The Council for Exceptional Children’s Questions & Answers
How the American Recovery and Reinvestment Act Impacts Special Education and Early Intervention
Background
On Feb. 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act (ARRA), commonly referred to as the economic stimulus package. ARRA more than doubles current federal funding for programs that CEC and its members have long advocated for, such as special education and early intervention.
Never before has the federal government invested so much in special education. This historic investment is the culmination of decades of advocacy and leadership by CEC and its members in collaboration with the education and disability communities. CEC thanks its members for over 30 years of strategic, focused advocacy!
To help our members understand ARRA and maximize its impact, CEC is providing a variety of resources about how ARRA funds special education and early intervention programs. In addition to this Q & A, CEC has dedicated an area of its Web site to ARRA (referred to as economic stimulus) and will continue to provide regular updates via its Policy Insider (weekly e-newsletter) as new information becomes available.
This Q&A summarizes the portions of ARRA that CEC believes will be of particular interest to its members. It is not meant to summarize the entire Act. For links to more resources discussing ARRA, including the text of the Act itself, please look to CEC’s ARRA page.
In addition, CEC is collecting feedback on how ARRA has impacted you, your school/early intervention program, and the children and youth you serve. By completing CEC’s short survey you will help us sustain this investment in special education and early intervention.
General Information About ARRA
This legislation seeks to address the challenging economic times confronting the nation by providing tax cuts and infusing historic levels of federal funding into areas such as education, health care, energy, and infrastructure. Overall, ARRA provides approximately $100 billion for programs administered by the U.S. Department of Education.
Of the total $787 billion ARRA package:
- $575 billion is dedicated for spending, which includes:
- $105 billion for education related programs
- $90 billion for Medicaid
- $51 billion for Energy & Water
- $48 billion for Transportation
- $39 billion for Unemployment
- $25 billion for Health Insurance
$212 billion is dedicated for tax cuts. This includes:
- $83 billion for Alternative Minimum Tax Fix
- $66 billion for Making Work Pay Credit
- $36 billion for Business Tax Cuts
- $4 billion for Education Credit
CEC has created a chart specifically detailing ARRA-funded programs that impact individuals with disabilities. These programs include:
- $12.2 billion for Special Education (IDEA) which includes:
- $11.3 billion for Part B Grants to States for school aged students
- $400 million for Part B Section 619 for preschool children
- $500 million for Part C Infants and Toddlers with Disabilities Program
- $680 million for Rehabilitation Services and Disability Research
- $13 billion for Education for the Disadvantaged (including Title I)
- $53.6 billion for a State Fiscal Stabilization Fund (to provide fiscal relief to States to prevent tax increases and cutbacks in education and other critical services)
- $250 million for Institute for Education Sciences (education research)
- $1 billion for Head Start
- $1.1 billion for Early Head Start
CEC’s Questions & Answers on the American Recovery and Reinvestment Act (ARRA)
While there are many areas of ARRA that the U.S. Department of Education is currently reviewing, CEC is pleased to provide a general Q&A to assist its members in understanding how this law will impact students, schools, and states. PLEASE NOTE: Information regarding ARRA is very fluid and CEC will provide regular updates as more information becomes available.
** Please note that we have corrected a typo contained in the original Q & A. In the answer to Question 11, the term “SEA” in the first line of the second major bullet point should have read “LEA.” **
- Why is funding for education considered economic stimulus?
- How does ARRA provide additional funding for education?
- What is the timeline for use and distribution of IDEA funds?
- I understand that the ARRA provides over $12 billion to special education. How much of that money will go to my SEA and LEA?
- I understand that $500 million is slated to go to IDEA’s Part C Infants and Toddlers with Disabilities Program. How
- What can SEAs and LEAs spend the additional IDEA funding on?
- How long will the IDEA funds provided by ARRA remain available?
- How much of this funding can SEAs use for state administration and state level activities?
- Is IDEA now fully funded because of this historic investment in special education?
