June 30, 2004

Dear Chairman Boehner:

As the nation’s chief state school officers, we write to express our strong objections with your recent comments regarding federal funding to support public education.  You assert that No Child Left Behind (NCLB) is adequately funded because states are “sitting on” billions of unspent dollars.  You also state, “we are increasing federal education spending more quickly than states can actually spend the money.”  If these statements are meant to defend the current level of federal funding for education, they are deliberately misleading.  Your statements ignore the budgeting practices authorized by Congress and misrepresent the quality work of our nation’s chief state school officers.  As chairman of the Committee on Education and Workforce, we call on you to acknowledge that states are in fact following the federal laws and guidance regarding the expenditure of federal funds for NCLB.

Throughout the last six months, the Committee on Education and the Workforce has cited a U.S. Department of Education (ED) Grant Administration and Payment System (GAPS) report that identified $5.7 billion in unexpended funds from fiscal years 2000, 2001, and 2002 and implied that states are not taking full advantage of appropriated funds for NCLB.  It may be understandable for members of the general public to assume that federal funds flow immediately to states after an appropriation bill is signed, but you or members of your staff know better. Indeed, states could issue press releases expressing a concern that we have not been “paid $16.8 billion owed to us for more than a year.”  However both that statement and yours would be equally foolish since both disregard the budgeting regulations and practices authorized by Congress.

The conclusions reached by the Committee on Education and Workforce majority staff are inaccurate and misleading for the following reasons:

1. The comments ignore the fact that funds cannot be expended until rules have been created for the operation of each program.  ED took more than a year and a half to regulate on many aspects of NCLB.  Once ED finally issued regulations, states still had to submit plans for approval and/or approve LEA plans for receipt and expenditure of funds, all of which delayed the time period during which states could begin committing and actually spending their NCLB funds.


2. The U.S. Department’s own report, based on Office of Management and Budget (OMB) estimates, explains that states are expending funds faster than anticipated.  The OMB projections are based on congressionally mandated budgeting practices, including the Tydings amendment that gives states the full 27 months to expend funds.  With passage of Tydings, Congress enabled states and local districts to better manage funds within the bureaucratic timelines, and they deliberately encouraged states to engage in longer term planning and to abandon the practice of racing to spend federal funds within a fiscal year.  Your statements would suggest that states should return to the days of less deliberate budgeting.  As a steward of public funds, I believe it would be reckless for states to accelerate their spending for any reasons other than those that are in the best interest of all students.
   
3. The comments fail to note that, according to ED, the level of unexpended funds has dropped from $5.7 billion to $2.7 billion within the past six months.  This is due to projects and activities from school districts being completed and districts requesting reimbursement with the appropriate federal funds.
   
4. It is also most inaccurate to suggest that because states and schools have not spent their funding, it is going unused.  Of the funds that are still unexpended, most are already committed to pay for specific projects; they are in a queue waiting to be expended for ongoing contracts.  The comments fail to distinguish between funds that have been obligated to support specific projects and activities and those funds that are unobligated.  If we held an individual to the same standard, we would judge him/her based solely on the amount of money in his/her bank account, without considering credit card debt, rent, student loans, and car payments.  Unfortunately, the GAPS report only tracks how much money states have in the bank without considering what obligations the school system has made for the coming years.  The GAPS report was designed to identify unexpended funds; without having more information, there is no way to discern from the report whether the states have committed the money for NCLB.

As the nation’s chief state school officers, we particularly resent the implication that state education agencies, rather than Congress, are somehow blocking the flow of funds to local classrooms.  Not only is the insinuation untrue, but state education agencies and their chiefs have cooperated fully with the administration and with Congress in a partnership to implement No Child Left Behind – indeed we are on the front lines of that partnership.  Now you inaccurately suggest that any lack of resources appears to be of our own making.

CCSSO members are committed to following the laws and regulations that guide the expenditure of federal funds.  It is our understanding that no state has been accused of wrongdoing, and there have been no accusations of mishandled funds.  A letter from U.S. Secretary of Education Rod Paige to me in my capacity as President of CCSSO (dated February 24, 2004) acknowledges that “comments on the unspent funds issue were in no way intended as criticism” of state fiscal practices.  Yet, the insinuations and accusations continue.

The “unexpended funds” issue is being used as a diversion from the real issues of how to help a much larger proportion of students achieve academic success.  The $2.7 billion in unused funds represents less than one quarter of one percent of funds that were available to public schools during the same three-year time period.  It is hardly the panacea that would facilitate successful NCLB implementation, and it stands in stark contrast to the half trillion dollars spent on education each year.  If states drew down all $2.7 billion today, it would still be earmarked for specific, congressionally mandated purposes and could not, in most cases, be used to implement the provisions of NCLB.

We simply ask that the high quality work of our nation's chief state school officers not be diminished by false accusations.  We will continue to fight for the successful implementation of the law and to spend federal funds in a manner that meets the Federal requirements, as well as in the best interests of children.

Rather than continuing this discourse through the media, our organization would be pleased to participate in a meeting with you and your committee staff to work together to come to a mutual understanding on these issues.  Please let me know your pleasure in that regard.

Sincerely,

Ted Stilwill
Director
Iowa State Department of Education