american recovery & reinvestment act of 2009

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American Recovery & Reinvestment Act of 2009

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Overview & Roadmap

• David A DeSchryver, Esq. Legislative Counsel at Brustein & Manasevit

• Roadmap– ARRA 2009 overview

– General Provisions

– Stabilization Funds

– Targeted Funds

– Questions & Discussion

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Resources:

• http://www.recovery.gov/

• http://www.ed.gov/policy/gen/leg/recovery/index.html

• “Recovery Act Guidance,” http://www.whitehouse.gov/omb/recovery_default/

http://www.recovery.gov/

http://www.ed.gov/policy/gen/leg/recovery/index.html

http://www.ed.gov/policy/gen/leg/recovery/index.html

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ARRA 2009: Overview

• The Act will lay the foundation for a generation of education reform by encouraging states to adopt college and career-ready standards and assessments, to build robust data systems that allow districts to better track the growth of individual students, to turn around failing schools and embrace innovative new learning models, and to invest heavily in teacher and principal quality initiatives that both elevate the teaching profession and help recruit and retain great teachers and principals for underserved schools and communities.

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Direct Education Funding - $77 Billion

• $48.3 billion in state stabilization funds.• $8.8 billion is targeted to "public safety

and other government services,” which may include including K-12 or higher education assistance or facilities modernization.

• $10 billion for Title I.• $3 billion for Title I school improvement

programs, 1003(g).• $12 billion for IDEA.

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Direct Education Funding - $77 Billion

• $5 billion State incentive grants to be distributed on a competitive basis to states. – This includes $650 million to fund school systems and

non-profits with strong records of innovation and improving student achievement.

• $5 billion for Early Childhood, including Head Start, early Head Start, Childcare Block Grants, and programs for infants with disabilities. (Includes HHS programs)

• $2 billion for other education investments, including pay for performance, data systems, teacher quality investments, technology grants, vocational rehab, work study, and Impact Aid

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General Provisions

• Period of Availability: All funds appropriated under this Act shall remain available for obligation until September 30, 2010, unless expressly provided otherwise in this Act.

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General Provisions

• Buy American: No funds may be used for construction, alteration, maintenance, repair of a public building or public work unless all of the iron, steel, and manufactured goods in the project are produced in the US. – There are exceptions.

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General Provisions

• Wage Requirements: All laborers and mechanics employed by contractors and subcontractors on projects funded directly by or assisted in whole or in part by and through the Federal government pursuant to this Act shall be paid not less than the wages prevailing in the locality for similar projects as determined by the Secretary of Labor, in accordance with the Davis-Bacon Act.

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General Provisions

• Relationship to other appropriations: Stimulus + FY09

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General Provisions

• Special contracting provisions: To the maximum extent possible, contracts funded under this Act shall be awarded as fixed-price contracts through the use of competitive procedures.

• Any contract awarded with such funds that is not fixed-price and not awarded using competitive procedures shall be posted in a special section of the website established in section 1526.

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Stabilization Funds: 2 pots• Of the $53.6 billion, after reservations, $48.3 billion is

dedicated for the support of state budgets– 81.8% or near $39.5 billion immediately earmarked for

restoring education funding to the greater of the level in FY08 or FY09.

– The recipient Governors must FIRST use the 81.8% of their allocation for filling shortfalls for

– elementary, secondary and – post secondary and, as applicable, – early childhood education programs and services.

– If there is a shortfall in both, the Gov. has to allocate proportionally across the accounts.

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Stabilization Funds: 2 pots

• 18.1% or near $8.8 billion in funding (from the $48.3 billion) is for public safety & other govt. services, which may include:– assistance for elementary & secondary, and public

IHE

– Modernization, renovation or repair of public school facilities and IHE

– including M/R/R that are consistent with a recognized green building rating system (not required).

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Stabilization Funds: Fiscal

• Timing: Stabilization funds will be distributed as soon as possible, pending completion of the Governor’s application guidelines by USED.

• Period of availability: Plain language of the Act limits availability to September 30, 2010.

• The Governor must return any funds that are not awarded as sub grants or “otherwise committed” within 2 yrs of receiving such funds.

• There will be extensive reporting requirements.

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Stabilization Funds: Fiscal

• Sec. 14012, fiscal relief, includes a maintenance of effort provision that may be waived or modified under certain conditions. – Lower % analysis: State receiving the waiver must not provide a

lower percentage of the total funds available for elementary and secondary education that in the preceding fiscal year.

– States, with prior approval, may treat stabilization funds as “non federal funds” for purposes of meeting MOE under “any other” USED program.

• There is no SNS provision applicable to fiscal stability funds.

• Uncertainty within USED as to the application of SNS to the stabilization funds.

