Legislation and Guidance
- Congress Panels Pass Budget Resolutions
- ED's Schoolwide Guidance Provides Key Insights
- With Farm Bill Still Stalled, Nutrition Takes Center Stage
News
Legislation and Guidance
Congress Panels Pass Budget Resolutions
Both the House and Senate Budget Committees passed their respective budget resolutions (BR) yesterday, taking an important step in the Congressional fiscal year 2009 (FY09) appropriations cycle. The Senate committee approved the BR on a 12-10 party-line vote, while the House committee passed its measure by a vote of 22-16. The Senate budget would allow $18 billion above the President's request for the twelve appropriations bills for FY09, and the House budget would top the Administration's request by $22 billion.
The House and Senate bills differ over paying for a way to fix the alternative minimum tax (AMT), which, if left unchecked, could cost middle class Americans millions. House Democrats want offsets for the cost of a one-year patch, but the Senate BR assumes there will be no offset. Both the House and Senate budget plans show surpluses in fiscal 2012 and fiscal 2013, but Senate Democrats plan to offer an amendment on the floor next week that would dedicate that surplus to covering the costs of extending tax cuts targeted to the middle class. At the same time, Senate leaders are assuming that the 2001 and 2003 tax cuts will expire in 2010, which the Congressional Budget Office (CBO) estimates would increase government revenue by $683 billion over five years.
The House BR allows for a $7.1 billion increase over the President's request and about 9 percent over FY08 for "function 500" spending, which covers the Departments of Labor, Health and Human Services and Education. The Senate BR allows for $5.4 billion over the President's request and an 8 percent increase over fiscal year 2008 levels. However, the BR is a non-binding resolution that sets spending caps for appropriators. As such, the levels in the BR do not necessarily reflect what will appear in final appropriations bills. If last year's budget battle is any indication, the caps may become irrelevant, depending on how Congress decides to approach White House concerns.
While the Senate budget resolution does not include reconciliation instructions, the House budget proposal would include the AMT patch in reconciliation. The House measure also includes instructions for the Ways and Means Committee to produce a bill that would reduce mandatory spending by $750 million over six years, which could be used to move pending Medicare legislation. Senator Judd Gregg (R-NH), the ranking member of the Senate Budget Committee, failed to add an amendment in the Senate that would require a reconciliation package that would produce net savings equal to 0.5 percent of total mandatory spending in the budget, or about $30 billion over five years.
The House is scheduled to debate the BR on the floor next week. The Senate may also bring its bill to the floor, depending on the schedule set by Majority Leader Harry Reid (D-NV). Congress begins its Spring recess next weekend, giving both chambers one week to pass their respective bills and negotiate a joint BR, giving appropriators final spending caps for the remainder of the session. Yet, since Congress usually aims to have a finished BR by mid-April, Democrats may take advantage of the recess to ensure full party support before bringing a final joint BR to each chamber for a final vote.
Resource
David Clarke and Liriel Higa, "Tax Cuts Front and Center in Senate Budget Committee's Debate," CQ Today, March 6, 2008.
ED's Schoolwide Guidance Provides Key Insights
Last month, the U.S. Department of Education (ED) released long anticipated guidance on the fiscal aspects of schoolwide programs. Schoolwide programs, as we know them today, have been a part of Title I since at least 1994. Yet, the fiscal aspects of the schoolwide requirements have remained something of a mystery as state education agencies (SEAs), local education agencies (LEAs) and schools have struggled to implement compliant schoolwide programs.
Section 1114 of the Elementary and Secondary Education Act (ESEA) authorizes eligible schools to consolidate federal, state and local funds to upgrade the entire educational program of the school. A school is considered eligible if it has at least forty percent poverty and it completes a compliant schoolwide plan in accordance with section 1114.
