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Friday, 11th September 2009

$75 Billion in Noncompetitive Formula Grants Failed to Drive Reform. Can $5 Billion in Competitive Grants Now Do the Job?

$75 Billion in Noncompetitive Formula Grants Failed to Drive Reform. Can $5 Billion in Competitive Grants Now Do the Job?
Source: American Enterprise Institute

In February 2009, Secretary of Education Arne Duncan hailed the American Recovery and Reinvestment Act (ARRA) funds allocated to the Department of Education as a "historic opportunity to create jobs and advance education reform." Seven months later, it seems unlikely that ARRA's $75 billion in formula-based grants has advanced education reform.

In this second report of the AEI Education Stimulus Watch (ESW) series, AEI adjunct fellow Andy Smarick continues to examine whether this unparalleled federal investment in schooling is yielding innovation and improvement or merely subsidizing the status quo. In particular, Smarick takes a look at three areas in which the ARRA legislation provides opportunities for reform: the $75 billion in noncompetitive formula-based funds, the $5 billion in competitive grants, and their potential influence on state education policies.

While the primary aim of the ARRA was admittedly to stabilize the economy by saving or creating jobs, the administration also hoped that the $75 billion in education provisions would be used toward reform. Despite the enormous financial commitment of the federal government, however, these funds have not fully covered the education deficits accrued by states and districts, which has left little room for reform-minded spending. In a July report to Congress, the Government Accountability Office reported that states and districts, presented with the option of filling existing budget holes or advancing reforms, were choosing to address their "more pressing" fiscal needs.

+ Education Stimulus Watch: Special Report 2


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