The deadline for state application for the federal Race to the Top passed this week. According to the U.S. Education Department, 40 states and the District of Columbia have applied.

Thursday's Argus Leader has some reaction to the state's application (read here).

Given three days and no opportunity to read the state's plan, apparently only 10 South Dakota schools signed on to support the effort. No local education association's lent their support.

State officials have been trumpeting the unique nature of South Dakota's application. Other states have adopted sweeping reforms based on U.S. DOE's priorities, but South Dakota's effort is narrowly defined to helping improve the success of the state's American Indian students.

… And now for some commentary …

For all the wrangling in Washington over hot-button issues, the Obama Administration has spurred significant education reform across the nation. States are signing on to merit pay proposals, promoting charter schools and strengthening monitoring systems (see EdWeek's report on state movements, premium access required). With states struggling to fill budget holes, Race to the Top incentives are being eyed by many as a way to keep local school budgets intact.

That said, the Race to the Top fund is exceeding expectations in ushering in the administration's education agenda. And they did it with incentives, not mandates. In fact, it's been so successful, the President will ask for an additional $1.3 billion to supplement the $4 billion already authorized.

The success may grease the wheels for the reauthorization of No Child Left Behind, which is rumored to be modeled after the Race to the Top qualifications. If states are already pushing reforms, it may tramp down opposition later.

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The House Education committee on Friday unanimously endorsed legislation to allow school districts to transfer some federal special education funding to other funds. The bill (HB 1020) is being pitched by the Department of Education.

If the flexibility passes the state house, districts can transfer local SPED funds in an amount not greater than 50 percent of its annual increase in federal IDEA dollars to any other fund. The funds could be used to carry out any activities allowable under the Elementary and Secondary Education Act. Districts that use the flexibility lose the safety net of applying to the extraordinary cost fund.

Tami Darnall, finance director for the education department, told lawmakers the spending flexibility would be useful for districts who are tying to spend special education funds authorized by the American Recovery and Reinvestment Act. The funds have a 2011 use-it-or-lose it clause, she said.

The Department of Education talked last summer about making the change via administrative rule, but that plan was panned after critics said the Legislature should weigh-in on the matter.

The idea met little resistance Friday. After asking a few clarification questions, members of House Education passed the legislation on a 14-0 vote.

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Gov. Rounds briefly mentioned the possibility during his state of the state address that a second federal stimulus package may ease the state's budget woes.

The governor said an amendment to pending federal health care legislation may provide states with more cash to fulfill the state's Medicare and Medicaid obligations. The passing mention didn't include any estimated numbers, but Gov. Rounds did say that the state can't count on relief from Congress.

In December, the U.S. House of Representatives passed a $174 billion measure, titled the Jobs for Main Street Act, which features several streams of aid to local and state governments, including $23 billion to prevent cuts to K-12 and higher education. The money would come as an extension to the State Fiscal Stabilization Fund created under the American Recovery and Reinvestment Act of 2009. The U.S. Senate is expected to consider the legislation in the coming weeks.

Gov. Rounds didn't mention the Jobs for Main Street Act specifically, but referred to Congress' efforts to create “Stimulus II.”

Much like he did last year, the governor cautioned lawmakers on relying on federal stimulus dollars to balance the state's budget. Instead, he called on legislators to “maximize the recovery” by passing a balanced budget with little reliance on the state's two reserve accounts.

If federal relief did come, Gov. Rounds said, the state would likely use the money instead of spending down the state's reserves.

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On Friday, Duncan planned to outline some ideas on how schools can use the money in a speech at theUniversity of Northern Iowain Cedar Falls.

"You can identify your best teachers and pay them to coach their colleagues who are having trouble," Duncan said in prepared remarks. "You may have to scale this down after two years, but it can really help your younger teachers get up to speed."

Duncan also recommended adding afternoons, weekends andsummer daysto the school calendar: "Our school day, week and year is too short as it is. Many kids just need more time on task," he said.

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The state's strategy to use stimulus funds to prevent cuts and balance the state's budget became a clearer Tuesday, as members of House Appropriations approved nearly $40 million in cuts to education for the current year.

The cuts, which will be replaced with federal stimulus dollars, ensure the state will not go through with the governor's plan to spend nearly $60 million in state reserves to balance the state's budget.

The action came during a House Appropriations Committee hearing on SB 50, legislation that will revise the state's appropriation act from the 2008 legislative session. Lawmakers adopted a budget amendment, labeled 50bc, that reduces the current year state aid to education spending by nearly $21 million.