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Stabilization Funds: How Distributed

• The Secretary of Education will distribute funds to States according to the following formula:

– 61% of a state’s allocation will be based on the state’s relative population of individuals ages 5 through 24; and

– 39% of a state’s allocation will be based on the state’s relative total population compared to the country.

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Stabilization, the 82%

• The restoration funds are distributed among the shortfalls in K-12 and higher education.

• The K12 funds go to restore, through the state's primary elementary and secondary funding “formulae,” the level of support provided to the greater of the state FY 2008 or 09 level; and – Where applicable, to allow existing state formulae increases to

support elementary and secondary education for fiscal years 2010 and 2011 to be implemented and

– allow for phasing in a state equity and adequacy adjustments,

– if such increases were enacted prior to October 1, 2008.

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• For higher education,

– for each fiscal year 2009, 2010 and 2011

– the amount of funds to public IHE to restore state support (excluding tuition and fees paid by students)

– to the greater of fiscal year 2008 or fiscal year 2009 level.

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• Shortfall provision:

– If the funds, in each of fiscal years ‘09, ‘10, and ‘11 is insufficient to support both higher education and K-12,

– then the Governor shall allocate the funds between the two in proportion to the relative shortfall in state support for those two education sectors.

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• Once the restoration is carried out, the Governor shall use any remaining funds to provide LEAs with sub grants based on the relative shares of funding under part a Title I of ESEA for most recent year for which data are available.

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14002(a) Is for restoration and (b) is the 18.2% of the State’s allocation for:

• public safety and

• other “gov’t services,” that may include – assistance for elementary & secondary, and public

IHE

– M/R/R of public school facilities and IHE

– including M/R/R that are consistent with a recognized green building rating system (not required).

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Sec.14003, uses of funds by LEAs: Critical topic!

• LEAs that receive funds under “this title” “may” use the funds for any activity authorized by the:– ESEA

– IDEA

– The Adult and Family Literacy Act, or

– The Perkins act, or

– MRR of public school facilities, including modernization, renovation, and repairs that are consistent with a recognized green building rating system. (The drafting is critical!)

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Section 14003: LEA Prohibitions

• An LEA may not use funds for – 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.

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Section 14003: LEA Prohibitions

• Nothing in this section shall allow a local educational agency to engage in school modernization, renovation, or repair that is inconsistent with State law.

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Section 14003, Drafting Qs

• Critical interpretations:– What will be “unfettered” funds?– LEAs that receive funds under “this title”

“may” use the funds for any activity authorized by the…

– Can we use the 81.8 percent of funds that are distributed based on cuts in the basic formula to pay the salaries of education staff who were losing their jobs because of the shortfall?

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Key issues for LEA use• Is the activity allowable?

– Review statute– Review guidance– Review cost principles

• Does it violate non-supplanting provisions?– Review three scenarios where supplanting is presumed, see Revised

Non-Regulatory Guidance Title I Fiscal Issues, Feb. 2008 (http://www.ed.gov/programs/titleiparta/fiscalguid.pdf).

• When federal funds are used to provide services that the SEA/LEA is required to make available under other federal, state or local laws;

• When federal funds are used to provide services that the LEA/SEA provided with State or local funds in the prior year; or

• When federal funds are used to provide the same services to Title I participating students that are being received by nonparticipating students.

• Is the documentation in place to rebut the presumption of supplanting?

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Section 14005, state applications

• How to get the funds - the Governor’s application is a three-part application:– 1) Assurances as required under the law

– 2) Provision of baseline data demonstrating the state’s current status in each of the assurances

– 3) Description of how the state intends to use the allocation, including a description if the state will use the funds to meet maintenance of effort requirements under ESEA and IDEA. (See fiscal relief section!).

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Section 14005, the assurances

• 1) MOE: in each fiscal year’s ‘09, ‘10, and ‘11 maintain state support for elem. & secondary education and higher education at least at the level of support in FY ‘06.– See Sec 14012 Fiscal Relief if unable to meet ‘06 MOE.

• 2) Equity and teacher distribution: State “will take actions” to improve teacher effectiveness and comply with the ESEA to address inequities in the distribution of highly qualified teachers between high & low poverty schools, and to ensure low income and minority are not taught at higher rates than other children by inexperienced or out of field teachers. (ESEA 1111(b)(8)(c))

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• 3) The state will establish a K-16 longitudinal data system, according to the elements described in the America Competes Act (20 USC 9871).

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• 4) Standards and assessments:

– Will enhance the quality of academic assessments, (ESEA 1111(b)(3));

– Comply ESEA requirements related to the inclusion of students with disabilities and limited English proficient students in state assessments, the development of valid and reliable assessments and provisions of accommodations (ESEA 1111(b)(3)(C)(ix) and (6); IDEA 612(a)(16));

– Take Steps to improve State academic content standards. (America Competes 6401(e)(1)(9)(A)(ii)).

