US DOE's Inspector General questions MA funding of education

The Alliance for Excellent Education has released a report, Straight A’s, that is scathing about the misuse of stimulus money in Massachusetts, Pennsylvania and Connecticut. It cites a report from the US DOE’s Inspector General criticizing the three states for using the stimulus funds in a way that was not intended in the stimulus legislation. (See the OIG’s memo and the Federal OESE’s response here.)

The Patrick administration has not done anything illegal but the feds don’t like it. Basically, what happened is that the ARRA had a loophole and it has led to unintended consequences – reductions in state funding for education commensurate with what the three states thought they could use the federal money for. The feds clearly don’t like it, but are now struggling with how to deal with it as they limited remedy.

In what follows you will see the term “MOE.” It refers to Maintenance of Effort, and implies that the states were supposed to hold the districts harmless. MOE will be considered as the state seeks to move its RTTT funding application forward but the OIG notes there is no hard penalty attached to ensure compliance.

From the Alliance for Excellent Education report:

“In Massachusetts, the governor’s original budget proposal for FY 2009 included a $223.2 million increase to the state’s primary K-12 funding formula, Chapter 70 education aid. In October 2008, the governor announced reductions in the state’s budget to cover revenue shortfalls, but Chapter 70 was unaffected. In January 2009, the governor proposed further reductions, but again, Chapter 70 was unaffected. But in May 2009, after the enactment of ARRA, the governor announced a plan to reduce funding for Chapter 70 by $412 million and use $412 million of the state’s SFSF allocation to fill the hole.

In order to address these budget shell games, the inspector general makes two recommendations to the U.S. Department of Education. First, it suggests that the department implement a process to track state support for elementary and secondary education, as well as for public institutions of higher education, as defined in state SFSF applications, to determine the extent to which State funding on public education is being reduced. Second, it recommends that the department establish and implement a process to ensure that states have met the MOE requirements and assurances prior to awarding additional SFSF funding.

This strikes me as an important story, about which the Globe editorial board and this young fellow wrote in February and May 2009, respectively.