ED's new guidance finally provides insight into some of the trickiest schoolwide fiscal issues, such as the nature of consolidation, appropriate methods for accounting for consolidated funds and allowable charges in schoolwide programs. The guidance is included in the revised "Non-Regulatory Guidance on Title I Fiscal Issues" (Outside Source; DOC; 731 KB; 70 pp.)
- What is consolidation?
According to the new guidance, consolidating funds in a schoolwide program simply means that the school treats identified funds as a single "pool" of money. In other words, the school must identify which programs are considered consolidated in its schoolwide plan and how much each program will contribute to the schoolwide pool. Those identified amounts will be considered the consolidated pool and must be used on allowable schoolwide activities.
The new guidance clarifies that schools do not need to literally combine their funds into a single account in their accounting systems. Rather, the term "pool" is used conceptually to indicate that the identified funds will be used to pay the costs of the schoolwide program without regard to the original source of those funds.
Because consolidation is a conceptual idea (as opposed to a literal combining of funds) the importance of identifying, in the schoolwide plan, the programs that will make up the consolidated pool becomes critically important. Only those funds that are specifically identified in the plan will be considered "schoolwide funds" subject to the schoolwide flexibility.
Unfortunately, identifying programs is easier said than done. Under Title I, Part A, LEAs are required to allocate funds to eligible schools. Thus, each school receives an allocation to support its school-level costs. Outside of Title I, Part A, however, most federal education programs do not contain a process for allocating funds to individual schools. Rather, SEAs allocate funds to LEAs for LEAs to spend in accordance statutory requirements. While LEAs may choose to allocate, or set-aside, some of its funds to pay allowable school-level costs, many LEAs spend the funds at the LEA level and provide services to schools.
If a schoolwide program school does not receive a distinct allocation, how should it identity the funds to be consolidated? In 2004, ED released a notice on schoolwide programs that clarified consolidation also extends to services, materials, and equipment purchased with federal funds and provided to a schoolwide program school. Thus, schools should identify the services, materials and equipment they receive from the LEA as part of the schoolwide pool in order to make them part of the schoolwide program. Schools may need assistance from their LEAs to identify which services, materials and equipment were purchased with federal funds and are eligible for consolidation.
- How do you account for consolidated funds?
The new guidance provides several examples of how an LEA may account for funds in a schoolwide pool.
One option is to charge costs proportionally among the programs that make up the schoolwide pool. In other words, the program funds earmarked for the schoolwide pool may be used for any allowable schoolwide activity. Allowable schoolwide costs are then charged back to the contributing programs on a proportionate basis. In other words, if Title I, Part A contributed ten percent of the funds in the consolidated pool, 10 percent of the expenditures from the pool would be charged back to Title I, Part A.
Another option is to charge costs sequentially. In other words, charge costs to state and local funds first, and then to federal programs until those funds are exhausted. Charging costs to state and local funds first ensures SEAs and LEAs stay in compliance with federal cash management rules.
If consolidated funds remain unexpended at the end of the year, ED recommends that LEAs credit the unspent funds back to the contributing programs on a proportional basis.
- What are allowable costs and how do schoolwide programs prove that funds were spent on allowable costs?
One of the most important clarifications in the guidance concerns the concept of allowable activities in a schoolwide program. Under section 1114, eligible schoolwide program schools may consolidate their federal, state and local funds to upgrade the "educational program" of the school. A schoolwide program school must identify its educational needs in the schoolwide plan by conducting a comprehensive needs assessment and describing the specific strategies it will use to upgrade the educational program in accordance with section 1114. The new guidance clarifies that federal funds contributed to a schoolwide pool may only be used on the educational activities described in the schoolwide plan. Further, costs charged to federal funds must be consistent with the federal cost principles set out in Office of Management and Budget (OMB) Circular A-87.
Thus, in order to be allowable, a cost paid with federal funds in a schoolwide program must be: (1) related to an educational activity that is included in the schoolwide plan; and (2) consistent with federal cost principles.
