The View From Washington: What’s Likely to (Not?) Happen On Federal Education Policy

1. The View From Washington:  What’s Likely to (Not?) Happen On Federal Education Policy Andrew J. Rotherham State of the State of Education in Georgia Conference University of Georgia September 16, 2011 Athens, Georgia

3. Welcome and Overview About me: Co-Founder and Partner, Bellwether Education. A national non-profit organization working to improve educational outcomes for low-income students. Bellwether produces analytic work and helps individuals, organizations, companies, and philanthropic entities on strategy, talent, and leadership issues. Write the weekly “School of Thought” column for Time.com Write the blog Eduwonk.com Co-Publish “Education Insider” at Whiteboard Advisors

4. Goals For Today • Background on what’s happening nationally • Context on what’s likely to shape what happens going forward • Q & A and discussion

5. The Backdrop & Context • Three underlying drivers of the education • reform debate today: • Performance and outcomes • Increasing demand for choice and customization • Increasingly constrained public finance

6. Education Finance • ”Hard” Facts: • $600 billion+ annual spending on K-12 schools nationally • 250 percent increase over the past three decades • Resources to duplicate this trajectory do not exist because of a variety of public finance pressures • Exacerbating factors: • Unsustainable cost trajectory relative to overall public finance trends • Political pressures that lead to “more” instead of “better” in spending choices • Built-in cost escalators in state and local policy • Inequitable resource distribution – kids who need more systemically get less, challenging to fix this absent new resources • Little attention to questions of productivity and cost-benefit considerations related to spending choices • Money flows at the state and local level that are often unrelated to avowed performance goals.

7. Education Finance Trends to Watch • Aging population • Health care costs • Pension obligations (more than $1 trillion in unfunded liability) • Property taxes • Sales taxes and spending habits • Voting behavior • Economic recovery • Jobless recovery? • Stagnant growth?

8. The State Landscape “State general fund spending is forecast to be $668.6 billion based on governors proposed budgets for fiscal 2012. This represents an increase of 2.6 percent above the $651.5 billion spent in fiscal 2011. This spending increase will be the second consecutive year-over-year increase in general fund expenditures following back-to back declines in general fund spending in fiscal 2009 and fiscal 2010, at 3.8 percent and 6.3 percent respectively. However even the 2.6 percent increase in fiscal 2012 will still leave state general fund expenditures $18.7 billion, 2.7 percent, below the $687.3 billion spent in fiscal 2008.” Source: National Governors Association and National Association of State Budget Officers” Fiscal Survey of States, Spring 2011.

9. The State Landscape cont. • “Governors recommended general funding spending of $668.6 billion in fiscal 2012 is 2.6 percent above the $651.5 billion estimated in fiscal 2011. The $651.5 billion in general fund expenditures in fiscal 2011 is 5.2 percent above the $619.3 billion spent in fiscal 2010.” • “Forty states recommended budgets with increasing general fund expenditures for fiscal 2012 compared to fiscal 2011. However, even with these proposed increases, 29 states would still have lower general fund spending in fiscal 2012 compared to the pre-recession levels of fiscal 2008.” • “Twenty-three states made budget cuts to their fiscal 2011 budgets totaling $7.8 billion. Thirty-nine states made mid-year budget cuts of $18.3 billion in fiscal 2010, while 43 states made $31.3 billion in mid-year cuts in fiscal 2009.” Source: National Governors Association and National Association of State Budget Officers” Fiscal Survey of States, Spring 2011.

10. State Fiscal Woes Budget Gaps as a Percentage of General Fund Revenue

11. Economy, Economy, Economy State Unemployment Rates 50 50 58 Source: BLS, WSJ

12. Long Term Fiscal Pressure at Federal Level

13. Visualization of the President’s $3.7 trillion 2012 Budget Rectangles are sized according to proposed spending while the color represents the severity of cuts/increased relative to the fiscal year 2010 budget. Source: The New York Times New York Times

14. August Debt Deal & Super Congress • Created by the Budget Control Act of 2011 (the debt ceiling bill). • Comprised of 12 members of the special committee. Six from House and Six from Senate. Six Republicans and Six Democrats. • Charged with identifying $1.5 trillion in savings over next ten years by November 23.* • Seven votes sends a bill to the House and Senate under expedited rules for an up or down vote by December 23. • If the committee cannot reach agreement or Congress fails to pass the agreement $1.2 trillion in cuts go into effect automatically. That would mean approximately $3 billion in new spending education cuts. *In his address to Congress on September 8, the President asked the committee to also offset the cost of his new jobs bill – an additional $447 billion. That request is not binding on the committee.

15. The Obama Jobs BillThe American Jobs Act • $447 billion in spending/tax cuts to stimulate the economy and save/create jobs. • Two primary education components: • School infrastructure $30 billion • Edujobs (includes $5 billion for $35 billion first responders) Source: The White House

16. The Public Mood Generally speaking, would you say you favor (smaller government with fewer services), or (larger government with more services)? Source: The Washington Post

17. Political Volatility Source: Real Clear Politics

18. And More Adverse Public Mood… Source: The Washington Post

19. Federal initiatives RTT – Race to the Top I3 – Investing In Innovation Fund ELCF – Early Learning Challenge Fund NCLB – No Child Left Behind

20. Races to the Top Round III • $200 million for a competition among Round II finalists: Arizona, California, Colorado, Louisiana, New Jersey, Pennsylvania, South Carolina, Illinois, and Kentucky. • STEM • 50-50 split with LEAs • $500 million for an Early-Learning Challenge Fund. • $148 million for a new 2011 i3 competition. New absolute priorities include rural education and STEM. .

21. I3 Round II StructureAn Illustrative Approach

22. No Child Left Behind • Neither authorizing committee in Congress has formally considered or passed a full reauthorization bill although the House Education and Workforce Committee has passes smaller education bills. • Responding to congressional inaction, Obama Administration is poised to release a waiver package to give states additional flexibility. • Education insiders surveyed by Whiteboard Advisors overwhelmingly think a compressive reauthorization will not happen until after 2012 election.

23. No Child Left Behind Timing • 95% of Insiders no believe ESEA will be reauthorized after 2013. Timing of ESEA Reauthorization About when do you believe a final ESEA bill will be signed into law? Date of Insider Survey Source: Whiteboard Advisors’ “Education Insider” available by subscription at: http://www.whiteboardadvisors.com/

24. What’s Next? • Fiscal uncertainty – the exact extent and nature of the fiscal situation is unknown but an environment of tight resources is likely to persist. • Political volatility and increased scrutiny of public sector services • Continued attention to human capital as a key issue • Pressure for greater accountability across the system • Increased pressure for transparency • Demand for greater choice • Increased availability and use of data