- Does the new funding in ARRA serve as a baseline for future funding of IDEA programs?
- How does ARRA address maintenance of effort (MOE) for IDEA?
- How does ARRA address supplement not supplant provisions (SNS)?
- What are the key elements of the State Fiscal Stabilization Fund?
- How does ARRA address maintenance of effort and supplement/not supplant provisions for the State Fiscal Stabilization Fund?
- Does ARRA include any reporting and accountability requirements for the use of the money? How will I know how the money is spent?
- What other programs are funded by ARRA that impact children and youth with disabilities?
- Does ARRA address Medicaid?
- Where can I find more information on ARRA?
- How can I share the impact the economic crisis has had on me, my school/program, and students; and how ARRA is addressing these issues?
- Glossary of Terms
Q1. Why is funding for education considered economic stimulus?
A1. The answer to this question focuses on ARRA’s twin goals: short and long term economic impact. In the short term, ARRA aims to stimulate the economy by reducing cuts to education. Estimates indicate that at least 26 states are confronting fiscal crises and cutting education as a result. Cutting education funding often means layoffs, discontinuation of programs and indefinite postponement of new initiatives. Moreover, during times of economic crisis, programs serving children and youth with disabilities are often cut, further straining systems that have been stretched thin for years.
By infusing more funding into education in the short term, ARRA seeks to avoid layoffs and program cuts, especially in programs which help individuals with disabilities. It also aims to create new jobs needed to implement new initiatives.
In the long term, ARRA seeks to ensure better educational outcomes, thus preserving the economic health of the nation. To that end, ARRA provides the U.S. Secretary of Education with discretionary funds to grant to local education agencies (LEAs), nonprofit partnerships or consortia of LEAs funds for innovative programs designed to prepare students to succeed in the global workforce. By investing in these programs, ARRA hopes to ensure long term job growth for the nation.
Q2. How does ARRA provide additional funding for education?
A2. ARRA provides over $100 billion for education programs. Much of this money will be distributed to state education agencies (SEAs) and LEAs through existing programs such as the Individuals with Disabilities Education Act (IDEA); Title I; and Student Financial Assistance and Higher Education (including Pell Grants). ARRA also includes $53.6 billion for a State Fiscal Stabilization Fund, which is intended to provide fiscal relief to states and prevent tax increases and cutbacks in critical services, namely education. Of the State Fiscal Stabilization Fund, Governors must use $40 billion to restore support to elementary, secondary and higher education. (See the following questions for more information on State Fiscal Stabilization Fund.)
Q3. What is the timeline for use and distribution of IDEA funds?
A3. The Department of Education has released the following timeline for IDEA specific ARRA funds:
End of March 2009:
- 50% of IDEA Part B Grants to States and Preschool Grants to States will be awarded to SEAs; and
- A minimum of 50% of IDEA Part C Infants and Toddlers with Disabilities Program, and Vocational Rehabilitation State Grants will be available pending upcoming guidelines.
End of April 2009:
- SEAs are expected to make funds available to LEAs.
July 1, 2009:
- Regular Fiscal Year 2009 Part B Grants to States and Preschool Grants to States awarded to SEAs. Note:ARRA funds are in addition to regular Fiscal Year 2009 funding.
October 1, 2009:
- Remaining 50% of IDEA, Part B Grants to States and Preschool Grants to States awarded to SEAs.
September 30, 2011:
- All IDEA ARRA funds must be obligated.
Q4. I understand that the ARRA provides over $12 billion to special education. How much of that money will go to my SEA and LEA?
A4. ARRA provides $12.2 billion to IDEA programs, (see CEC chart for program breakdown) which will flow to SEAs and LEAs using the same funding formula currently used by IDEA programs, based on the timelines described above. The U.S. Department of Education has published data charts detailing how much additional funding SEAs will receive for IDEA Part B (school aged students); Part B Section 619 (preschool children); and Part C (infants and toddlers). The Congressional Research Service has also published charts listing individual LEA allocations.