The legislation is part of a broader effort to use more than $55 million in federal stimulus dollars, in place of state general funds, to support the state's budget for FY09.

State budget chief Jason Dilges explained the process to members of the Appropriations committee, saying that the concept had to be discussed carefully.

“It's $55 million in general funds we never had,” Dilges said, referring to falling state revenues. “It will be an expense we don't have to find reserves for.”

According to Dilges, the stimulus package will allow the state to eliminate the state's structural deficit and maintain state reserves through FY11.

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Two pieces of legislation aimed at changing the index factor have stalled in response to fears that changing the state's funding formula would jeopardize access to federal stimulus dollars.

Lawmakers have stripped SB 106 and HB 1254 of their original content, leaving the simple phrase “education shall be enhanced” remaining. In each case, lawmakers were responding to Department of Education requests to kill legislation which they say will prevent South Dakota from accessing more than $100 million in state stabilization funds.

The bills were amended Monday and Tuesday during education committee meetings in the House and Senate, clearing the way for possible House-Senate negotiations in the final day of session.

Department of Education officials cautioned lawmakers against making changes to the law, telling legislators that their informal conversations with advocacy groups suggest no changes can be made to the formula. Other states are trying to attempt formula changes, but have been told they can't, they said.

“Everything we have gotten form the feds say that the existing formula is king,” said Education Secretary Tom Oster. “I know that we're fine if we spend money through the existing formula.”

Not all lawmakers are convinced that changes can't be made. Rep. Ed McLaughlin, R-Rapid City, and Sen. Dave Knudson, R-Sioux Falls, both challenged the department's interpretation of the law and said more information is needed before the state can proceed.

Sen. Knudson, whose effort to change the index factor fizzled Monday in House Education, admitted that index factor language had come down with a case of “stimulitus” – a condition that he said has impacted several bills this year.

Worried that changing the index factor would hurt South Dakota's chances of gaining stimulus funding, Sen. Knudson asked committee members to amend SB 106 to implement the index factor change for FY12, one year after stimulus money runs out.

Lawmakers resisted that notion, arguing that the state can't afford to offer school districts additional dollars than what is currently permitted. Members of House Education then stripped the bill of its contents before passing the legislation to the House floor.

Sen. Knudson returned the favor Tuesday in Senate Education, hogging House Education Chair Rep. Ed McLaughlin's index factor legislation, HB 1254.

Both pieces of legislation will likely head to conference committee, but it's unclear whether the issues can or will be resurrected this session.

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Lawmakers officially broke ranks with Gov. Rounds' recommended budget two more times Monday, meaning four of the governor's proposals to balance the state budget have now fizzled-out during the legislative process.

Saying the changes could disqualify South Dakota from receiving federal stimulus dollars, legislators dismissed the elimination of increasing and decreasing enrollment payments and killed legislation to freeze property tax levies.

House Bill 1067, which was Gov. Rounds' bill to eliminate aid for districts with enrollment fluctuations, was amended heavily in House Education to remove any reference to the funding cut. The bill now deals with a school board governance issue.

Members of House State Affairs killed HB 1068 – the bill that the governor introduced to freeze property tax levels at FY2009 levels. The bill would have saved the state more than $6 million.

In each case, Administration officials asked lawmakers to defeat the legislation. The issues may resurface once more is known about the federal stimulus package, they said.

The Senate has already passed measures to restore funding for the Birth-to-Three program and to remove the sunset on sparsity aid – two pieces of legislation that were counter to Gov. Rounds' proposed budget.

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Though lawmakers seem to agree that federal stimulus legislation will significantly impact the state's budget process, state officials are keeping quiet about how the plan would impact K-12 education.

Gov. Mike Rounds told reporters during his week-end press conference that lawmakers can “incorporate into our budget” an estimated $100 million in stimulus money earmarked for education. The money could be used to “reinstate some of the cuts,” Rounds said.

ASBSD has been waiting for state officials to detail their stimulus plans, hoping to gauge how much of the $100 million in “state stabilization” money would be used to restore cuts to K-12 education.

Earlier in the week, Senate Majority Leader Dave Knudson said that the stimulus money could impact formula cuts, such as increasing and decreasing enrollment aid. Programs like birth-to-three and the TCAP could also be affected, he said.

During a press conference today, Sen. Knudson said bills that will freeze special education funding and revise the index factor have a 75 percent chance of being re-worked.

According to the stimulus provisions, money allocated in the state stabilization fund must first be used to restore K-12 and higher education cuts. Any remaining money would be sent to K-12 schools based on their percentage of Title I student population.

