Nov/Dec 2009

State News: August 2009



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Stimulus Aims to Keep Education Safe
CSG’s Guide to the State Fiscal Stabilization Fund

By CSG Washington, D.C., office staff
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There are Bonus Funds

A pot of $5 billion out of the total $53.6 billion for the Stabilization Fund is reserved for bonus grants to states for meeting key performance measures and for other purposes. This funding is authorized for State Incentive Grants and an Innovation Fund.
State Incentive Grants – The Secretary of Education is authorized to award, in the 2010 fiscal year, Incentive Grants to states that have made significant progress in equity in teacher distribution, establishing a longitudinal data system and enhancing the quality of academic assessments for English language learners and students with disabilities. The Secretary of Education will determine which states receive State Incentive Grants on the basis of the information provided in a state’s application.
Each state receiving funds through the State Incentive Grant program must use at least half of the grant to provide the state’s local educational agencies with subgrants based on their relative shares of funding under part 1 of Title I of the Elementary and Secondary Education Act for the most recent year.
Innovation Fund – The Secretary of Education can also reserve up to $650 million of the bonus dollars to establish an Innovation Fund, which includes academic achievement awards to recognize school districts, or partnerships between nonprofit organizations and state educational agencies, school districts or one or more schools that have made achievement gains. Awards will be distributed to allow eligible entities to expand their work and serve as models for best practices, to work in partnership with the private sector and the philanthropic community.
To be considered eligible for an award under the Innovation Fund, entities must have:
  • Significantly closed achievement gaps between certain groups of students;
  • Exceeded the state’s annual measurable objectives for two or more consecutive years or have demonstrated success in significantly increasing student academic achievement for certain groups of students;
  • Made significant improvement in other areas, such as graduation rates or increased recruitment and placement of high-quality teachers and school leaders; and
  • Demonstrated that they have established partnerships with the private sector, which may include philanthropic organizations, and that the private sector will provide matching funds in order to help bring results to scale.

States Must Submit Reports

  • A state receiving Stabilization funds must submit an annual report to the Secretary of Education describing:
  • The uses of funds provided within the state;
  • How the state distributed the funds it received;
  • The number of jobs the governor estimates were saved or created with Stabilization Funds received by the state;
  • Tax increases that the governor estimates were averted because of the availability of Stabilization Funds;
  • The state’s progress in reducing inequities in the distribution of highly qualified teachers, in implementing a state longitudinal data system, and in developing and implementing valid and reliable assessments for limited English proficient students and children with disabilities;
  • The tuition and fee increases for in-state students imposed by public higher education institutions during availability of Stabilization Funds, and a description of any actions taken by the state to limit those increases;
  • The extent to which public institutions of higher education maintained, increased or decreased enrollment of in-state students; and
  • Each modernization, renovation and repair project funded with Stabilization Funds.

GAO, Secretary of Education Must Evaluate

The Government Accountability Office is the group in charge of conducting the evaluations of the State Incentive Grants and the Innovation Fund, which must include the criteria used for the awards made, the states selected for awards, award amounts, how each state used the award received as well as the impact of this funding on the progress made toward closing achievement gaps.
The Secretary of Education must also submit a report to Congress no less than six months following the submission of state reports that evaluates the information provided in the state reports.

No Funds for Private Schools

The legislation provides that no recipient of Stabilization Funds shall use such funds to provide financial assistance to students to attend private elementary or secondary schools.

A Note on Waivers

The Secretary of Education may waive or modify any requirement of this title relating to maintenance of effort, for the purpose of relieving fiscal burdens on states and local educational agencies that have a precipitous decline in financial resources. In granting such a waiver, the Secretary of Education will determine that the state or school district will maintain the proportionate share of total revenues for elementary and secondary education as in the preceding fiscal year.

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