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					       FEDERAL STIMULUS BILL


•General Overview
•Impact of Specific Provisions

       Minnesota Department of Education
              February 18, 2009



                                           1
State Fiscal Stabilization Fund
General Overview:
• $53.6 billion available to states
• Approximately $821.4 million available to the state of
  Minnesota (this is an estimate only).
• Distribution to states: 61% is based on a state’s
  relative population of individuals aged 5-24 and 39% is
  based on the relative total population.
• Governor must allocate 81.8% of the state’s allocation
  for the support of “elementary, secondary, and
  postsecondary education and, as applicable, early
  childhood education programs and services.”


                                                            2
State Fiscal Stabilization Fund
Governor must use the funds first to:
1. Restore in FY 2009, 2010 and 2011 the level of state
   support to K-12 education to the greater of FY 2008 or
   FY 2009.
2. Allow existing State funding increases to support
   elementary and secondary education for FY 2010 and
   FY 2011 to be implemented if such funding increases
   were enacted pursuant to state law prior to October 1,
   2008.
3. Provide in FY 2009, 2010, 2011, the amount of funds
   to public institutions of higher education in the State
   that is needed to restore State support for higher
   education to the greater of FY 2008 or FY 2009 level.
   (This excludes tuition and fees paid by students.)

                                                             3
State Fiscal Stabilization Fund
If the Governor determines that amount of funds
   to cover #1-3 is insufficient, the allocation of
   #1-3 is proportionate to the relative shortfall in
   State support as described in #1-3.
After carrying out #1-3, remaining funds (if any)
   are provided to Local Educational Agencies
   (LEAs) based on their relative shares of
   funding under Title I, part A of the Elementary
   and Secondary Education Act.


                                                        4
State Fiscal Stabilization Fund
Allowable Uses by Local Education Agencies
  include any activities under:
  – Elementary and Secondary Education Act
  – Individuals with Disabilities Education Act
  – Carl D. Perkins Career and Technical Education
    Act
  – Modernization, renovation or repair of public school
    facilities, including modernization, renovation, and
    repairs that are consistent with a recognized green
    building rating system.



                                                           5
State Fiscal Stabilization Fund
Prohibitions on Funding for K-12 Education:
  – Payment of maintenance costs
  – Stadiums or other facilities primarily used for
    athletic contests or exhibitions or other events for
    which admission is charged to the general public
  – Purchase or upgrade of vehicles; or
  – Improvement of stand-alone facilities whose
    purpose is not the education of children, including
    central office administration or operations or
    logistical support facilities.



                                                           6
State Fiscal Stabilization Fund
The Governor must submit an application to the Secretary of
  Education. In the application, the Governor must assure:

   – Maintain effort for elementary and secondary education in FY
     2009, 2010 and 2011 at least at such level as FY 2006.
   – Maintain effort for higher education in FY 2009, 2010 and
     2011 for public institutions of higher education at least at such
     level as FY 2006.
   – Improve achieving equity in teacher distribution under ESEA
     section 1111(b)(8)(C).
   – Improve collections and use of data under America
     COMPETES Act section 6401(e)(2)(D).




                                                                         7
State Fiscal Stabilization Fund
In the application, the Governor must assure (continued):

   – Enhance the quality of statewide assessments and
     comply with rules related to inclusion of children
     with disabilities and limited English proficient
     students in statewide assessments and provide
     necessary accommodations.
   – Improve State academic content standards and
     student academic achievement standards
     consistent with section 6401(e)(1)(9)(A)(ii) of the
     America COMPETES Act.
   – Ensure compliance with section 1116(a)(7)(C)(iv)
     and 1116(a)(8)(B) of ESEA and support schools in
     need of improvement.
                                                            8
State Fiscal Stabilization Fund
Clarification is needed on definition of “State Support” for
  MOE calculation:

• If calculations are done using aid entitlements or appropriations
  excluding shifts, MN exceeds MOE requirement each year by
  over $500 million

• If calculations are done using appropriations including shifts, MN
  exceeds MOE requirement by only $23 million in FY 2010 under
  current law, and falls short of MOE by $1.176 billion under current
  Governor’s recommendation
    – FY 2006 base inflated by $607 million for shift paybacks
    – FY 2010 Governor’s recommendation based on November forecast
      reflects $1.252 billion shift reduction



                                                                        9
State Fiscal Stabilization Fund

                Maintenance of Effort Waiver

Eligibility Criteria:
•     State or local educational agency must have experienced a
      precipitous decline in financial resources.
•     State maintains education spending as a percentage of state
      budget from the preceding fiscal year.