Gov. Rounds' revised budget made nearly $20 million in cuts to K-12 education funding and services. Cuts were also made to higher education, but to a lesser degree.

There is still question whether non-formula programs, such as ESAs or TCAP, will be funded. The governor has continued to press lawmakers to balance the structural deficit, and has yet to publicly support any K-12 programs he cut as a part of his revised budget.

There's also uncertainty as to how much – if any – of the state stabilization fund would remain after cuts are restored. Money that flows to K-12 districts through the state stabilization fund can be used at the local districts discretion, and may be used to modernize and repair facilities.

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• 61% of these funds will be distributed based on a state’s relative population of 5 to 24 year olds and 39% of these funds will be distributed based on a state’s relative total population
• Each state must first use these funds to restore state funding for K-12 education to its FY 2007-2008 level.
• States must then restore higher education funding to its FY 2007-2008 level.
• If there is any remaining funding after restoring funds to their FY 2007-2008 levels, it must be distributed to school districts based on their share of Title I funding.
• For states to qualify for this funding, they must maintain support for K-12 and higher education at least at the level provided in FY 2005-2006.

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Legislators and state government officials will attempt to appropriate federal stimulus dollars during the regular session, according to testimony offered Wednesday in the Senate State Affairs Committee.

Assuming normal business of a 40-day session, lawmakers will have approximately 12 legislative days to chart a course for stimulus funding – a task Administration officials and lawmakers acknowledge will be difficult.

The commentary came during a hearing on SB 197, a measure that would have established a special stimulus commission to provide recommendations on how to allocate more than $100 million in stimulus funds earmarked specifically for education.

Neil Fulton, the governor's chief of staff, opposed the legislation, saying the commission wasn't needed because the governor plans to have the Legislature weigh in on stimulus spending through the appropriations process.

Fulton told lawmakers that there would be “discretionary funds of consequence” within the education portion of the stimulus aid, suggesting to lawmakers that they may want to stretch that funding through the state's 2010-11 budget year.

Lawmakers rejected the idea of the commission, saying they hope to handle the stimulus package during the course of the regular session.

Sen. Dave Knudson, who voted against the proposal, said other pieces of legislation can be reworked to include stimulus appropriations.

“This may well have big implications for things such as special education, the TCAP program and the various pieces of our funding formula,” Knudson said.

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• A district-by-district breakdown of Title I and IDEA grants (PDF) REFER US DOE
• A state-by-state breakdown of grants to states (PDF) REFER TO US DOE
• A one-sheet explanation of 'school modernization' funds provided through state stabilization funding (PDF).
• A one-sheet explanation of 'investing in excellent teachers' provided through the federal stimulus package (PDF).

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Cuts to K-12 education may have to be restored if South Dakota wants access to federal stimulus money, Gov. Mike Rounds told reporters during a weekly press conference in Pierre.

The governor said that he's yet to receive complete information on how much the state would receive form the $789 billion stimulus or what types of strings would be attached the federal legislation. More information would be available in 2 to 3 days.

“We don't know what's in the fine print,” Gov. Rounds said. “We're hopeful that there's enough leeway that it will actually help us get through the short term problems.”

The structure of the federal legislation has shifted in recent days and the governor is receiving a continual stream of information – as many as 20 updates an hour, he said – that provide additional information on how federal money would be distributed.

When asked about education funding in the federal stimulus, the governor spoke cautiously.

“We understand most recent legislation lots of strings attached to it,” said Gov. Rounds, adding that recent version of the bills require that states fund K-12 education at the FY08 levels in order to access federal funds. If that's the case, the governor said he would “lobby the legislature not to increase funding, but to leave it at its current level.”

During his hour-long press conference, the governor generally resisted to release number, except to say that the plan would offer $183 million for road construction projects.

He did mention that the legislation included funds to help South Dakota make its share of federal Medicaid payments – relief that would free up state general fund money, the governor said.

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The U.S. House of Representatives are set to vote Friday on the $790 billion American Recovery and Reinvestment Act of 2009, action that follows detail-oriented discussions centering on aid to K-12 education.

Open Forum is awaiting specific details, but you can view the summary of the House-Senate compromise here.

For now, read EdWeek's report on the stimulus provisions:

The compromise agreement, worked out by a House and Senate conference committee, would provide $53.6 billion for a state fiscal-stabilization fund, including $39.5 billion that local school districts could use to avert staff layoffs and programmatic cutbacks and to pay for school modernization, among other purposes.

