FEDERAL STIMULUS BILL

1
FEDERAL STIMULUS BILL

• General Overview
• Impact of Specific Provisions
• Minnesota Department of Education
• February 18, 2009

2
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
  states relative population of individuals aged
  5-24 and 39 is based on the relative total
  population.
• Governor must allocate 81.8 of the states
  allocation for the support of elementary,
  secondary, and postsecondary education and, as
  applicable, early childhood education programs
  and services.

3
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 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.)

4
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.

5
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.

6
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.

7
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).

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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.

9
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 Governors recommendation
• FY 2006 base inflated by 607 million for shift
  paybacks
• FY 2010 Governors recommendation based on
  November forecast reflects 1.252 billion shift
  reduction

10
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.

11
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

12
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.

13
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.

14
Innovative Fund

• The Secretary must award entities that have
• made significant gains in closing the achievement
  gap
• exceeded the States 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.

15
Innovative 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

16
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

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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

18
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

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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

20
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)

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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

23
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

24
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

25
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

26
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

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Requirements for Federal Funds

• Maintenance of Effort
• State-level maintenance of effort
• Additional Federal do not reduce States
  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

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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

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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

30
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

31
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

32
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.

33
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

34
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

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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

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Department Staff

• Lisa Mueller
• Program Finance
• 651-582-8225 or lisa.mueller_at_state.mn.us
• Chas Anderson
• Deputy Commissioner
• 651-582-8207 or chas.anderson_at_state.mn.us
• Tom Melcher
• Director, Division of Program Finance
• 651-582-8828 or
• tom.melcher_at_state.mn.us