Q5. I understand that $500 million is slated to go to IDEA’s Part C Infants and Toddlers with Disabilities Program. How can this money be allotted?
A5. Part C funding will be distributed through the same IDEA funding formula which is always used to distribute Part C funds. The U.S. Department of Education has stated it will issue more specific guidance by the end of March 2009. Therefore, the information below does not address Part C unless specifically noted. CEC will update this Q & A with Part C information as soon as it becomes available.
Q6. What can SEAs and LEAs spend the additional IDEA funding on?
A6. The additional IDEA funding provided by ARRA will be distributed through the existing funding formulas. This means that the allowable uses for these funds are the same as they always are for IDEA funds. The U.S. Department of Education has emphasized, however, that ARRA funds should be used for investments that can be sustained after ARRA funding expires, such as:
- Assistive technology devices and training in their use;
- Focused professional development;
- Data collection enhancements;
- Expanding the availability and range of inclusive placements for preschool children with disabilities; and
- Hiring transition coordinators and job developers for students entering the workforce.
Q7. How long will the IDEA funds provided by ARRA remain available?
A7. All IDEA ARRA funds must be obligated by LEAs by September 30, 2011. The $11.3 billion provided by ARRA to IDEA Part B (school aged students), $400 million for IDEA Part B Section 619 (preschool children), and the $500 million for IDEA Part C (infants and toddlers) will be available during school years 2008-2009, 2009-2010 and 2010-2011. Importantly, according to the U.S. Department of Education, “[a]n LEA should obligate the majority of these funds during the school years 2008-09 and 2009-10 and the remainder during school year 2010-11.”
Q8. How much of this funding can SEAs use for state administration and state level activities?
A8. ARRA funds do not increase the amount that a SEA would otherwise be able to reserve for state administration or other state-level activities. SEAs are held to amounts already identified in their Fiscal Year 2009 awards.
Q9. Is IDEA now fully funded because of this historic investment in special education?
A9. No. While ARRA provides a historic infusion of funding to special education—doubling what special education programs currently receive —it does not achieve full funding of IDEA. In 1975, when IDEA was originally enacted, Congress committed to providing 40% of the national average per pupil expenditure to assist SEAs and LEAs with the excess cost of educating students with disabilities. For fiscal year 2009, ARRA would bring the percentage from its current 17.2% to 34.2%, a significant step forward, but still not full funding.
Q10. Does the new funding in ARRA serve as a baseline for future funding of IDEA programs?
A10. It is unclear. The U.S. Department of Education guidelines on IDEA and the State Fiscal Stabilization Fund repeatedly note that funding provided by ARRA represents a one time, historic infusion that is expected to be temporary and should not be used in a way that would create unsustainable commitments after ARRA funding runs out.
However, because all IDEA programs have been underfunded for decades, CEC believes ARRA’s investment must be the baseline for future federal funding of special education programs. CEC and its members have long advocated for full funding of IDEA and therefore, will advocate for ARRA’s substantial investment to remain intact and increase in the future. Full funding is CEC’s goal.
Q11. How does ARRA address maintenance of effort (MOE) for IDEA ?
A11. The U.S. Department of Education’s recent guidance indicated that all IDEA funds provided by ARRA are subject to the same MOE provisions as those included in IDEA 2004. Here, for all ARRA IDEA funds, the following applies:
1. IDEA 2004’s 50% MOE Provision Applies to ARRA funds:
- As allowed by IDEA 2004 Section 619(a)(2)(C), under certain circumstances, if an LEA’s fiscal year allocation exceeds its allocation from the previous year, (which it will for many LEAs that receive ARRA funds) the LEA can reduce the level of state and local expenditures by up to 50% of the increase, as long as the reduced or freed-up funds are used for authorized ESEA purposes.
- If an LEA takes advantage of this MOE flexibility, then its MOE in future years is reduced by the same percentage amount it reduced its MOE (unless the LEA increases the state and local expenditures on its own).