…and…

In addition, the fund would include $8.8 billion that states could use for education and for modernization, renovation, and repair of public schools and higher education facilities, but could also direct to public safety and other pressing needs.

The $39.5 billion of the state stabilization fund for schools would first have to be used by states to “backfill” any cuts they have made to both K-12 and higher education, up to 2008 or 2009 levels. If a state didn't have enough money to make K-12 and higher education whole, the money would have to be spread proportionally between the two.

Money in the stabilization fund would flow to states based in part on their populations of 5- to 24-year-olds. Any leftover money after backfilling cuts would flow to K-12 districts based on existing Title I formulas, and could be used for a host of purposes, including school modernization. New construction is not envisioned, congressional aides said.

… and …

The agreement would also provide $10 billion for Title I programs for disadvantaged students, and $3 billion for Title I school improvement grants. And it would provide $11.7 billion for state grants for special education.

Read the whole article here.

The National School Board Association is working to provide a more detailed summary of the legislation, and NSBA has been an extremely valuable resource during stimulus discussions. Information and resources from NSBA is an ASBSD membership benefit.

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As of 11:00 a.m., the House Rules Committee does not have the conference committee report. NSBA isworking with the Speaker's Office oninformation for asummary and specific examples that can be referenced in remarks.

The House may vote on the conference report late today or tomorrow. However, the Clerk does not have it scheduled yet.

As soon as we can confirm specific funding allocations for education and any related provisions, we will forward an update.

THESE ARE VERY PRELIMINARY DETAILS AND MAY NOT RELFECT THE FINAL AGREEMENT WHICH IS BEING PREPARED BY CONGRESSIONAL STAFF:

For now, we are told that the agreement retains funding for IDEA, Title I, and a portion of state fiscal stabilization funding for education.There is reportedly funding for school infrastructure repairs and modernization.However, we do not know if this is a separate allocation or part of the state stabilization funding.Details regarding flexibility and use of funding are not available now.

Open Forumwill keep you posted as soon as we know more.

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Negotiations on the American Recovery and Reinvestment Act wrapped up Wednesday, when Congressional leaders and Obama aides settled on a compromise legislation totaling $789 billion.

According to CNN, the final compromise includes between $6 and $9 million slated to modernize and repair schools – about half the amount included in the original House version. The senate version didn't include any funding for K-12 facilities.

The agreement also includes $44 billion in aid to states, about $5 billion more than the Senate version but $35 million less than the House stimulus. At this point, it's unclear whether any money flowing to states would be set aside specifically for K-12 education.

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President Barack Obama is calling on Congress to restore K-12 education funds cut under a Senate stimulus plan, the Washington Post reports.

His comments came during a town hall meeting in Elkhart, IN, in which the President urged lawmakers to act quickly to pass a stimulus plan. About 1,700 people packed into a high school gym heard President Obama say education will play a central role in any economic recovery.

The Senate is reportedly considering passage of an $827 billion stimulus plan that calls for more tax cuts and less government spending (read more here) than legislation that passed in the House.

According to the Post report, President Obama didn't specify how much K-12 funding should be restored, but many believe the president was referring to nearly $14 billion in school construction funds included in the House's version of the stimulus.

Open Forum will keep you updated as we learn more.

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United States Senators reportedly agreed Friday night on an $827 billion federal stimulus package.

The deal, which will be considered in the Senate this week, sets the stage for negotiations between the House and Senate. A final package could be delivered to President Obama before the President's Day holiday.

Congressional leaders say the House and Senate plans overlap considerably.

“Our bill is 90 percent the same as the House,” Sen. Claire McCaskill, D-Missouri, said during NBC's Sunday morning political affairs show Meet the Press.

Funding for Title I and IDEA federal education programs survived the Senate's scalpel. Late last week, ASBSD learned that a group of Senators were attempting to cut federal education aid in half, but the compromise will invest $12.4 billion in Title I and $13 billion in IDEA for FY09 and FY10 – a total that closely mirrors the House's effort.

The Senate plan scuttles 21st Century Classrooms funding – a $14 billion line item in the House's plan that provided more than $60 million to upgrade South Dakota K-12 facilities.

According to political news web site Politico, Senate Republicans were reluctant to invest in K-12 facilities, arguing the move would expand the federal government's reach into an area that has traditionally been a state and local government matter.

The Senate plan also nixes a host of federal K-12 spending that would fall under the discretion of the U.S. Department of Education, including $300 million for teacher quality grants and $250 million to modernize state data systems.

Some K-12 education cuts could fall in a category of spending Senators said should be included in the federal budget and not in a stimulus bill.

