The Federal Stimulus (American Recovery and Reinvestment Act) and Education

Updated June 2011

In February 2009, the nation's lawmakers enacted the American Recovery and Reinvestment Act (ARRA), also known as the federal stimulus. The act provided California with nearly $8 billion, and more than $100 billion nationally. The act both provided substantial one-time funds to help struggling states and created competitive programs designed to spur reform.

Much of the $8 billion was distributed as augmentations to existing programs—e.g., Title I for disadvantaged students and IDEA for students with disabilities. More than $3 billion came through the State Fiscal Stabilization Fund, which provided largely discretionary monies and required states to report on specific indicators in four reform areas:

1. Increasing teacher and principal effectiveness;
2. Establishing data systems and using data for improvement;
3. Adopting rigorous college- and career-ready standards and high-quality assessments;
4. Turning around the lowest-performing schools.

The Race to the Top and Other Competitive Programs

The largest competitive program is known as Race to the Top (RTT). This $4.35 billion program challenges states to meet federal priorities for comprehensive action in the same four reform areas. The program consisted of two award cycles (or phases). States could apply in either cycle; and if they failed to receive an award in the first cycle, they could apply again. The awards are designed to provide states one-time funds to help implement reforms.

In January 2010, California joined 39 other states and the District of Columbia in applying for an RTT grant in the first cycle. Two winners, Delaware and Tennessee, were announced on March 29. The Department of Education has posted feedback and scores for all applications online.

In May 2010, California applied for an award in the second phase. A group of seven unified school districts—Clovis, Fresno, Long Beach, Los Angeles, Sacramento City, San Francisco, and Sanger—led the application process. Although selected as one of nine finalists, California ultimately did not secure a grant. The seven districts that led the application process formed an organization, California Office to Reform Education (CORE), to carry on the work proposed in the application.

A year after California applied for a grant in phase two, the federal Department of Education announced that it would allow the finalists to apply for a share of $200 million added to the program in 2011. A grant winner will receive $10 million to $50 million, depending on the state's size and the final number of grants awarded. Those amounts are much smaller than what was awarded in phases one and two. When states apply, they will work with the federal department of education to identify a portion of the reforms proposed in the second phase applications for which they would use the money. Soon after federal officials announced the availability of additional funding, CORE signaled a strong interest in applying for a grant.

The federal Department of Education will also work with the Department of Health and Human Services on a $500 million competitive grant program for early learning programs.

Up to $350 million of original RTT funds were set aside for states to develop new assessments. The Department of Education has awarded two state coalitions most of that money to develop assessments aligned with Common Core standards.

California originally joined a group of 26 states called the Partnership for Assessment of Readiness for College and Careers (PARCC). However, in June 2011, California officials announced that the state would join the other coalition, SMARTER Balanced, as a governing member, which gives a state voting power in decision-making. This means that California can no longer belong to PARCC.

Other competitive grants will provide incentives to enhance teacher recruitment and retention, create alternative pay structures for teachers, and develop longitudinal data systems. In addition, Investing in Innovation ("i3") provides funding for local entities to explore promising ideas and expand proven programs. To read about California's i3 winners, see EdSource's December 2010 report, Challenging Times: California Schools Cope with Adversity and the Imperative To Do More.

Race to the Top-Related Reforms in California

In the run-up to the state's submission, the Legislature passed a number of bills proponents said were necessary to make California's application competitive. The laws have wide-ranging effects. Notably, lawmakers removed the "firewall" that U.S. Secretary of Education Arne Duncan said existed between California's personnel evaluations and student achievement data. The state also established legislative intent to create a preschool through higher education (P-20) statewide longitudinal educational data system. Other major changes related to charter schools and interventions in low-performing schools. Despite the fact that California did not win an RTT grant in the first two phases, the significant policy changes enacted appear here to stay. (See our Noteworthy New Laws page for details.)