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Backgrounder #1193

June 16, 1998

Education Dollars are Spent Best in the Classroom, Not onBureaucracy

The House Education and Workforce Committee is considering a new education initiative called the Dollars to the Classroom Act (H.R. 3248). Sponsored by Representative Joseph Pitts (R-PA) and Senator Tim Hutchinson (R-AR), this bill would shift power and funding for local schools from Washington to the states and would guarantee that at least 95 percent of existing federal funds reach the classroom.

If adopted, H.R. 3248 would represent a major policy change for Washington. It would block grant to the states the funding for 35 K-12 education programs, sending $3.37 billion in tax dollars to their governors. No more than 5 percent of this money could be used for paperwork and administration. Targeted programs would include Goals 2000, School-to-Work programs, and most programs under the Elementary and Secondary Education Act (ESEA). H.R. 3248 would not involve Title I, Individuals with Disabilities Education Act (IDEA), or vocational education funds. The constitutional right of the states to make their own decisions on how to use the funds would be protected, but the bill would set a precedent by requiring that states reserve most federal tax dollars for specific classroom expenditures. A "hold harmless" provision would guarantee that states receiving formula-based grants could not receive less than the amount they would have received to carry out those programs under previous statute for that fiscal year, beginning in FY 1999.

The Dollars to the Classroom Act could be one of the first truly "child-centered" education initiatives ever enacted by Congress. Instead of funneling billions of tax dollars to bureaucratic school systems, the bill would ensure that money reaches teachers, students, and principals who make schools succeed.

HOW DOLLARS TO THE CLASSROOM WOULD WORK

As a policy change, the Dollars to the Classroom initiative would:

  1. Channel more money to classroom needs. Despite limitations and variations in the information states provide concerning what constitutes a "classroom expenditure," according to an April 1998 report by the U.S. Department of Education, around 84 percent of federal elementary and secondary education funds is used for instruction.1 This supports earlier findings by The Heritage Foundation published in December 1996 in a report on "Where the Money Goes."2 For every dollar sent to Washington, states receive back on average about 80 cents, losing nearly 20 cents to paperwork and administration. The amount varies from state to state. The Heritage study found that Connecticut and Nevada receive only 39 cents for each dollar they send to Washington, while Alaska receives $3.12.

According to a recent Congressional Research Service (CRS) report, programs block granted under the Dollars to the Classroom Act would shift from 30 percent to 40 percent in additional funding directly to America's classrooms.3 The CRS also notes that the greatest increase in program funds used "in the classroom" would come from programs that now serve local education agencies indirectly (such as the Eisenhower Professional Development Program, School-to-Work Opportunities Program, Safe and Drug Free Schools Program, and Education Research, Development, and Dissemination programs).

  1. Reduce the regulatory and bureaucratic burden. The high costs of administering federal programs often fall on the states. The regulatory and bureaucratic burdens that federal education programs impose on school districts increase the number of paperwork hours needed to apply for and accept federal dollars and to comply with requirements. The U.S. Department of Education estimates that it takes approximately 48.6 million paperwork hours--the equivalent of almost 25,000 employees working 40 hours a week for a full year--to complete the paperwork involved in administering federal education programs. Consider some of the burdens at the state level:
  • In 1990, Ohio calculated that over 50 percent of its paperwork burden was related to federal education programs, although only 5 percent of its education revenues came from federal sources.4

  • Dr. Charles Garris, Superintendent of the Unionville-Chadds Ford School District in Pennsylvania, stated in supporting documentation for his 1997 testimony before the Subcommittee on Oversight and Investigations of the House Committee on Education and the Workforce that he had to spend over $2,400 to receive federal funding in the 1997-1998 school year. This was nearly 13 percent of the $21,796 in funding for which he was applying. He predicted that, once he received the funding, he would have to spend another 25 percent on administrative costs. Dr. Garris decided it was no longer cost-effective to apply for certain federal programs.5

  • Florida Education Commissioner and Education Leaders Council (ELC) President Frank T. Brogan would agree. Testifying before the House Education and Workforce Committee on May 5, 1998, Brogan said that "Six times as many people are required to administer a federal dollar as a state dollar."6

  • Georgia's Superintendent of Schools and ELC member Linda Schrenko pointed out at the same hearing that "Georgia's total education budget from all sources for the 1996-97 school year was about 9.45 billion dollars, of which about 6.4 percent, slightly over 600 million dollars, came from the federal government. In that same year the Georgia Department of Education had 322 employees, of whom 93 worked full-time administering the federal programs."7 She estimated that it took four and one-half hours to administer a federal dollar for every hour needed to administer a state dollar.

According to these education officials and many of their colleagues in other states, if federal tax dollars for state education are going to be used, Congress should give the states the power and the dollars to reform education and should require that most of the taxpayers' money be spent in the classroom.

  1. Boost accountability. Currently, little is known about what happens to federal tax dollars for education programs once they leave Washington. Few school districts, parents, and taxpayers have accurate data with which to determine exactly how many cents of each dollar paid actually reach their classrooms. Data released by New York City's public schools, for instance, reveal that only 43 percent of the city's total education funds has been used directly for classroom expenditures. H.R. 3248 would encourage the states to determine what a "classroom expenditure" is and would ensure that at least 95 percent of the federal funds they receive under the Dollars to the Classroom Act is spent on classroom activities.

Under this bill, the governors of each state would be required to tell Congress what classroom services are being provided to children in their states. The bill also would require the Secretary of Education to report to Congress how regulations would be cut and bureaucracy eliminated so that 95 percent of grant awards could be made available to states for use in the classroom.

CONCLUSION

The President views hiring more teachers, building more schools, hooking up more classrooms to the Internet, and offering states more "flexibility" on how they spend federal funds as key components of education reform. Under provisions like those in the Dollars to the Classroom Act, such goals would become reality without increasing spending, infringing on state and local authority, or wasting money on bureaucracy in Washington, D.C., or state education offices. This modest effort would offer principals additional funding to purchase the materials they deem necessary for their classrooms, be it books or extra tutors in reading and mathematics.

Congress has an opportunity to change current federal education policy to one that is more truly child-centered. Legislation like H.R. 3248 offers Congress a tangible way to get more education dollars into America's classrooms, where the real learning occurs, instead of wasting them on administrative paperwork in distant government offices.

Nina H. Shokraii is Education Policy Analyst at The Heritage Foundation

Endnotes

1. U.S. Department of Education, "The Use of Federal Education Funds for Administrative Costs," in Laureen Lazarovici, "Classrooms Clear 84 Percent of Federal Education Funds," Education Daily, April 15, 1998, p. 1.

2. Christine L. Olson, "U.S. Department of Education Financing of Elementary and Secondary Education: Where the Money Goes," Heritage Foundation F.Y.I. No. 126, December 30, 1996.

3. Congressional Research Service memorandum from Wayne Riddle to Representative Joseph Pitts on "uses of funds under selected federal education programs," April 29, 1998.

4. Olson, "U.S. Department of Education Financing of Elementary and Secondary Education."

5. Dr. Charles Garris, letter to Lauren Richardson, office of Representative Joseph Pitts, on "Federal Funds," June 12, 1997, in support of statement before the Subcommittee on Oversight and Investigations, Committee on Education and the Workforce, U.S. House of Representatives, May 8, 1997.

6. Frank Brogan, testimony before the Committee on Education and the Workforce, U.S. House of Representatives, May 5, 1998.

7. Linda Schrenko, testimony before the Committee on Education and the Workforce, U.S. House of Representatives, May 5, 1998.

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