Federal funds cannot be spent on operational costs such as building maintenance and repair, landscaping, and custodial services. These costs are per-se non-educational; thus, they are not allowable.
This again highlights the importance of the schoolwide plan. Costs are only allowable to the extent they are linked to the educational needs and strategies identified in the plan. It is important to ensure a schoolwide plan is sufficiently detailed to include the educational costs the school will charge to the schoolwide pool and that the school's budget is well aligned to the schoolwide plan.
The process of proving that a school has spent federal funds on allowable costs depends on how the school has chosen to consolidate its funds:
- If a school consolidates federal, state and local funds, the school does not need to trace its federal expenditures to allowable schoolwide costs. Once federal funds are consolidated with state and local funds they lose their identity as federal funds; thus, they do not need to be tracked to allowable educational costs. However, the school must demonstrate that, in the aggregate, there are sufficient state and local funds to pay for all of the non-educational costs charged to the schoolwide pool. Because federal funds lose their identity in this situation, any employee working exclusively on schoolwide activities and whose salary is charged to the schoolwide pool is not required to maintain any time and effort records.
This distinction between educational and non-educational costs is an important clarification. Title I, Part A contains a supplement not supplant provision, which generally means that Title I funds must be used only to provide additional services, staff, programs, or materials that could not be provided by the SEA or LEA absent the federal funds. In other words, federal funds normally cannot be used to pay for services, staff, programs, or materials that would otherwise be paid with state or local funds. ED has clarified that this restriction applies in schoolwide program schools, but that to demonstrate compliance an LEA simply must ensure that a schoolwide program school receives all of the state and local funds it would receive if it were not a Title I school.
The new guidance provides an additional nuance to this supplanting analysis. Under the new guidance, an LEA must not only provide a school with all of the state and local funds it is entitled to receive, it must ensure the school receives sufficient state and local funds it would otherwise need to operate the school in the absence of federal funds. Thus, LEAs will need to implement a methodology for identifying operational expenses within a schoolwide program school and ensure there are sufficient state and local funds in the schoolwide pool to pay for those expenses.
- If a school only consolidates its federal funds, and does not include any state or local money in the schoolwide pool, it is required to demonstrate the federal funds were spent on educational activities by tracing all costs charged to the pool to a specific allowable educational activity. Employees working exclusively on schoolwide activities and whose salaries are charged to the schoolwide pool must maintain a semi-annual certification. An employee who works on schoolwide and other activities must maintain a monthly personnel activity report.
- If a school operating a schoolwide program does not consolidate its Title I, Part A funds with any other federal, state or local funds, it is required to demonstrate the Title I funds were spent on educational activities by tracking all costs charged to Title I, Part A to a specific allowable educational activity.
Resource
Non-Regulatory Guidance on Title I Fiscal Issues (Outside Source; DOC; 731 KB; 70 pp.) (United States Department of Education: Revised February 2008)
With Farm Bill Still Stalled, Nutrition Takes Center Stage
Negotiators have not made much progress regarding the Farm Bill this week. The chairmen and ranking members of the House and Senate Committees on Agriculture, Nutrition and Forestry were able to unify against efforts by the House Ways and Means and Senate Finance Committees to gain jurisdiction over certain Farm Bill programs, but they remain at odds with the White House regarding total spending for the bill. Meanwhile, school nutrition gained the spotlight early this week during a Congressional hearing and a legislative action conference.
The current Farm Bill, set to expire on March 15th, will likely be extended through April, as Congress seems unable to reach common ground with the Bush Administration. Despite her very outspoken opposition to an extension, Speaker of the House Nancy Pelosi (D-CA) will allow for a month-long extension, but no more than that. Congressional leaders are growing exceedingly frustrated with the Administration over the Farm Bill negotiations. House and Senate leaders were able to reach a tentative agreement on spending that is $10 billion above baseline spending, $4 billion more than the level the White House supports.
