Earlier this week, leaders of the Miami-Dade school system and
Broward County school board in Florida called on the federal
government to provide a "bailout" for the area's ailing school
The lagging economy has resulted in declining tax revenues and
ballooning budget shortfalls for many state governments and local
communities across the nation. The National Conference of State
Legislatures recently reported that state governments are facing
$137 billion in budget gaps over a two year period. Thirty-eight states
expect budget shortfalls for the 2009 fiscal year.
The difficult fiscal climate is forcing states and localities to
cut state services, such as public education funding, or increase
taxes to raise new revenue. Some officials have proposed a federal
bailout of state and local governments as an alternative to making
difficult budget decisions. For example, the National Governors
Association and a number of big city mayors have appealed to
Washington for increased federal aid. As budget pressure increases
on public school systems, education officials across the country
may follow those from Miami-Dade and Broward County by requesting a
bailout for public education. But what states, local governments,
and schools need is not more federal funds but freedom from federal
regulations that burden school districts with added costs and red
Why a Federal Education Bailout Is Not
A federal "bailout" package for public school systems is
unnecessary for a number of reasons.
First, people need to keep potential state and local budget
cuts, including those affecting public education, in perspective:
State government spending has been increasing steadily for decades.
The National Association of State Budget Officers reports that
state general fund expenditures have increased, on average, by 6.7
percent annually over the past 31 years.
Second, Government spending on public education has also
increased over recent decades. The National Center for Education
Statistics reports that, between 1994 and 2004, average per-pupil
expenditures grew by 23.5 percent (adjusted for inflation).
Between 1984 and 2004, real expenditures grew by 49 percent.
Unfortunately, continuous spending increases have not
corresponded with equal improvement in American educational
performance. While a federal a bailout for public
education may allow state and local officials to avoid difficult
budget decisions, experience suggests that increasing or
maintaining higher levels of government spending is an ineffective
policy strategy for improving educational performance.
Third, a federal bailout of state and local public education
spending would only shift the tax burden from state and local
taxpayers to federal taxpayers. In the past year, Congress
and the Administration have approved historic federal spending
increases. This spending has added to the ballooning federal budget
deficit and the federal taxpayers' growing long-term obligations.
In difficult economic times, American families must often make
tough budget decisions and reduce their spending. Government should
not be any different.
An Alternative Solution: Emergency
Regulatory Relief and State Flexibility
Instead of offering a federal education bailout, Congress and
the incoming Administration should examine other ways that the
federal government can help states and local governments in today's
difficult fiscal climate. A promising solution would be to grant
states emergency regulatory relief and greater flexibility in the
potential use of funding provided through major federal programs
like No Child Left Behind.
Under No Child Left Behind, the federal government distributes
$24.5 billion annually to states for education programs. However,
funds are required to be spent on specific programs, and states
must comply with federal regulations to receive funding. These
regulations restrict states' ability to use funds on state
priorities and create significant administrative costs for states,
school districts, and public schools. Since 2002, this compliance
burden has grown significantly under No Child Left Behind.
To assist states during the current economic downturn, the
federal government could grant states greater freedom and
flexibility over how federal education funding is used for programs
like No Child Left Behind.
For example, the Department of Education could give states the
opportunity to establish a charter agreement with the federal
government. Under the terms of the charter, states would be free to
receive federal education funding for NCLB without complying with
federal regulations and program requirements so long as states
agree to meet basic requirements, such as continuing to use Title I
funding to assist disadvantaged students and maintaining academic
and fiscal transparency through state-level testing and public
This approach would allow states to reduce administrative costs
associated with federal program compliance, end ineffective or
unnecessary programs, and direct more federal education funding to
state priorities to improve education. Under normal circumstances,
granting states greater freedom to allocate federal education funds
would enable greater state-directed innovation and reform by
allowing states leaders to best meet students' needs.
However, in the current fiscal climate, such a policy would offer
the added benefit of easing the fiscal burden on state and local
The Path Forward
Members of Congress should resist calls by states and school
districts for a federal bailout for public education. Instead,
Congress should grant states greater freedom and flexibility in how
federal funds for education are used while maintaining academic and
fiscal transparency. State policymakers and local school leaders
should also resist calls to request a federal bailout for schools.
Instead they should join state leaders like Governor Mark Sanford
of South Carolina in calling for flexibility and freedom from
federal regulations in place of new funding.
Dan Lips is Senior Policy
Analyst in Education in the Domestic Policy Studies Department at
The Heritage Foundation.