Prepared by Mary Kusler, Assistant Director of Government Relations, AASA

February 5, 2007

These are AASA’s reactions to President Bush’s FY 2008 budget:

1. Special Education state grants would be cut by $291 million under the President’s budget proposal, reducing the federal commitment to fully fund IDEA.

The President’s budget signals a strong retreat away from the goal of reaching the federal commitment to fund IDEA. In 1975, Congress promised to provide 40 percent of the National Average per Pupil Expenditure for every child in special education. For the first time, a president is proposing cutting funding to students with disabilities and increasing the funding shortfall on local school districts. The FY 2008 budget would represent just 16.5 percent instead of the promised 40 percent, representing a $15 billion federal shortfall. This is the lowest the federal commitment has been since FY 2002 and represents a decrease from the high of 18.6 percent in FY 2005. In addition, President Bush’s proposed level would be $8.7 billion below the level promised for FY 2008 in the IDEA reauthorization of 2004.

Once again, the burden for paying for special education will continue to be shifted to local districts, forcing school districts to raise local taxes. In many rural communities, the tax base is not sufficient leaving local school districts to make tough choices. Congress must fulfill its commitment to schools and students across the country. AASA strongly supports Congress reaching the 40 percent level through mandatory funding of special education. By funding IDEA on the mandatory side of the budget, school districts would be ensured the full federal commitment in just eight years.

Given the continually rising mandates for local school districts, AASA appreciates the proposed $1.1 billion increase for Title I. However, we remain concerned about what the actual increase would mean for school districts. First of all, local districts will not receive their increase until the state has reserved their 4 percent set aside for school improvement. Current law prevents states from reducing a local district’s Title I allocation in order to meet their school improvement set aside. With stagnant Title I funding for the past couple of years, few states have been able to reserve any funds. A considerable portion (up to half) of this proposed increase would be taken off the top at the state departments of education.

Secondly, the Department is using this Title I increase for high school reform and is seeking a change in language that would require school districts to spend 90 percent of new funding at the high school level. This would limit local districts’ ability to allocate Title I dollars where there are most needed and could lead to ineffective and wasteful use of Title I dollars. Decisions on how Title I should be spent ought to be made at the local level.

Finally, the entire $1.1 billion increase would be directed to local school districts through the targeted formula (just one of the four Title I formulas). This particular formula would focus new dollars on concentrations of poverty (in terms of both numbers of low-income students and percentages of poverty). Using this formula will target dollars to larger districts under the assumption that it is harder to serve large numbers of low-income students. It will also mean that some high-poverty rural areas with smaller student populations will be hurt by this decision.

With his FY 2008 budget proposal, President Bush once again targets the major funding streams that rural school districts count on year after year. The President proposes the elimination of Education Technology State Grants (Title II, Part D of ESEA) and the Education Innovative Block Grant (Title V of ESEA) citing the lack of need at the local level. Specifically, the administration acknowledges advances in technology in schools and claims there is no longer a need for a dedicated pot of funding. The Education Innovative Block Grant is slated for elimination because the Administration claims it is too flexible to track its use in local school districts.

In addition, the President once again proposes to cut funding in half for the Perkins Career and Technical Program. The funding cut for Perkins will mean massive cuts for local school districts as they work to meet the new requirements of the Perkins reauthorization of 2006. In addition to the cut for Perkins, the administration suggests a $100 million cut to the Improving Teacher Quality State Grants (Title II, Part A of ESEA) despite the continuing need to meet the highly qualified provisions. Finally, the administration has proposed a significant cut to the Safe and Drug Free Schools State Grants. This would represent a 70 percent cut to the program and would greatly affect local school districts’ ability to provide safe environments for learning. Congress should continue its commitment to the current agenda before creating new programs.

Under the FY 2008 budget, President Bush once again recommends the elimination of the Medicaid reimbursement for school-based administration and transportation costs established under IDEA. This is a continuation of the proposal first introduced in President Bush’s FY 2007 last February. This is a major reversal in federal policy and court precedent utilized since 1988. Elimination of this reimbursement opportunity once again increases the burden on local school districts to cover costs while denying school districts funding that is entitled to them under law. School districts should not be treated differently than health clinics and should be guaranteed reimbursement for Medicaid eligible services for Medicaid eligible children.

For the fourth year in a row, President Bush has included funding for REAP in his FY 2008 budget and recognized the importance of this critical rural education funding stream. This funding will help rural districts to overcome the additional costs caused by their geographic isolation, smaller number of students and increased poverty. Already, funding from this program has helped districts increase reading achievement through the hiring of reading specialists; update their technology through the purchasing of computers for students and hire highly-qualified teachers. The budget proposal also suggests the Administrations changes to the REAP program for ESEA reauthorization. Some of the proposed changes will undermine the original intent of the program. Further details are expected in the coming weeks. As other federal education programs are cut or eliminated, funding for REAP becomes even more important to help fill the funding shortfall in many rural districts. Rural educators should advocate for increased funding for REAP.

Despite the proposed cuts and lack of funding for federal mandates on local school districts, the President’s budget proposes two new voucher programs. These programs would divert $300 million from public to private schools and will take resources from rural schools. The first voucher, the Promise Scholarships, would provide a voucher to low-income students in low-performing schools to go to a private school. In addition to the voucher, students would be eligible to take their Title I and IDEA per student allocation. This would create a budgeting nightmare at the local level and cause the district even greater budget distress due to the voucher. The second voucher is based on the Opportunity Scholarships in the District of Columbia. This would be a grant to a public or private non-profit to operate a voucher program in a city. This expansion is suggested despite the lack of effectiveness shown by the D.C. private school voucher program. Federal education dollars should be targeted at public schools as the mandates currently increase at the local level.