Media Inquiries: Véronique Rodman
202.862.4870 (vrodman@aei.org)

FOR IMMEDIATE RELEASE: June 23, 2009

Over the next two years, the federal government, through the American Recovery and Reinvestment Act (ARRA), will spend an unprecedented amount on education--nearly $100 billion. The legislation calls for transparency; President Obama has warned that if funds are not spent wisely, "we will call it out, and we will publicize it." The American Enterprise Institute (AEI) is lending its support to this cause by helping to keep an eye on this huge pool of funds through its new Education Stimulus Watch (ESW) project. Each quarter, an ESW report will deliver a careful, even-handed analysis of ARRA's implementation, with a particular focus on whether these federal dollars are leading to meaningful reform of our K-12 public education system.

Frederick M. Hess, director of education policy studies at AEI, says, "What will matter is not just whether these dollars are lawfully processed, but how they are allocated, monitored, and spent--and what this means for our students and our schools. ESW will be an important tool in helping citizens, journalists, and policymakers understand how stimulus funds are being used, how to ensure they are used as wisely as possible, and what lessons this experience holds for K-12 improvement."

ESW is directed and produced by Andy Smarick, a former deputy assistant secretary for planning, evaluation, and policy development at the U.S. Department of Education and a current adjunct fellow at AEI. "Because of ARRA, in the months to come the federal government will spend an unprecedented amount on K-12 education," Smarick explains. "The Education Stimulus Watch reports will help inform taxpayers and education observers whether this money was used to drive innovation and improve student learning, or merely to preserve the practices of the past."

Secretary of Education Arne Duncan has repeatedly warned that ARRA education funds must be used in new ways to increase student achievement, not just to protect existing jobs and programs. In response, considerable attention has been given to the many ways this enormous influx of federal funds might be used to change state, district, and classroom practices for the better. Yet, Smarick already notices that "at this early date, it appears that we must adjust our expectations about ARRA's ability to generate the types of improvements our schools so urgently need."

Smarick notes that ARRA's first and foremost aim is to "spend funds quickly to save and create jobs." Indeed, the largest portion of ARRA's education funds--$75 billion in "Recovery-First Funds"--are meant to stabilize finances and allocated in ways that will reach states quickly, fill budget holes, and protect jobs, but not necessarily reform or improve America's education system. Money from a much smaller group of programs, the "Reform-First Funds," is given to states through a competitive process--unlike the federal formulas used to distribute Recovery-First Funds. These Reform-First funds total $5 billion and are intended to improve teacher quality, the use of data to track student achievements, standards and assessments, and assistance for struggling schools. Although these programs have a better chance of generating academic gains, there may be difficulties in implementing them.

In this first Education Stimulus Watch report, Smarick examines in detail whether ARRA will be able to improve America's schools. He finds a number of obstacles:

1. Stabilization vs. Reform. In providing such an enormous influx of funds to protect cash-strapped school systems, the federal government may have unintentionally delayed or inhibited crucial reforms, like prioritizing programs and reconsidering staffing needs, that would have been possible had the full financial effects of the recession not been mitigated.
2. New Funds, Old Formulas. Rather than allowing states to reconsider how they allocate resources, states must use the existing federal guidelines for Title I and IDEA funds to determine the use of their new funds, leaving little room for innovation.
3. One-Time Money. Since reform initiatives require sustained effort, continued spending is unavoidable; however, ARRA provides explicitly one-time funds.
4. Vested Interests. In instances in which reform-minded local leaders hope to launch innovative initiatives, organizations with vested interests may create impassable roadblocks.
5. Limited Leverage. The Department of Education has little power over state and district officials who decide to use Recovery-First Funds for non-reform purposes.
6. Enticing with a Dime after Giving a Dollar. If states do not satisfy the federal government with their allocation of the Recovery-First funds, they will likely be ineligible to receive the Reform-First funds. In light of the small amount of money available through Reform-First funds, many states would rather have the freedom to do what they please with the larger amount of Recovery-First funds instead of enacting unwanted reforms to obtain a small, additional amount of funding.
7. Two Buckets into the Sea. For states to receive Reform-First funding, they must prove that they can raise private dollars to sustain the reform effort once their one-time Reform-First funds run out.

Smarick concludes that in education, stabilization and reform do not necessarily go hand-in-hand. At this admittedly early date, it seems that where the bulk of ARRA education funds go will be determined by local leaders preoccupied by short-term considerations, such as budget shortfalls and job protection. Additionally, these decisions will be subject to the same politics, interest groups, and government sensibilities that have influenced decisions on hundreds of billions of dollars in previous federal aid. In this light, ARRA's education components may not deliver as hoped.

In addition to the quarterly ESW report, Andy Smarick will be tracking ARRA on The Enterprise Blog at blog.american.com. Please contact Jenna Schuette at jenna.schuette@aei.org if you wish to be added to the ESW mailing list.

Andy Smarick is an adjunct fellow at the American Enterprise Institute and a distinguished visiting fellow at the Thomas B. Fordham Institute. From 2008 to 2009, he was deputy assistant secretary for planning, evaluation, and policy development at the U.S. Department of Education. Smarick also served on the White House's domestic policy council from 2007 to 2008, working primarily on K-12 and higher education issues. He is currently working on a book about rebuilding America's urban public school systems.