Waiver:
•   If eligible, a state or local education agency may treat any
    funds received under the State Fiscal Stabilization Fund as
    non-federal funds for MOE requirements for one year only.



                                                                    10
State Fiscal Stabilization Fund
                State Incentive Grants
• $4.350 billion available for states (Secretary of
  Education may reserve 1% for administration).
• Governor submits application to the Secretary
  of Education
• Each state receiving a state incentive grant
  must use at least 50 percent of the funding to
  provide LEAs with sub-grants based on the
  Title I, part A formula


                                                      11
State Fiscal Stabilization Fund
                      State Incentive Grants
Secretary of Education will distribute grants to states that have made
                      significant progress in meeting:
   – Improve achieving equity in teacher distribution under ESEA section
     1111(b)(8)(C).
   – Improve collections and use of data under America COMPETES Act
     section 6401(e)(2)(D).
   – Enhance the quality of statewide assessments and comply with rules
     related to inclusion of children with disabilities and limited English
     proficient students in statewide assessments and provide necessary
     accommodations.
   – Improve State academic content standards and student academic
     achievement standards consistent with section 6401(e)(1)(9)(A)(ii) of
     the America COMPETES Act.
   – Ensure compliance with section 1116(a)(7)(C)(iv) and 1116(a)(8)(B)
     of ESEA and support schools in need of improvement.



                                                                              12
State Fiscal Stabilization Fund
                 Innovative Fund
Secretary of Education may reserve up to $650
  million to establish an Innovative Fund to
  recognize eligible entities.

Eligible entities:
   – Local education agency or
   – Partnership between a nonprofit organization and
     either one or more local education agencies or a
     consortium of schools.



                                                        13
State Fiscal Stabilization Fund
                    Innovative Fund
The Secretary must award entities that have:
   – made significant gains in closing the achievement gap;
   – exceeded the State’s annual measureable objectives for two
     or more years or have demonstrated success in significantly
     increasing academic achievement for all 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 as demonstrated by
     meaningful data; and
   – demonstrated that they have established partnerships with the
     private sector and the private sector will provide matching
     funds in order to bring initiatives to scale.




                                                                     14
State Fiscal Stabilization Fund
The work from the Innovation Fund must:
  – Allow eligible entities to expand their work
    and serve as models for best practices
  – Allow eligible entities to work in partnership
    with the private sector and the philanthropic
    community
  – Identify and document best practices that
    can be shared and taken to scale


                                                     15
Elementary and Secondary Education Act Funding
• Title I, Part A funding: $87 million (est.)
   – Formula based on census data
• Title II, part D funding: $5.8 million (est.)
   – Competitive to local school districts and used to enhance
     technology in schools
• McKinney Vento funding: $612,000 (est.)
   – Competitive to local school districts and based on number of
     homeless students in 2007-08
• School Improvement funding: $27.2 (est.)
   – Competitive to local school districts and assists schools in
     need of improvement




                                                                    16
 Federal Special Education Funding

• Education for All Handicapped Children Act of
  1975 (P.L. 94-142)
  – FAPE a legal right for all children with a disability
  – Authorized federal funding for up to 40% of
    national average excess cost of special ed


• Reauthorized in 1991,1997 and 2004 as IDEA


                                                            17
Federal Special Education Funding

• FY 2009 Allocations to Minnesota:

  – Part B, Section 611 (3-21)      $180.4 Million

  – Part B, Section 619 (3-5)       $   7.3 Million

  – Part C   (Birth – 2)            $   7.0 Million



                                                      18
  Federal Special Education Funding

• New Allocations under Economic Stimulus Bill
  Two-Year Total - FY 10 + FY 11 ($ millions):
•                   U.S.Total          MN (Est)
  – Part B, Sec 611   $ 11.3 Billion   $189.8 million

  – Part B, Sec 619   $ 400 Million    $ 3.2 million?

