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OBAMA SIGNS “LARGEST INVESTMENT IN EDUCATION IN THE NATION’S HISTORY”: Economic Recovery Legislation Includes Nearly $100 Billion for U.S. Department of Education

“We know America can’t out-compete the world tomorrow if our children are being out-educated today.”

Following House passage on January 28, Senate passage on February 10, and passage of a subsequent conference bill in both chambers, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law on February 17. During a signing ceremony in Denver, Obama called the package the “most sweeping economic recovery package in our history” and the “largest investment in education in the nation’s history.”

“We know America can’t out-compete the world tomorrow if our children are being out-educated today,” Obama said. “[This is] an investment that will create jobs building twenty-first century classrooms and libraries and labs for millions of children across America. It will provide funds to train a new generation of math and science teachers, while giving aid to states and school districts to stop teachers from being laid off and education programs from being cut.”

In an unusual turn of events, the House-Senate conference bill had a smaller price tag than the version either chamber had originally passed, coming in at a total cost of $787 billion. (The original House bill was $820 billion and the original Senate bill checked in at $838 billion.) To achieve this compromise, significant cuts were made to the House number for the state fiscal stabilization fund (money provided to governors to cover some of their budget shortfalls).

In total, the package will provide the U.S. Department of Education with nearly $100 billion over the next two years to save education jobs, send young people to college, modernize America’s classrooms, and advance education reforms. That number is down from the nearly $145 billion that the original House bill would have provided for the department. Still, considering that the U.S. Department of Education received $59.18 billion in discretionary funding in Fiscal Year 2008, the money included in the stimulus legislation amounts to nearly a doubling of the federal contribution for education.1

The largest portion of the education funding is the $53.6 billion state fiscal stabilization fund, of which $48.6 billion has been set aside for education and can be used to prevent cutbacks and layoffs, or be used for other purposes such as school modernization. Of the remaining $5 billion, $4.35 billion will go toward incentive grants to reward states for meeting certain education performance measures such as better distribution of highly qualified teachers and improved academic and graduation outcomes for students; the remaining $650 million will go toward an innovation fund to help create models of innovation to increase student achievement and prepare students for success after high school.

In a February 17 statement to the press, Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia, praised Congress for including the incentive and innovation funds and singled out several other provisions in the legislation that are targeted at secondary schools. Specifically, he highlighted language that requires 40 percent of the school improvement funds to be spent on middle and high schools, and a provision that ensures states implement new graduation rate regulations that require them to more accurately report the number of students who receive a high school diploma.2 Wise also said that the $250 million for Statewide Data Systems would help make it possible to follow student progress, determine the best ways to improve student achievement, and provide instruction targeted to students’ needs.

Several other education programs also received a significant funding boost with the enactment of the ARRA. The biggest winners were Title I, which will receive $13 billion, including $3 billion for school improvement grants, and special education, which will receive $12.2 billion. To put these numbers in perspective, annual fiscal year appropriations over the last two years averaged about $14 billion for Title I, $500 million in school improvement funds, and $12 billion for special education. A sampling of other programs that received funding as part of the economic recovery legislation include the Teacher Incentive Fund ($200 million) and Impact Aid ($100 million). The legislation also provides $17 billion to close the shortfall in the Pell Grant program and increase the maximum grant award by $500 to $5,350 in 2009.

“These funds will keep our teachers teaching and our students learning—the single best way to stimulate our economy in the short-term and in the long run,” said U.S. Secretary of Education Arne Duncan. “It’s absolutely a once-in-a-lifetime opportunity to lift American education to a new level—and make us more competitive in the global economy. In tough times like these, we have to tighten our belts—but not at the expense of our country’s children. Every child in America deserves the best education possible—and with this historic legislation, we will make good on that promise.”

Citing a University of Washington study showing nearly 600,000 education jobs at risk of state budget cuts, Duncan emphasized the urgency of distributing the funds to states on an aggressive timetable in order to avert layoffs. He said that his office will publish timelines and initial guidance before the end of February so that states and districts can plan accordingly. The department has set a goal of getting half of the money to the states within forty days and the second half within six months, conditioned upon receipt of a comprehensive reform plan.

The department has also said that it will post specific guidelines and a timetable for each funding stream included in the Act, including early childhood and state stabilization funds, special education and Title I funds, college affordability funds, and school modernization funds. It has already posted statutory language on its website along with state-by-state estimates to help school districts, public colleges, and universities plan budgets.

“This legislation will provide U.S. Secretary of Education Arne Duncan—who has a well-established commitment to reforming secondary schools—with the opportunity to advance significant reforms in education, including closing achievement gaps and improving academic standards,” Wise said.

More information on the ARRA, including funding totals and state-by-state estimates, is available at

An Alliance for Excellent Education document that provides more details on the provisions in the ARRA that impact secondary schools is available here PDF file icon.

1) The funding included in the stimulus bill for education will be in addition to the money that Congress appropriates for the U.S. Department of Education in the Fiscal Year 2009 omnibus spending bill (see the box below).
2) The 40 percent provision was included in report language, making it a preference of the Congress, not a legislative requirement. Enforcement of this provision will be at the discretion of U.S. Secretary of Education Arne Duncan.

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