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The Council for Exceptional Children’s
Questions & Answers:
How the American Recovery and Reinvestment Act Impacts Special
Education and Early Intervention
Background
On Feb. 17, 2009, President Obama signed into law the American
Recovery and Reinvestment Act (ARRA), commonly referred to as the
economic stimulus package. ARRA more than doubles
current federal funding for programs that CEC and its members have long
advocated for, such as special education and early intervention. Never
before has the federal government invested so much in special education.
This historic investment is the culmination of decades of advocacy and
leadership by CEC and its members in collaboration with the education
and disability communities. CEC thanks its members for over 30
years of strategic, focused advocacy!
To help our members understand ARRA and maximize its impact, CEC is
providing a variety of resources about how ARRA funds special education
and early intervention programs. In addition to this Q & A, CEC has
dedicated an area of its Web site to ARRA
(referred to as economic stimulus) and will continue to
provide regular updates via its Policy
Insider (weekly e-newsletter) as new information becomes
available.
This Q&A summarizes the portions of ARRA that CEC believes will
be of particular interest to its members. It is not meant to summarize
the entire Act. For links to more resources discussing ARRA, including
the text of the Act itself, please look to CEC’s
ARRA page.
In addition, CEC is collecting feedback on how ARRA has impacted you,
your school/early intervention program, and the children and youth you
serve. By completing CEC’s
short survey you will help us sustain this investment in
special education and early intervention.
General Information About ARRA
This legislation seeks to address the challenging economic times
confronting the nation by providing tax cuts and infusing historic
levels of federal funding into areas such as education, health care,
energy, and infrastructure. Overall, ARRA provides approximately
$100 billion for programs administered by the U.S. Department of
Education.
Of the total $787 billion ARRA package:
- $575 billion is dedicated for spending, which includes:
- $105 billion for education related programs
- $90 billion for Medicaid
- $51 billion for Energy & Water
- $48 billion for Transportation
- $39 billion for Unemployment
- $25 billion for Health Insurance
- $212 billion is dedicated for tax cuts. This includes:
- $83 billion for Alternative Minimum Tax Fix
- $66 billion for Making Work Pay Credit
- $36 billion for Business Tax Cuts
- $4 billion for Education Credit
CEC has created a chart
specifically detailing ARRA-funded programs that impact individuals with
disabilities. These programs include:
- $12.2 billion for Special Education (IDEA) which includes:
- $11.3 billion for Part B Grants to States for school aged
students
- $400 million for Part B Section 619 for preschool children
- $500 million for Part C Infants and Toddlers with Disabilities
Program
- $680 million for Rehabilitation Services and Disability
Research
- $13 billion for Education for the Disadvantaged (including Title
I)
- $53.6 billion for a State Fiscal Stabilization Fund (to provide
fiscal relief to States to prevent tax increases and cutbacks in
education and other critical services)
- $250 million for Institute for Education Sciences (education
research)
- $1 billion for Head Start
- $1.1 billion for Early Head Start
CEC’s Questions & Answers on the American Recovery and
Reinvestment Act (ARRA)
While there are many areas of ARRA that the U.S. Department of
Education is currently reviewing, CEC is pleased to provide a general
Q&A to assist its members in understanding how this law will impact
students, schools, and states. PLEASE NOTE: Information
regarding ARRA is very fluid and CEC will provide regular updates as
more information becomes available.
** Please note that we have corrected a
typo contained in the original Q & A. In the answer to Question
11, the term "SEA" in the first line of the second major bullet
point should have read "LEA." **
Q1. Why is funding for education considered economic stimulus?
A1. The answer to this question focuses on
ARRA’s twin goals: short and long term economic impact. In the
short term, ARRA aims to stimulate the economy by reducing cuts to
education. Estimates indicate that at least 26 states are confronting
fiscal crises and cutting education as a result. Cutting education
funding often means layoffs, discontinuation of programs and indefinite
postponement of new initiatives. Moreover, during times of economic
crisis, programs serving children and youth with disabilities are often
cut, further straining systems that have been stretched thin for
years.
By infusing more funding into education in the short term, ARRA seeks
to avoid layoffs and program cuts, especially in programs which help
individuals with disabilities. It also aims to create new jobs needed to
implement new initiatives.
In the long term, ARRA seeks to ensure better educational outcomes,
thus preserving the economic health of the nation. To that end, ARRA
provides the U.S. Secretary of Education with discretionary funds to
grant to local education agencies (LEAs), nonprofit partnerships or
consortia of LEAs funds for innovative programs designed to prepare
students to succeed in the global workforce. By investing in these
programs, ARRA hopes to ensure long term job growth for the nation.
