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

February 4, 2008

In his FY 2009 (2009 – 2010) budget proposal, President Bush once again short changes education by proposing level funding for the Department of Education despite increasing mandates and rising costs for local school districts. The president’s budget proposal would level fund federal support for the U.S. Department of Education at $59.2 billion. This lack of funding investment shows a lack of understanding of the rising costs to educate America’s future generations.

These are AASA’s reactions to President Bush’s FY 2009 budget:

With the increasing expectations of local school districts under No Child Left Behind, AASA was pleased to see an increase of $406 million for Title I. Unfortunately, the impact of the president’s proposed increase is completely undermined by the policy proposals that are attached.

Currently, all states are allowed to take a four percent state set aside for school improvement providing it does not reduce the allocation for any local school district. Under the President’s proposal, the states would now be allowed to take their full state set aside regardless of whether it impacted funding allocations at the local level. Therefore, the proposed increase would be made meaningless by this policy change allowing states to take up the majority of the new money in the state set aside. This change is also on top of the proposed increase in the state set aside under the School Improvement grant program from five percent to 50 percent. Both of these changes will leave less funding available at the local level for implementing school improvement strategies.

In addition to the changes at the state level, President Bush’s FY 2009 would propose a policy change in the local allocation of funds. Under this proposal, local school districts would be required to spend a a more proportional share of their Title I allocation at the high school level . The current percentage share is only eight to ten percent. Given the lack of new real Title I funding for school districts, this would require them to redirect funding to their high schools at the expense of their middle and elementary schools. This entire proposal is meant to back up the policy change to add two new years of additional testing at the high school level by 2012 – 2013.

Both of these changes would reduce local decision making in how best to spend scarce federal resources when it comes to improving student achievement.

The President’s budget fails to show a commitment 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. Once again, the proposed budget would level fund the federal commitment to special education at 17 percent instead of the promised 40 percent, representing a $15 billion federal shortfall. This represents another retreat from the commitment that was restated in the 2004 reauthorization of IDEA to fully fund the federal share by the 2012 – 2013 school year. In addition, President Bush’s proposed level would be $10.2 billion below the level promised for FY 2009 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. 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.

President Bush has created an expected trend in his budget proposal that once again targets the major funding streams that 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 Perkins Career and Technical Education Act citing the lack of need and effectiveness 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 Perkins program is slated for elimination because the administration does not believe the program has an ability to improve academic performance for high school students and therefore is a waste of money.

In addition to the slated program eliminations, 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 66 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.

The FY 2009 budget proposes significant administrative changes in Medicaid in addition to the changes already being proposed by the Centers for Medicare and Medicaid Services to eliminate school-based administrative and transportation claiming. Under the budget proposal, CMS will be issuing regulations on the "free care" rule and strengthening their role as the payer of last resort as they push health care providers, including schools, to bill private insurance before Medicaid.

The "free care" concept is　controversial because it is not in the law, has changed to fit CMS desire to cut Medicaid, and　has been overturned by the HHS Departmental appeals board.　 Basically, CMS has　tried to state that if you provide　a free service　for anyone,　schools, hospitals or doctors cannot　seek reimbursement from　Medicaid for that service.　 This could have a dramatic impact on the ability of schools to claim for Medicaid expenses for direct service.　 Oklahoma tested this concept in front of the CMS Department Appeals Board.　 The DAB ruled in Oklahoma’s favor stating that "free care" did not exist and would need to be clarified within policy.　 This budget proposal seems to be CMS’ attempt to do so.

After five years of inclusion in the president’s budget, REAP was once again included at level funding in the FY 2009 proposal. Continued proposed funding has helped to ferment the importance of this program in the federal budget. REAP 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, including changing the Small and Rural Schools Achievement Program to a state grant program based on a per-pupil formula.

In light of increasing demands at the local level and continued federal funding, educators must make a strong push this year to increase REAP funding. 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.

Despite increasing pressures on local school districts and diminishing federal resources, the President once again proposed diverting scarce federal funding to private schools. As announced in his State of the Union address, President Bush is proposing $300 million for a new Pell Grant for Kids program. This proposal would grant kids in low-performing schools a per pupil allocation that along with their Title I and IDEA allocation could be used for tuition for another public school or a private school. This is not a new concept. Senator Lamar Alexander (R-Tenn.) proposed this concept back in 2004 and even held a hearing where AASA testified. There was not enough support to even get it out of the Senate committee. Either way, this is another private school voucher proposal.

In addition to the Pell Grants for Kids, the President proposes doubling the funding for the private school vouchers in the District of Columbia, known as the D.C. Opportunity Scholarships. At the same time as this pilot program is intended to be phasing out, the President is proposing expanding the overall program to increase access and increase the voucher allotment for private high school tuition. Both of these private school funding proposals threaten federal support for public education.

7. The FY 2009 proposal would completely revamp afterschool programs taking dollars away from school districts and instead placing them in the hands of parents and students.

Under President Bush’s 2009 budget proposal, he plans to totally revamp the federal role in afterschool programs. The current 21^st Century Community Learning Centers would be overhauled to create the 21^st Century Learning Opportunities. In addition to completely changing the operation, the new program would also be funded at close to $300 million below last year’s levels.

The new program would continue to flow dollars from the federal government to the states through a formula program. However, unlike current law where the state distributes grants to school districts, community organizations or other local providers, the new grant program would flow to private or public non-profit organizations that could oversee the establishment of a scholarship program. This scholarship program would give each student in a low-performing school or a high school with less then a 60 percent graduation rate a per-pupil allocation to take and use at an afterschool provider of their choice, including private providers. In a general sense, this is an expansion of supplemental services.

Either way, the new program threatens the ability of school districts to receive consistent federal assistance to create quality afterschool programming.