Budget 2010: New Investments in Transforming America’s Schools and Workforce

In speaking about how to resolve the economic woes facing the nation, President Obama has consistently cited three investment priorities as essential for achieving long-run, sustainable economic growth: clean energy, health care, and education. With respect to the latter, the Metro Program has argued in its Blueprint for American Prosperity initiative that improving the education and skills of American workers would contribute greatly to more robust and widely-shared economic prosperity.

The detailed FY 2010 budget reveals many elements of the administration’s strategy to achieve needed reforms in schooling and worker skills. In several respects, the FY 2010 detailed budgets for the Department of Education and Department of Labor continue efforts initiated by the American Reinvestment and Recovery Act (ARRA). These include:

• $1.5 billion proposed for Title I School Improvement Grants, in addition to $3 billion in ARRA, and an increase of $1 billion over regular 2009 appropriations. These grants to states assist schools identified as in need of improvement for failing to meet Adequate Yearly Progress benchmarks for at least two consecutive years. As Education Secretary Duncan outlined in a speech at Brookings, he intends to use these funds to focus on turning around the lowest-performing 1 percent of U.S. schools. The budget also proposes that states apply 40 percent of these funds to middle and high schools, which the department argues receive a less-than-proportionate share of Title I assistance. The significant increase in School Improvement Grants is offset by a proposed cut in Title I Basic Grants, which spread money very thinly across thousands of school districts, many with low levels of student poverty
• An additional $100 million proposed for the What Works and Innovation Fund, on top of the $650 million provided in ARRA. These funds would continue to support grants to school districts and partnerships between districts and non-profit organizations to scale up models that have a demonstrated track record of closing achievement gaps. This idea was described in “Changing the Game,” a Brookings Blueprint paper by Sara Mead and Andy Rotherham published last year
• $517 million proposed for the Teacher Incentive Fund, on top of $200 million in ARRA, and a dramatic increase over the $97 million appropriated for 2009. These funds support development and implementation of performance-based compensation systems, linked to student achievement, for personnel in high-needs schools. This proposal is designed to further one of Secretary Duncan’s key priorities, indicated in the assurances states must make to receive ARRA education dollars, to attract highly effective teachers to the schools and classrooms most in need of their talents. An increasing preponderance of educational research has reached the conclusion that teacher effectiveness is the most important in-school factor influencing student achievement. The fund seeks to overcome some of the well-documented barriers to staffing high-poverty urban schools with high-performing teachers
• Building on ARRA’s $17 billion in Pell Grant funding, which helps lower-income students pay for post-secondary education, the FY 2010 budget proposes to make Pell Grants a mandatory, rather than discretionary, program, and to index maximum awards to inflation in future years. As others have noted, this is a big change in the federal student loan system, one that would add much greater predictability to lower-income students’ financial decisions around attending college. Improving higher education access for this population is key to increasing social mobility. The $47 billion, five-year cost of the proposal would be offset in part by eliminating the Federal Family Education Loan program, in favor of direct lending by the Department of Education
• Finally, the Department of Labor budget proposes $114 million for the YouthBuild program, which would follow $50 million in ARRA funding and a $70 million appropriation for FY 2009. YouthBuild provides job training to out-of-school youth aged 16 to 24, who split their time between a construction site and a classroom as they earn a GED or high school diploma. The department’s Employment and Training Administration (ETA), which oversees the program, is placing greater emphasis on green construction techniques among its grantees. Interestingly, ETA would also devote a significant portion of its $11.6 million proposed evaluation budget to a randomized trial evaluation of YouthBuild

The detailed budget also includes several items of note that do not grow out of the recovery package, but do have particular metropolitan relevance, including priorities identified in the Blueprint initiative.

First, as described in an earlier analysis of the FY 2010 budget blueprint, the Department of Education would operate a new College Access and Completion Fund to support partnerships between the federal government and states to enhance college completion, particularly for students from lower-income backgrounds. This program would be operated out of the Office of Federal Student Aid, and that the program would be supported by mandatory funding of $2.5 billion over five years. Brookings has argued that a significant portion of the fund—at least half—be devoted to bolstering student success in community colleges, which currently enroll more than half of undergraduate black and Latino students. (The budget does not, however, envision additional direct federal support to community colleges, which Brookings has argued is necessary for achieving the president’s goal of recapturing American leadership in higher educational attainment by 2020.)

Second, the Department of Education’s budget proposal also includes a greatly expanded focus on early childhood education, with several new and expanded programs proposed, including:

• Title I Early Childhood Grants would provide $500 million to states to make matching grants to school districts that use Title I funds to invest in early childhood education
• The Early Learning Challenge Fund would fund a $300 million competitive program to states to enhance coordination among and raise the quality of early learning programs
• Early Reading First, which funds competitive grants to expand literacy services for preschool-aged children, would receive an increase of $50 million over 2009 appropriations
• $10 million in one-year planning grants for a Promise Neighborhoods initiative, supporting non-profit, community based organizations in low-income areas to design comprehensive programs for children, modeled on the successful Harlem Children’s Zone

These proposals would undoubtedly provide significant support to large cities, where the child poverty rate is much higher than the national average, and help more kids enter school prepared to learn. As others have pointed out, however, the effectiveness of these investments will depend greatly on the details of implementation and coordination with related programs.

Third, the Department of Labor proposes a new $135 million Career Pathways Innovation Fund, to replace the existing Community-Based Job Training Program (funded at $125 million in 2009). This fund will administer competitive grants to individual or groups of community colleges that focus explicitly on establishing career pathway programs. These programs have a clear sequence of coursework, multiple entry and exit points to accommodate learners at different levels, and often include links to basic services. Several states have implemented a career pathways model for aligning community college workforce preparation efforts with state workforce and economic development systems, and the fund would presumably build upon those initiatives. The proposal’s focus on community colleges acknowledges part of their role in building a stronger national economy.

Fourth, and finally, Labor proposes to use the bulk ($50 million of $57 million) of its FY 2010 pilots, demonstrations, and research budget to examine transitional job programs, specifically those serving noncustodial parents. These programs combine short-term subsidized employment with case management services to help individuals facing significant barriers to employment. Improving workforce participation among non-custodial parents could benefit many children as well, since it may help to increase child support compliance. Labor would work jointly with the departments of Health and Human Services and Justice to conduct the pilot, and learn which models work best, and most cost-effectively, for this disadvantaged population.

Overall, the President’s FY 2010 budget envisions a strengthened federal commitment to improving education and enhancing worker skills. Many of the strategies the administration proposes to pursue in this arena could have meaningful impacts in urban and metropolitan communities, though much will depend on how legislation evolves and programs are implemented. Nevertheless, these ideas represent a significant step toward a national economic strategy that invests strategically in human capital to improve our collective prosperity.