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Q2. How does ARRA provide additional funding for education?
A2. ARRA provides over $100 billion for
education programs. Much of this money will be distributed to state
education agencies (SEAs) and LEAs through existing programs such as the
Individuals with Disabilities Education Act (IDEA); Title I; and Student
Financial Assistance and Higher Education (including Pell Grants). ARRA
also includes $53.6 billion for a State Fiscal Stabilization Fund, which
is intended to provide fiscal relief to states and prevent tax increases
and cutbacks in critical services, namely education. Of the State Fiscal
Stabilization Fund, Governors must use $40 billion to restore support to
elementary, secondary and higher education. (See the following questions
for more information on State Fiscal Stabilization Fund.)
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Q3. What is the timeline for use and distribution of IDEA
funds?
A3. The Department of Education has
released the following timeline for IDEA specific ARRA funds:
- End of March 2009:
- 50% of IDEA Part B Grants to States and Preschool Grants to States
will be awarded to SEAs; and
- A minimum of 50% of IDEA Part C Infants and Toddlers with
Disabilities Program, and Vocational Rehabilitation State Grants will be
available pending upcoming guidelines.
- End of April 2009:
- SEAs are expected to make funds available to LEAs.
- July 1, 2009:
- Regular Fiscal Year 2009 Part B Grants to States and Preschool
Grants to States awarded to SEAs. Note:ARRA funds are
in addition to regular Fiscal Year 2009 funding.
- October 1, 2009:
- Remaining 50% of IDEA, Part B Grants to States and Preschool Grants
to States awarded to SEAs.
- September 30, 2011:
- All IDEA ARRA funds must be obligated.
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Q4. I understand that the ARRA provides over $12 billion to special
education. How much of that money will go to my SEA and LEA?
A4. ARRA provides $12.2 billion to IDEA
programs, (see
CEC chart for program breakdown) which will flow to SEAs and LEAs
using the same funding formula currently used by IDEA programs, based on
the timelines described above. The U.S. Department of Education has
published data
charts detailing how much additional funding SEAs will receive for
IDEA Part B (school aged students); Part B Section 619 (preschool
children); and Part C (infants and toddlers). The Congressional Research
Service has also published
charts listing individual LEA allocations.
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Q5. I understand that $500 million is slated to go to IDEA’s
Part C Infants and Toddlers with Disabilities Program. How can this
money be allotted?
A5. Part C funding will be distributed
through the same IDEA funding formula which is always used to distribute
Part C funds. The U.S. Department of Education has stated it will issue
more specific guidance by the end of March 2009. Therefore, the
information below does not address Part C unless specifically noted. CEC
will update this Q & A with Part C information as soon as it becomes
available.
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Q6. What can SEAs and LEAs spend the additional IDEA funding
on?
A6. The additional IDEA funding provided by
ARRA will be distributed through the existing funding formulas. This
means that the allowable uses for these funds are the same as they
always are for IDEA funds. The U.S. Department of Education has
emphasized, however, that ARRA funds should be used for investments that
can be sustained after ARRA funding expires, such as:
- Assistive technology devices and training in their use;
- Focused professional development;
- Data collection enhancements;
- Expanding the availability and range of inclusive placements for
preschool children with disabilities; and
- Hiring transition coordinators and job developers for students
entering the workforce.
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Q7. How long will the IDEA funds provided by ARRA remain
available?
A7. All IDEA ARRA funds must be obligated
by LEAs by September 30, 2011. The $11.3 billion provided by ARRA to
IDEA Part B (school aged students), $400 million for IDEA Part B Section
619 (preschool children), and the $500 million for IDEA Part C (infants
and toddlers) will be available during school years 2008-2009, 2009-2010
and 2010-2011. Importantly, according to the U.S. Department of
Education, “[a]n LEA should obligate the majority of these funds
during the school years 2008-09 and 2009-10 and the remainder during
school year 2010-11.”
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Q8. How much of this funding can SEAs use for state administration
and state level activities?
A8. ARRA funds do not increase the amount
that a SEA would otherwise be able to reserve for state administration
or other state-level activities. SEAs are held to amounts already
identified in their Fiscal Year 2009 awards.
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Q9. Is IDEA now fully funded because of this historic investment in
special education?