  – Part C            $ 500 Million    $ 5.8 million

                                                        19
  Federal Special Education Funding

Standard Rules for Use of IDEA Funds Apply To
  Increase in IDEA Funding Under Economic Stimulus
  Bill

• Funds Must be Used for Excess Cost of Special
  Education

• Maintenance of Effort (50% rule)

• Tydings Amendment (27 months to Obligate)

                                                     20
21
Federal Special Education Funding
 Part B, Section 611
3 part formula for allocating funds to LEAs:

• Base Funding –
  – $55.1 million (FFY 99 funding level)
  – allocated based on 1998 child count
  – for districts with newly opened, closed or
    significantly expanded charter schools, dollars are
    reallocated within district based on current year
    child count

                                                      22
Federal Special Education Funding
Part B, Section 611

Increase over Base ($108.8 million) is allocated:

• 85% on Total PK-12 enrollment
  – (October 1 MARSS + nonpublic enroll)
  – $92.5 million


• 15% on Poverty (Free and Reduced lunch count)
  – $16.3 million

                                                    23
Federal Special Education Funding

New Part B, Section 611 Funding

• $94.5 million per year for 2 years

• The portion allocated to LEAs would be distributed
  85% based on total PK-12 enrollment, and 15%
  based on poverty



                                                       24
Uses of Federal Funds


• Can only be used to pay the excess costs of
  providing special education

• Must be used to supplement not supplant
  state and local funds




                                            25
Uses of Federal Funds


•   Staff
•   Contracted Services
•   Staff Development
•   Supplies
•   Equipment
•   Early Intervening Services (15%)
•   Cannot be used to cover unreimbursed cost
    for staff funded with state categorical funds
                                                    26
    Requirements for Federal Funds

Maintenance of Effort:

• State-level maintenance of effort
    – Additional Federal $ do not reduce State’s obligation to maintain effort
    – State-level special education spending cannot be reduced below prior year
      level to offset increase in federal special education funding
    – MDE calculates based on:
        • 100% of State Aid Entitlement +
        • Direct SP Ed Expenditures by state agencies (e.g., Academies)

• LEA maintenance of effort
    – 50% rule Applies




                                                                                  27
Requirements for Federal Funds

LEA Maintenance of Effort Exceptions:

50% Rule
  –   LEAS may treat up to 50% of the increase in IDEA Part B
      funds over the previous year as local funds
  –   This reduces MOE requirement for one year only
  –   Interconnected with 15% for EIS provision



                                                            28
Requirements for Federal Funds

50% Rule Example:

                     FY 09     FY 10    FY 11     FY 12
Federal funds:         200      300       300       200
50% of Incr in Fed               50        --       --
State & local funds
 (min. for MOE) 1,000           950     1,000      1,000

•   LEA can treat $50 as local (e.g., supplant state $
    with federal $) in FY 10 only

                                                           29
Requirements for Federal Funds
Early Intervening Services - 15% Rule

  –   LEAs may use up to 15% of IDEA Part B funds,
      less any amount used for 50% rule, for EIS.

  –   For students in K-12 not identified as needing
      special education services but who need
      additional academic and behavioral support to
      succeed in a general education environment

                                                       30
Requirements for Federal Funds

LEA Maintenance of Effort Exceptions:

•   Decrease in enrollment of children with disabilities
•   Change in status of a high-cost student
•   Elimination of one-time expense (e.g., major
    equipment purchase)
•    Voluntary departure or departure for just cause of
    staff while maintaining FAPE

                                                           31
Requirements for Federal Funds


Under the Tydings Amendment:

• funds must be obligated within 27 months and
  expended within 30 months

  – Example: funds becoming available in SFY 2010
    must be obligated by Sept. 30, 2011, and expended
    by December 31, 2011.



                                                        32
Other Funding

• Head Start: $20.6 million (est) to
  Minnesota
  – Funding flows directly to local providers
• Impact Aid: $100 million to states
  – Eligible entities apply for funding




                                                33
New Reporting Requirements
New reporting requirements include:
  – Use and distribution of funds
  – Number of jobs saved or created
  – Tax increases averted because of funds
  – Progress in reducing inequity in the distribution of
    highly qualified teachers, implementing state
    longitudinal data system, developing valid and
    reliable assessments for ELL students and students
    with disabilities
  – Tuition and fee increases imposed and any actions
    taken to limit increases to students



                                                           34
New Reporting Requirements Continued

New reporting requirements continued:
  – Extent to which public institutions of higher
    education maintained, increased or
    decreased enrollment of in-state students
    including students eligible for financial aid
  – Description of each modernization,
    renovation and repair project funded, which
    must include amounts awarded project
    costs


                                                    35
Department Staff
Lisa Mueller
Program Finance
651-582-8225 or lisa.mueller@state.mn.us

Chas Anderson
Deputy Commissioner
651-582-8207 or chas.anderson@state.mn.us

Tom Melcher
Director, Division of Program Finance
651-582-8828 or
   tom.melcher@state.mn.us



                                            36

				
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