II.F: Financial Transparency of American Recovery and Reinvestment Act (ARRA)

Demand accountability and transparency regarding this massive infusion of federal funds into the public education system.

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Historically, the federal government accounts for only 9 percent of total U.S. public education spending annually, with state and local governments providing the remaining 91 percent of funding, and states maintaining primary authority over education spending. As a result of the 2008 recession, however, state and local governments faced severe revenue shortfalls, limiting their ability to fund education at previous levels given balancedbudget restrictions. The American Recovery and Reinvestment Act of 2009 (ARRA) created the one-time $48.6 billion State Fiscal Stabilization Fund (SFSF) to address this crisis. Both ARRA and the Department demand accountability and transparency regarding this massive infusion of federal funds into the public education system. For example, the Department posted all SFSF applications and amendments to ensure stakeholders are informed on a State’s use of the program funds. The Department intends to build on this experience to create a new level of transparency regarding state education spending on an on-going basis. First, the Department is shining an unprecedented spotlight on the flow of ARRA funds at both the state and program level. All ARRA agencies are required to submit weekly spending updates by program to Recovery.gov. The Department of Education has gone above and beyond this requirement by aggregating this data into formats more meaningful to education stakeholders. Weekly reports of obligations and outlays for each state by program, and for each program by state, are posted at: http://www.ed.gov/policy/gen/leg/recovery/reports.html Second, the Department is providing unprecedented transparency into the education funding requirement that states use federal funding to support state and local funding, maintaining overall support rather than allowing funds to be shifted elsewhere (Maintenance of Effort or MOE). For SFSF, each State must assure that it will provide, for each of fiscal years (FYs) 2009 through 2011, at least the levels of support for elementary and secondary education and for public institutions of higher education as it provided for FY 2006. If a State is unable to maintain the required levels of support for education, it may apply for and obtain a waiver of the MOE requirements if it is able to demonstrate that it has not reduced the percentage of total State revenues spent on education. Examples of how the MOE compliance effort ensures transparency include: • All SFSF applications and amendments are posted at: http://www.ed.gov/programs/statestabilization/resources. html  Requests for MOE waivers and status of the waiver applications are posted at: http://www.ed.gov/programs/statestabilization/applicant.h tml • All SFSF Guidance and Monitoring Plans are posted at: http://www.ed.gov/programs/statestabilization/applicant.h tml Finally, ARRA provided a new level of transparency into the spending of federal funds at a granular level via the required Section 1512 Quarterly Reporting by recipients regarding ARRA awards, spending, and job creation. These data are compiled and posted by the Recovery, Accountability, and Transparency Board on Recovery.gov. To serve the financial transparency needs of education stakeholders, however, the Department aggregates these data at the state level by program and the program level by state. The posted data include the detailed jobs narratives provided by each state on jobs created with SFSF funds, allowing an unprecedented window into the use of funds by state and by program. The Department’s Section 1512 reports are posted at: http://www.ed.gov/policy/gen/leg/recovery/spending/impact2.ht ml The Department intends to build on these ARRA practices to enhance the transparency of all of its grant programs at the state level, in conjunction with the upcoming guidance on federal spending information, including sub-award collection.

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