A9. No. While ARRA provides a historic
infusion of funding to special education—doubling what special
education programs currently receive —it does not achieve full
funding of IDEA. In 1975, when IDEA was originally enacted, Congress
committed to providing 40% of the national average per pupil expenditure
to assist SEAs and LEAs with the excess cost of educating students with
disabilities. For fiscal year 2009, ARRA would bring the percentage from
its current 17.2% to 34.2%, a significant step forward, but still not
full funding.
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Q10. Does the new funding in ARRA serve as a baseline for future
funding of IDEA programs?
A10. It is unclear. The U.S. Department of
Education guidelines on IDEA and the State Fiscal Stabilization Fund
repeatedly note that funding provided by ARRA represents a one time,
historic infusion that is expected to be temporary and should not be
used in a way that would create unsustainable commitments after ARRA
funding runs out.
However, because all IDEA programs have been underfunded for decades,
CEC believes ARRA’s investment must be the baseline for future
federal funding of special education programs. CEC and its members have
long advocated for full funding of IDEA and therefore, will advocate for
ARRA’s substantial investment to remain intact and increase in the
future. Full funding is CEC’s goal.
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Q11. How does ARRA address maintenance of effort (MOE) for IDEA
?
A11. The U.S. Department of
Education’s recent guidance indicated that all IDEA funds provided
by ARRA are subject to the same MOE provisions as those included in IDEA
2004. Here, for all ARRA IDEA funds, the following applies:
- IDEA 2004’s 50% MOE Provision Applies to ARRA funds:
- As allowed by IDEA 2004 Section 619(a)(2)(C), under certain
circumstances, if an LEA’s fiscal year allocation exceeds its
allocation from the previous year, (which it will for many LEAs that
receive ARRA funds) the LEA can reduce the level of state and local
expenditures by up to 50% of the increase, as long as the reduced or
freed-up funds are used for authorized ESEA purposes.
- If an LEA takes advantage of this MOE flexibility, then its MOE in
future years is reduced by the same percentage amount it reduced its MOE
(unless the LEA increases the state and local expenditures on its
own).
- Thus, for example, if an LEA receives $300,000 in ARRA stimulus
funds, then the LEA can reduce its state and local spending by $150,000
and use those funds for any activity approved under ESEA.
- But note, that a SEA can prohibit an LEA from using the MOE
provision if it either independently determines that an LEA is unable to
establish and maintain FAPE for students, or if it has taken action
against the LEA under IDEA corrective action guidelines. See 34 C.F.R.
300.205(c).
- ARRA Specific Guidance:
- In recent ARRA guidance, the U.S. Department of Education instructed
SEAs to encourage LEAs to focus freed-up local funds on one-time
expenditures that will help states accomplish the State Fiscal
Stabilization Fund’s goals. (See Q & A 13 below). This has not
been developed any further, however, and there are not yet specific
guidelines for how to meet this requirement. Importantly, the Department
emphasized ARRA’s accountability requirements and stated that SEAs
will be expected to collect and report information on the use of any
freed-up funds.
- Additionally, a state or LEA may count State Fiscal Stabilization
funds (but not ARRA IDEA funds) as nonfederal funds for the purposes of
determining whether the state or LEA has met IDEA’s MOE
requirements.
- IDEA 2004 allows LEAs to reserve up to 15% of IDEA Part B funds for
early intervening services (EIS). This also applies to ARRA funds:
- LEAs may also (and in cases of disproportionality must also) spend
up to 15% of their total IDEA Part B Grants to States on general
education students in K through 12, who are not currently eligible for
IDEA, but who need academic or behavioral support to succeed in general
education.
- MOE and the 15% of IDEA funds for early intervening services are
interconnected. Therefore, an LEA must carefully consider how it uses
these funds.
- Notably, the LEA must calculate its 15% by subtracting the amount,
on a dollar for dollar basis, by which the LEA reduced its required
state and local expenditures under the maintenance of effort provisions,
from the total amount of IDEA funds received.
- Example: The following is an example of this
interconnection between MOE and EIS, provided with IDEA 2004 guidance by
the U.S. Department of Education:
- Prior Year's Allocation: $900,000
Current Year's Allocation: $1,000,000
Increase: $100,000
Maximum Available for MOE Reduction: $50,000
Maximum Available for EIS: $150,000
- If the LEA chooses to set aside $150,000 for EIS, it may not reduce
its MOE (MOE maximum $50,000 less $150,000 for EIS means $0 can be used
for MOE).
- If the LEA chooses to set aside $100,000 for EIS, it may not reduce
its MOE (MOE maximum $50,000 less $100,000 for EIS means $0 can be used
for MOE).