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• 5) Supporting struggling schools: the State will ensure compliance with the requirements of the ESEA related to corrective action and restructuring. (ESEA 1116(a)(7)(C)(iv), 1116(a)(8)(B)).

• And what if the Governor fails to make an assurance? No penalties, but consider:– loss of State Incentive funding.

– Audit/monitoring findings

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Section 14012, fiscal relief

• For the purpose of relieving fiscal burdens on States and LEAs that have

– experienced a precipitous decline in financial resources,

– the Sec. of Education may waive or modify any requirement of this title (the stabilization title) relating to maintaining fiscal effort.

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• (b) A waiver modification under this section shall be for any fiscal year 2009, 2010, or 2011.

• (c) Criteria: Secretary shall not grant a waiver or modification unless

– the state or local educational agency will not provide a smaller % of the total revenues available than the amount provided in the preceding fiscal year.

– It can not be a smaller percentage!

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• (d) Maintenance of effort: upon prior approval from the Secretary, a state or LEA that receives funds under this title may treat any portion of such funds that is used for elementary, secondary, or post secondary education as nonfederal funds for the purpose of any requirement to maintain fiscal efforts under any other program administered by the Secretary.

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• Notwithstanding (d), the level of effort required by a state or local educational agency for the following fiscal year shall not be reduced.

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State Incentive Grants

• Up to $5 billion that the Secretary shall, in FY 2010, make grants to states that have made significant progress in meeting the assurances identified in the State application:– Achieving equity in teacher distribution– Improving collection and use of data– Standards and assessments– Supporting struggling schools, corrective action and

restructuring– And other criteria the Sec. determines appropriate

• This is a large amount of funding at the Sec.’s discretion.

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State Incentive Grants

• State must use at least 50% of the grant to provide local educational agencies with sub grants based on the relative share Title I funding.

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Innovation Fund: LEAs & nonprofit innovation

• The Secretary may reserve up to $650 million for the innovation fund that consists of academic achievement awards for eligible entities that meet certain requirements.

• This fund appears to be available immediately.

• Awards for eligible entities to – allow them to expand successful practices and served as the

best model;

– allow the entities to work in partnership with the private sector and the philanthropic community;

– and identify best practices that can be shared and taken to scale.

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• To be eligible and entities shall:– Significantly close the achievement gaps (ESEA 1111(b)

(2));

– Exceeded the state’s AMO is consistent with ESEA for 2 or more consecutive years or have demonstrated success in increasing student academic achievement for all groups of students through another measure as described in ESEA 1111(c)(2);

– Have made significant improvement in other areas such as highly qualified teachers, HQT, data, graduation rates, etc.

– Demonstrated an established partnership with the private sector and that the private sector will provide matching funds to help bring results to scale.

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• The term “eligible entity” means: –an LEA,

–or a partnership between a nonprofit organization and

• (i) one or more LEAs or

• (ii) a consortium of schools.

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Stabilization reporting

• States receiving Stabilization funds must submit a report to the Sec. describing:– How the funds were used– How the fund were distributed– Estimated number of jobs saved or created using the

stabilization funds– Tax increases averted– State’s progress in meeting the assurances– Increases in tuition and fees at public IHEs– Changes in enrollment in public IHEs– Each M/R/R project funded

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Targeted Funds: Fiscal

• Timing: Title I funds are expected to be allocated by the end of March. Then, on July 1, schools will receive their regular, fiscal year 2009 Title I allocations

• Period of availability: depends upon guidance. Plain language of the Act limits availability to September 30, 2010.

• Programs are governed by current statutory provisions regarding MOE, SNS, but it is clear that USED wants to provide great flexibility.

• Sec. 14012 Fiscal Relief: on the prior approval of the Secretary of Education, stabilization funds to be counted as non-Federal for the purposes of maintaining fiscal effort for "other" programs.

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Targeted Funds: Set asides

• USED officials said they may providing relief from provisions of NCLB, such as:– 20% set asides, that could be especially

burdensome in the context of the stimulus

– 15% carryover limit

– NCLB 1004 1% State administrative cap

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Targeted Funds

• ESEA Title I, Sec. 1125 and 1125A: $10,000,000,000– Reporting: Each LEA must file school by school listing

of PP expenditures from state & local sources during the 08-09 SY by Dec.1, 2009.

• School Improvement Grants, ESEA1003(g): $3,000,000,000– Reporting: Each LEA must file school by school listing

of PP expenditures from state & local sources during the 08-09 SY by Dec.1, 2009.