“The 10 percent difference was some of the cuts that we made in some of the things that could be put in an omnibus appropriations bill or an appropriations bill,” said Sen. McCaskill.

The biggest philosophical shift between the House and Senate stimulus plans is money allocated for fiscal relief to state governments. The House plan included $79 billion, which would have delivered nearly $170 million to South Dakota. The Senate version includes $39 billion in direct aid to states.

Money flowing to states could be a point of negotiation between the House and Senate, according Rep. Barney Frank, D-Mass, who supports in more aid to states.

“The wasteful spending that my colleagues are talking about, money to go to the states to stop from laying off cops and firefighters, money to help keep teachers going - those are jobs,” Rep. Frank told his fellow lawmakers on Sunday's Meet the Press. “There seems to be this notion that if you hire someone to do something useful, that somehow becomes social spending that doesn't count.”

It remains unclear how South Dakota might use federal stimulus aid.

Gov. Mike Rounds has suggested that federal one-time money won't be used to close the state's current budgetary gaps. He has asked lawmakers to minimize a structural deficit – a figure he says tops $80 million – without relying on federal dollars.

The governor has he will likely call a special session once a stimulus deal is reached. According to Gov. Rounds, the state may use the money to replenish state reserves weakened from the current budget shortfall.

ASBSD will have more on the stimulus plan as it develops.

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Brandon Valley Superintendent Dave Pappone talks with KELO news about the U.S. Stimulus making its way through Congress (see an overview here). Pappone says that funding from IDEA will help offset Gov. Rounds' proposal to freeze K-12 special education funding.

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Senate Appropriations and Finance Committees are scheduled to consider economic stimulus legislation on Tuesday, January 27, at 10:30 a.m. Please contact your senators who are members of the Appropriations and Finance Committees to urge their strong support and vote in favor of the economic stimulus legislation.

Visit NSBA's Legislative Action Center for background, speaking points, and a sample letter to send to your Senator.

The Senate's Appropriations Committee's proposal for the “American Recovery and Reinvestment Act of 2009” would provide funding for K-12 education programs, including school infrastructure repairs and modernization ($16 billion), Title I grants for disadvantaged students ($13 billion), special education ($13 billion), and education stabilization/fiscal relief (at least $39 billion).

The Senate Finance Committee's legislative provisions would increase bond allocations for Qualified Zone Academy Bonds (QZABs) and expand the use of QZABs for school repairs and modernization, allowing an additional $1.4 billion of issuing authority to state and local governments in 2009 and 2010.QZABs can be used to finance school renovations, equipment purchases, developing course material, and training teachers and personnel. Current bond authority for the QZAB program is $400 million annually.

The Senate Finance Committee would also create a new category of qualified school construction bonds that would provide $10 billion in bond authority for school construction projects in 2009 and 2010.

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A $825 billion federal stimulus package working its way through the U.S. House of Representatives could provide South Dakota districts relief in meeting the demands of No Child Left Behind (NCLB) and the Individuals with Disabilities Education Act (IDEA).

The House Appropriations Committee reported the “American Recovery and Reinvestment Act of 2009” Wednesday night on a 35-22 vote, clearing the way for Congressional sub committees to consider the various sections of the bill.

The legislation provides needed increases for key education programs and school districts nation wide, including two-year boots in Title I and IDEA funding for local school districts.

• Read a summary of the American Recovery and Reinvestment Act of 2009 by clicking here.
• Find out how much South Dakota schools would receive in Title I, IDEA and school construction by clicking here.

According to the National School Board Association, major components of the stimulus package include:

• $41 billion to local school districts through: Title I ($13 billion), IDEA ($13 billion), a new School Modernization and Repair program ($14 billion) and the Education and Technology program ($1 billion);
• $79 billion in fiscal relief to states, including $39 billion for K-12 and higher ed through existing state and federal formulas, $15 billion in bonuses for meeting key performance measures, and $25 billion for other high priority purposes - which can include education; and
• An extension of school-based Medicaid Services reimbursement to Oct. 2009.

State lawmakers have approached the concept of the federal stimulus with caution, suggesting that the state's budget concerns must be solved without the help of the federal government.

Despite the tempered approach, the stimulus could offer significant relief to the state's troubled general fund, either through unrestricted block grants or by changing the Medicaid match rate.

When asked about the stimulus package, Gov. Rounds said he may have to call a special session if the funds are released after the Legislature adjourns. He also said lawmakers could chose to allow the one-time federal stimulus to accumulate in reserves.

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