Stabilize State and local government budgets to avoid reductions in education and other essential public services while driving education reform in four key areas: teacher effectiveness and inequities in the distribution of highly qualified teachers; rigorous college- and career-ready standards and assessments; targeted, intensive support and effective interventions to turn around struggling schools; and pre-K-through-college-and-career data systems.
The overall goals of the State Fiscal Stabilization Fund (SFSF) and other U.S. Department of Education components of the ARRA are to stimulate the economy in the short term and invest in education and other essential public services to ensure the long-term economic health of our nation. The success of the education part of the ARRA will depend on the shared commitment and responsibility of students, parents, teachers, principals, superintendents, education boards, college presidents, State school chiefs, governors, local officials, and federal officials. Collectively, States must advance ARRA's short-term economic goals by investing quickly, and must support ARRA's long-term economic goals by investing wisely, using these funds to strengthen education, drive reforms, and improve results for students from early learning through college.
Four principles guide the distribution and use of SFSF and other ARRA funds:
1. Spend funds quickly to save and create jobs. The Department of Education will distribute funds quickly to States in order to avert layoffs and create jobs. States and LEAs in turn are urged to move rapidly to develop plans for using funds, consistent with the law's reporting and accountability requirements, and to promptly begin spending funds to help drive the nation's economic recovery.
2. Improve student achievement through school improvement and reform.
3. Ensure transparency, reporting, and accountability. To prevent fraud and abuse, support the most effective uses of ARRA funds, and accurately measure and track results, recipients must publicly report on how funds are used. Due to the unprecedented scope and importance of this investment, ARRA funds are subject to additional and more rigorous reporting requirements than normally apply to grant recipients.
4. Invest one-time ARRA funds thoughtfully to minimize the "funding cliff." SFSF represents a historic but temporary infusion of funds. These funds should be invested in ways that do not result in unsustainable continuing commitments after the funding expires.
Specifically, governors must use 81.8 percent of the SFSF State grant funds to support public elementary, secondary, and higher education, and, as applicable, early childhood education programs and services. These funds must be used to help restore for FY 2009, 2010, and 2011 State support for public elementary, secondary, and postsecondary education to the greater of the FY 2008 or FY 2009 level. The funds needed to restore support for elementary and secondary education must be distributed using the State's primary elementary and secondary education funding formulae. The funds for higher education must go to public IHEs. If any SFSF funds remain after the State has restored State support for elementary and secondary education and higher education, the State must award those funds to LEAs on the basis of their relative shares under Title I of the Elementary and Secondary Education Act of 1965 (ESEA).
Governors must use 18.2 percent of the SFSF State grant funds for public safety and other government services, which may include assistance for early learning, elementary and secondary education, and public IHEs. In addition, States may use these funds for modernization, renovation, or repair of public schools and public or private college facilities.