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Duncan Warns States Against Misuse of ARRA Funds

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While addressing the House Committee on Education and Labor in Washington, DC Wednesday, Education Secretary Arne Duncan reemphasized that the State Fiscal Stabilization Fund--part of the American Recovery and Reinvestment Act--is primarily to be used for education and warned states that the federal government will be keeping an eye on how the funds are used.

In prepared remarks, Duncan indicated that he was aware of some states' plans to use State Fiscal Stabilization Fund awards for purposes other than investing in education. This, he said, will lead to penalties for states when they apply for other stimulus package funds.

"Under the State Fiscal Stabilization Fund, states will receive $48.6 billion to supplement their own budgets during these difficult economic times. The Recovery Act says that states must spend most of that funding on education. $39.8 billion of that should go to schools," Duncan said.

"I want to assure you," he continued, "that I will be scrutinizing how states spend their stabilization money to make sure they are focused on education. I have heard that some states plan to use their stabilization money so as to maintain their rainy day fund and that others may rely on their stabilization grants to pay for tax cuts instead of investing in reforms. I will do everything in my power to reject any schemes that would subvert the intended purpose of the Recovery Act, which is to help schools through the economic downturn and push reform, thereby ensuring our economic prosperity in the future. When reviewing applications for the Race to the Top Fund, we plan to consider whether a state used their stabilization money to aggressively push reforms."

Duncan outlined some key principles for the use of State Fiscal Stabilization Funds. These included helping to ensure that the funds:

  • Help to improve the effectiveness of teachers;
  • Help place the best teachers where they are most needed;
  • Lead to the improvement of the quality of schools' academic standards;
  • Create more accurate assessments for English language learners;
  • Turn around underperforming schools; and
  • Contribute to data systems that will track long-term student performance.

In his address, Duncan also touched on a number of other education issues, including several he's spoken about before, such as expanding early childhood education and implementing teacher incentives to "develop comprehensive strategies for recruiting, preparing, rewarding, and retaining effective teachers."

And he also emphasized the $4.35 billion "Race to the Top Fund" and the$650 million "What Works and Innovation Fund," both of which provide awards through competitive grants to states and individual organizations to creative innovative education programs, "scale up" existing programs that have demonstrated success, and evaluate programs that show promise.

In related news, ED today announced the appointment of Joanne Weiss to lead development of the Race to the Top Fund. Further information about that appointment can be found here.

About the Author

Executive Producer David Nagel heads up the editorial department for 1105 Media's education publications — which include two daily sites, a variety of newsletters and two monthly digital magazines covering technology in both K-12 and higher education.

A 21-year publishing veteran, Nagel has led or contributed to dozens of technology, art and business publications.

He can be reached at dnagel@1105media.com. You can also connect with him on LinkedIn at linkedin.com/profile/view?id=10390192 or follow him on Twitter at @THEJournalDave (K-12) or @CampusTechDave (higher education). A selection of David Nagel's articles can be found on this site.


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