- If the LEA chooses to set aside $50,000 for EIS, it may not reduce
its MOE (MOE maximum $50,000 less $50,000 for EIS means $0 can be used
for MOE).
- If the LEA chooses to set aside $30,000 for EIS, it may reduce its
MOE by $20,000 (MOE maximum $50,000 less $30,000 for EIS means $20,000
can be used for MOE).
- If the LEA chooses to set aside $0 for EIS, it may reduce its MOE by
$50,000 (MOE maximum $50,000 less $0 for EIS means $50,000 can be used
for MOE).
- IDEA 2004’s State Level MOE Waivers also apply to ARRA funds:
- State level waivers are also governed as set forth in IDEA 2004.
Thus, the U.S. Secretary of Education may grant a state a one year MOE
level waiver for uncontrollable circumstances, such as, a natural
disaster or precipitous and unforeseen decline in the financial
resources of the State. Here, certainly the latter may apply. But in
either case, the LEA level of MOE still may not be waived.
The U.S. Department of Education has stated more guidance will be
available by the end of March 2009. CEC will update its ARRA Web page
with this information when it becomes available.
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Q12. How does ARRA address supplement not supplant provisions
(SNS)?
A12. ARRA does not directly address
supplement not supplant provisions. The supplement not supplant
provision generally forbids using IDEA funds to replace other state,
local or federal funds used for special education purposes. To date, the
U.S. Department of Education has not issued any specific guidance on
these provisions. But, based on the Department’s interpretation of
MOE, CEC believes that ARRA funds are subject to the same SNS provisions
required by IDEA 2004. Under IDEA 2004, the U.S. Secretary of Education
may grant a waiver for SNS provisions to a state, if the state can
provide clear and convincing evidence that all children with
disabilities are receiving a free appropriate public education
(FAPE).
The U.S. Department of Education is expected to release further
guidance on this issue. Check CEC’s
ARRA Web site for the latest information.
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Q13. What are the key elements of the State Fiscal Stabilization
Fund?
A13. The State Fiscal Stabilization Fund is
an appropriation of $53.6 billion, intended to provide fiscal relief to
SEAs to prevent tax increases and cutbacks in critical education and
other services. To that end, $48.3 billion will be distributed in Grants
to States for fiscal relief, mainly tied to education; $4.35
billion for State Incentive Grants (also referred to as the "Race
to the Top Fund"), $650 million for the Innovation Fund (also
referred to as the "Invest in What Works and Innovation Fund"); and the
U.S. Secretary of Education is permitted to reserve $14 million for
administration and oversight of the Fund. To see how much money your
state will receive, please look to the Department
of Education’s chart.
$48.3 billion in Grants to States:
- First 81%: Governors must use approximately 81% of their state
allocation to support elementary, secondary and post secondary
education, and, as applicable, early childhood education programs and
services. The overall purpose of this money is to restore funding to
education programs which may have been cut as a result of the current
economic crisis and state budget shortfalls. Therefore, SEAs are
required to use this money through existing formulas, to restore funding
levels for elementary and secondary education, in the fiscal years 2009
- 2011 to the 2008 or 2009 fiscal year level, whichever is higher.
- Remaining 18%: Governors must use approximately 18% of their
state’s allocation for public safety and other government
services, which may include education, modernization, renovation, and
repair of public school and higher education facilities.
- Funds used by LEAs for elementary and secondary education can be
used for any activity permitted by ESEA, IDEA, the Adult Family Literacy
Act, or the Carl Perkins Career and Technical Education Act.
- LEAs are prohibited from using funds for maintenance costs,
stadiums, and the purchase or upgrade of vehicles.
- Institutions of higher education must use funds for education and
general expenditures and to either “mitigate the need to raise
tuition and fees for in-State students”, or for modernization,
renovation, or repair of facilities that are primarily used for
instruction, research, or student housing.
- Prohibitions here include: funds cannot increase endowment;
maintenance of systems, equipment or facilities; modernization,
renovation or repair of stadiums; modernization, renovation, or repair
of facilities used for sectarian or religious instruction or in which a
substantial portion of the functions of the facilities are religious in
nature.
$4.35 billion for State Incentive Grants (also referred to as the
"Race the the Top Fund"):
- SEAs submit applications to the U.S. Secretary of Education for
these funds. SEAs receiving a grant must distribute at least 50% to
local school districts based on the Title I formula. To receive these
funds, each state application must include the following assurances:
- Providing maintenance of effort at least at FY 2006 level;
- Achieving equity in teacher distribution;
- Improving collection and use of data;
- Enhancing the quality of state assessments and improving state;
academic content standards and student academic achievement standards;
and
- Ensuring compliance with requirements related to schools identified
for corrective action and restructuring under ESEA.