– ED encourages States to use 40% of SIG for middle and high schools

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Targeted Funds

• Impact Aid, ESEA VIII, Sec 8007: $100,000,000– Construction payments by formula to eligible LEAs

receiving Impact Aid payments.

– 40% by formula based on LEA’s proportion of military children and children living on Indian lands. 60% made available by competitive grant.

• Enhancing Education Through Technology, ESEA Title II Part D-1: $650,000,000

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Targeted Funds

• Education for homeless children and youth, McKinney Vento Title VII Subtitle B: $70,000,000– Grants allocated in proportion to the number of

homeless students identified by the State during 07-08 SY relative to the number of homeless students identified nationally during the 07-08SY, rather than existing statutory provisions.

– Sec. is required to make grants to States not later than 60 days after the date of enactment. SEA must make subgrants to LEAs not later than 120 days after receiving the funds.

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Targeted Funds

• Credit Enhancement for Charter Schools Facilities, ESEA Title V Part B subpart 2: $0

• Teacher Incentive Fund, ESEA Title V, part D subpart 1: $200,000,000

• Statewide Data Systems, ETAA sec. 208: $250,000,000– Up to $5M may be used for State data coordinators

and for awards to public or private organizations or agencies to improve data coordination.

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Targeted Funds

• IDEA, Part B, C & Infants and Families. : $11,300,000,000 Part B 611; $400,000,000 Part B 619; $500,000,000 Part C– Estimated percentage of the “excess cost” of

educating children with disabilities that the fed. govt. will pay for FY09 is 34.2% (still not 40%).

• Vocational Rehabilitation State Grants, RA, Title I Part B: $540,000,000

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Targeted Funds: Higher Education

• Pell Grants, HEA IV, A. Maximum for award year 2009-2010 $4,860 (discretionary): $15,640,000,000– For the 2009-2010 award year, the maximum Pell

Grant award will be $5,350.

– This will consist of a discretionary maximum award amount of $4,860 and an add-on of $490 (funded by mandatory appropriations).

– $1.474B in mandatory appropriations for the Federal Pell Grant program, with $683 million provided for FY2009, and $831 million provided for FY2010.

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• Work Study, HEA IV-C: $200 million in supplemental discretionary appropriations for the FWS program for FY2009.

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• Teacher Quality Enhancement, State Grants, HEA Title II Part A.: $100,000,000– Grants for improving teacher education

programs, strengthening teacher recruitment efforts, and providing training for prospective teachers.

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Nutrition: $100,000,000

• Additional amount for the Richard B. Russell National School Lunch Act: The States shall provide competitive grants to school food authorities based upon the need for equipment assistance in participating schools with priority given to school in which not less than 50 percent of the students are eligible for free or reduced price meals under the Richard B. Russell National School Lunch Act.

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Head Start/ Early Head Start

• $2.1 billion for Head Start, including $1.1 billion for expanding Early Head Start. Of that $1.1B, up to 10% for the provision of training and technical assistance and up to 3% for monitoring the operation of such programs.

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Child Care & Development Block Grant

• $2,000,000,000, which shall be used to supplement, not supplant State general revenue funds for child care assistance for low-income families:

• In addition to the amounts required to be reserved by the States under section 658G of the CCDBG, $255,186,000 shall be reserved by the States for activities authorized under section 658G, of which $93,587,000 shall be for activities that improve the quality of infant and toddler care

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Tax Issues

• Qualified school construction bonds.– Can be used for the construction, rehabilitation, or repair of

public school facilities or for the acquisition of land on which a public school facility will be constructed. These bonds must meet three requirements:

• (1) 100% of the available project proceeds of the bond issue is used for the construction, rehabilitation, or repair of a public school facility or for the acquisition of land on which such a bond-financed facility is to be constructed;

• (2) Issued by a State or local government within which such school is located; and

• (3) Issuer designates such bonds as a qualified school construction bond.

– There is a national limitation on qualified school construction bonds of $11 billion for calendar years 2009 and 2010, respectively.

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Tax Issues

• Extension and increase in authorization for qualified zone academy bonds (QZAB).– The QZAB program is extended through

2010, allocating $1.4 billion for both fiscal years 2009 and 2010.

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Guidance

• Pending….• Imminent….

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Questions Questions Questions

• 82% vs. 18%– May both pots be used for school modernization?

– What is the meaning of “primary elementary and secondary formulae” in the 82%?

– How can the funds be used to restore general revenue shortfalls used to hire janitors, teachers, and other employees? How unfettered is the 82% in relation to the limited uses by the LEAs?

– Application of SNS as interpreted by USED?

– And so many more…

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End

• This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit does not create an attorney-client relationship with Brustein & Manasevit. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.

american recovery & reinvestment act of 2009

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