GAO Releases Report on Uses of Education Stimulus Funds

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.