribute the funds through the existing school funding formula, which focuses funds on low-income school districts where local property tax revenues are lowest. More here…

Oklahoma Higher Education Costs Set to Rise
The Oklahoma State Regents for Higher Education this week approved an increase of up to 6.9 percent in costs at the state’s public higher education institutions. The report examined the cost of tuition, fees, textbooks, supplies, and room and board, and recommended cost hikes ranging from 1 to almost 7 percent. Undergraduate students at the state’s research universities will see a 4.9 percent increase in tuition and room and board, from $14,658 last year to $15,369 in the 2010-11 school year. In 2008-09, Oklahoma’s four-year public institutions were ranked 14^th in the country for affordability. Higher education officials in the state say that even with these increases, higher education remains affordable. More here…