Despite the White House's concerns, if Congress can find acceptable offsets, President Bush may still sign the bill when it gets to his desk. However, President Bush and Senator Harkin disagree on what constitutes an adequate offset. About $8 billion of the $10 billion in offsets would come from spending cuts on the Administration's list. Congressional aides say Administration officials have put their stamp of approval on those spending cuts, but are not likely to support any additional offsets in spending that would require new taxes.
While the Farm Bill sits in limbo, school nutrition advocates descended on Capitol Hill this week, laying out their priorities for the remainder of the legislative session. The School Nutrition Association's Legislative Action Conference made national nutrition standards a priority this week, but Congress seemed much more interested in the causes and effects of the recent beef recall. At a House Education and Labor Committee hearing on Tuesday, panelists came prepared to discuss efforts to ensure that all foods sold on school property are held to a high set of uniform nutritional standards. Members of the committee, however, continued to zero in on the beef recall, specifically grilling U.S. Department of Agriculture officials on the process by which they monitor the quality of beef processed in the United States. Some advocates fear that their other messages were lost in the clutter, but the majority of advocates who came to Capitol Hill spent much of their time meeting with their Representatives and Senators, making sure that the delegation is well aware of the nutrition priorities of the various states.
Resources
Catharine Richert and Adrianne Kroepsch, "Pelosi Won't Back Farm Bill Extension," CQ Today, March 6, 2008.
Geof Koss, "Key Farm Bill Players Cite Progress, Unity on Jurisdictional Rift," Congress Now, March 6, 2008.
News
CAP Looks at Local Control
While the Senate continues its deliberate drafting on Title I Part A and Title II Part A of No Child Left Behind (NCLB) Act, education pundits ponder the future federal role in education. It is all but certain that things will change, but how and when is quite speculative. Congressional Republican and Democratic leadership are both seeking a new approach without compromising the core principles of the law. This balancing act will be difficult and the challenge commands more focus than election year politics may allow. The quality of discussion in Congress, thus far in 2008, has been middling at best.
The discussion has been more interesting off Capitol Hill. For example, the American Enterprise Institute has been hosting many forum discussions of the changing federal role. On March 20th, the Education Sector is hosting a sold out forum on the evolving federal role in education, and, this week, the Center for American Progress released a thoughtful examination of the unique American "obsession with local control" in the new report Nationalize the Schools (. . .A Little)! (Outside Source) It is significant that, despite the political orientation of these organizations, all are coalescing around a more nationalized system of education accountability, an accountability system quite unlike the current NCLB regime.
In Nationalize the Schools (. . .A Little)! (Outside Source), Matt Miller makes his argument by providing the reader with a brief trip through history to identify the roots of local control."A look at the history of local control as the organizing principle of schooling suggests that an approach that made perfect sense in the 1700s is crippling American education today." It is crippling, in part, because there are 50 states and 15,000 school districts all setting their own standards and accountability measures, meanwhile the U.S. Department of Education (ED) is trying to coalesce these actions with NCLB's objectives. It is not working, argues Miller.
In lieu of the current efforts, Miller suggests that the federal role should not be to micromanage the methods of accountability and interventions. ED should, instead, work with states to set rigorous national standards, increase the federal investment and provide a guaranteed baseline for funding per pupil, and to invest in research and development in order to promote innovation in teaching and learning techniques. Miller asserts, generally, that the new federal role must transcend the out-dated tradition of local control. He believes that ED needs to get serious about a new national role in standards and finance that will help the nation meet the challenges of today's international economy.
The document is brief and, consequently, lacks many critical details, but was not designed for that purpose. Mr. Miller intended it to spark discussion in Washington and capture the attention of Congress. That is happening, albeit slowly, and it is an issue worth tracking in the coming months and years.
Resource
Matt Miller, Nationalize the Schools (. . .A Little)! (Outside Source) (Center for American Progress: March 2003),