$650 million for the Innovation Fund (also referred to as the
“Invest in What Works and Innovation Fund”):
- This is to provide academic achievement awards to LEAs, partnerships
between nonprofits and LEAs or a consortia of LEAs, based on a variety
of criteria including all of the following:
- Making significant progress in closing achievement gaps; making AYP
for two or more years;
- Showing significant improvement in other areas such as graduation
rates;
- Serving as models for best practices;
- Enhancing partnerships between private sector and philanthropic
communities; and
- Identifying and documenting best practices.
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Q14. How does ARRA address maintenance of effort and supplement/not
supplant provisions for the State Fiscal Stabilization Fund?
A14. ARRA contains only sparse information
about MOE and SNS provisions for this fund. The U.S. Department of
Education has provided limited interpretation on MOE under ARRA, but CEC
is awaiting more detailed guidance on MOE and SNS provisions. CEC will
update its website with pertinent information as it becomes available.
Currently, it appears that:
- Base MOE Level is FY 2006:
- ARRA requires SEAs to use the state fiscal stabilization fund monies
to restore funding to the Fiscal Year 2008 or 2009 level, whichever is
higher. If that is not possible, the state must maintain an MOE of at
least Fiscal Year 2006, as a condition of accepting the funds.
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Q15. Does ARRA include any reporting and accountability requirements
for the use of the money? How will I know how the money is spent?
A15. ARRA requires all participants to
report publically on their use of ARRA funds. First, in terms of IDEA,
recipients will follow all guidelines currently set forth in funding
formulas. But, to receive the second infusion of IDEA funds on October
1, 2009, SEAs must submit an amendment to their Fiscal Year 2009
applications, explaining what record keeping and reporting requirements
LEAs will use to ensure transparency. It will be important for members
to understand what information their states will require to track use of
these funds.
In addition, all funds distributed from the State Fiscal
Stabilization Fund contain very specific reporting requirements which
include how and when money was spent and detail what if any progress was
made as a result of the funding.
The U.S. Department of Education has stated more guidance and
applications for these funds will be available by the end of March 2009.
CEC will update its ARRA webpage with this information when it becomes
available.
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Q16. What other programs are funded by ARRA that impact children and
youth with disabilities?
A16. A variety of programs funded by ARRA
impact children and youth with disabilities. These include healthcare,
research, school improvement, and child and family services. CEC’s
chart of selected programs in ARRA provides highlights of many of
these programs.
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Q17. Does ARRA address Medicaid?
A17. Yes. Of great interest to CEC members
is the extension of the current moratoria on controversial Medicaid
regulations, which would cut or eliminate the reimbursement for targeted
case management, rehabilitation services, transportation and
administrative claiming for Medicaid-eligible children with
disabilities. ARRA extends the current moratoria to July 1, 2009.
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Q18. Where can I find more information on ARRA?
A18. CEC is committed to providing
up-to-date information on ARRA and how it impacts special education on a
specially
designated area of the CEC website, which will include links to a
variety of additional resources. CEC’s
Policy Insider (weekly e-newsletter) will also provide several
important and useful updates, so please visit for the latest
information!
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Q19. How can I share the impact the economic crisis has had on me,
my school/early intervention program, and children and youth; and how
ARRA is addressing these issues?
A19. CEC encourages you to take its short,
five-question survey to provide feedback on how ARRA will address
issues impacting personnel, schools, and early intervention programs.
Your feedback will help CEC’s advocacy efforts for a sustained
investment in special education and early intervention.
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Glossary of Terms
- ARRA: American Recovery and Reinvestment Act of 2009
- EIS: Early Intervening Services
- ESEA: Elementary and Secondary Education Act of 1965
- IDEA 2004: Individuals with Disabilities Education Act of 2004
- LEA: Local Education Agency
- MOE: Maintenance of Effort
- Part B: IDEA’s Grants to States program for school aged
students
- Part B Section 619: IDEA’s Grants to States program for
preschool children
- Part C: IDEA’s Grants to States program for infants and
toddlers with disabilities
- SEA: State Education Agency
- SNS: Supplement not supplant
This ARRA Question and Answer is a publication of the Council for
Exceptional Children (CEC). Subscribers may distribute published
content for educational purposes only. © Council for Exceptional
Children (CEC). All rights reserved.
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