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American Recovery and Reinvestment Act: Frequently Asked Questions

Distribution of Education Funds under American Recovery and Reinvestment Act

When Will Money the Be Available?

Funds under the ARRA Funds for current programs are generally available for school years 2009-10 and 2010-11. The Department of Education goal is to get half the money to states within 40 days and the other within six months, conditioned on receipt from the state of a comprehensive reform plan.

How Will the Money Be Distributed?

Some funds under the Act (Title I, IDEA increases) will be distributed through the regular program funding streams. Some funds (“state stabilization funds”) will flow through state funding formulas.

What is the State Stabilization Fund?

The State Stabilization fund provides flexible funding ($53.6 billion) through existing state education formulas as follows:

  • $39.5 billion -- general fiscal relief for public school districts and public institutions of higher education
  • $8.8 billion -- public safety and other government services, which may include
                         - Assistance for elementary and secondary education                             and public institutions of higher education                                                 - Modernization, renovation, or repair of public school                             facilities and institutions of higher education facilities   
  • $4.35 billion -- State Incentive Grants
  • $650 million -- Innovation Fund

How Does the State Stabilization Fund Work?

Funds will be allocated to Governors to distribute. This is a change in general federal education policy. Currently federal funds go to State Education Departments, not Governors. 61% of the funds will be allocated to states based on the share of population aged 5-24.

The remaining 39 percent will be distributed to states based on their share of the overall population. No later than 45 days after enactment (April 1, 2009), the Governor must certify that the state will request and use the funds. If the Governor fails to request funds, the state legislature can do so by adopting a resolution.

Funds received by school districts can be spent for any purpose allowable under:

  • ESEA
  • IDEA
  • Adult and Family Literacy Act
  •  Perkins Career and Technical Education Act
  • Modernization, renovation or repair of public schools

Institutions of higher education can use the funds for:

  • Education and general expenditures
  • Mitigate need to raise tuition and fees
  • Modernization, renovation or repair of facilities

How Will the Governors Allocate Funds to Local Districts?

 1. The Governor will calculate the budget shortfall in K-12, higher ed. and other public services (health and safety).

2. If all three of these areas have shortfalls, 81.8% of money goes proportionately to K-12 and higher education based on their respective shortfalls. The rest goes to other services.

3. If there is money left over after filling budget holes, those funds will go to local districts using the Title I formula. However, the funds do not have to be used for Title I services, but can be used for any allowable purpose under the State Stabilization Fund.

What do States Have to Do to Get the Money?

In order to get the funds, States assure that they will:

1. Address inequities in teacher distribution (already required by NCLB)

2. Establish a statewide longitudinal data system including “teacher identifiers “ (new requirement)

3. Improve the quality of NCLB academic assessments (already required by NCLB)

4. Improve academic content standards and student achievement standards so students exit high-school ready for college, the 21st century workforce, and the Armed Forces without remediation

5. Comply with corrective action and school restructuring provisions of AYP (already required by NCLB)..

Can Economic Recovery Act money be used to stop layoffs?

The short answer: Absolutely!

And here's the longer answer.