- Thus, for example, if an LEA receives $300,000 in ARRA stimulus funds, then the LEA can reduce its state and local spending by $150,000 and use those funds for any activity approved under ESEA.
- But note, that a SEA can prohibit an LEA from using the MOE provision if it either independently determines that an LEA is unable to establish and maintain FAPE for students, or if it has taken action against the LEA under IDEA corrective action guidelines. See 34 C.F.R. 300.205(c).
- ARRA Specific Guidance:
- In recent ARRA guidance, the U.S. Department of Education instructed SEAs to encourage LEAs to focus freed-up local funds on one-time expenditures that will help states accomplish the State Fiscal Stabilization Fund’s goals. (See Q & A 13 below). This has not been developed any further, however, and there are not yet specific guidelines for how to meet this requirement. Importantly, the Department emphasized ARRA’s accountability requirements and stated that SEAs will be expected to collect and report information on the use of any freed-up funds.
Additionally, a state or LEA may count State Fiscal Stabilization funds (but not ARRA IDEA funds) as nonfederal funds for the purposes of determining whether the state or LEA has met IDEA’s MOE requirements.
2. IDEA 2004 allows LEAs to reserve up to 15% of IDEA Part B funds for early intervening services (EIS). This also applies to ARRA funds:
- LEAs may also (and in cases of disproportionality must also) spend up to 15% of their total IDEA Part B Grants to States on general education students in K through 12, who are not currently eligible for IDEA, but who need academic or behavioral support to succeed in general education.
- MOE and the 15% of IDEA funds for early intervening services are interconnected. Therefore, an LEA must carefully consider how it uses these funds.
- Notably, the LEA must calculate its 15% by subtracting the amount, on a dollar for dollar basis, by which the LEA reduced its required state and local expenditures under the maintenance of effort provisions, from the total amount of IDEA funds received.
Example: The following is an example of this interconnection between MOE and EIS, provided with IDEA 2004 guidance by the U.S. Department of Education:
- Prior Year’s Allocation: $900,000
- Current Year’s Allocation: $1,000,000
- Increase: $100,000
- Maximum Available for MOE Reduction: $50,000
- Maximum Available for EIS: $150,000
- If the LEA chooses to set aside $150,000 for EIS, it may not reduce its MOE (MOE maximum $50,000 less $150,000 for EIS means $0 can be used for MOE).
- If the LEA chooses to set aside $100,000 for EIS, it may not reduce its MOE (MOE maximum $50,000 less $100,000 for EIS means $0 can be used for MOE).
- If the LEA chooses to set aside $50,000 for EIS, it may not reduce its MOE (MOE maximum $50,000 less $50,000 for EIS means $0 can be used for MOE).
- If the LEA chooses to set aside $30,000 for EIS, it may reduce its MOE by $20,000 (MOE maximum $50,000 less $30,000 for EIS means $20,000 can be used for MOE).
- If the LEA chooses to set aside $0 for EIS, it may reduce its MOE by $50,000 (MOE maximum $50,000 less $0 for EIS means $50,000 can be used for MOE).
- IDEA 2004’s State Level MOE Waivers also apply to ARRA funds:
State level waivers are also governed as set forth in IDEA 2004. Thus, the U.S. Secretary of Education may grant a state a one year MOE level waiver for uncontrollable circumstances, such as, a natural disaster or precipitous and unforeseen decline in the financial resources of the State. Here, certainly the latter may apply. But in either case, the LEA level of MOE still may not be waived.
The U.S. Department of Education has stated more guidance will be available by the end of March 2009. CEC will update its ARRA Web page with this information when it becomes available.
Q12. How does ARRA address supplement not supplant provisions (SNS)?
A12. ARRA does not directly address supplement not supplant provisions. The supplement not supplant provision generally forbids using IDEA funds to replace other state, local or federal funds used for special education purposes. To date, the U.S. Department of Education has not issued any specific guidance on these provisions. But, based on the Department’s interpretation of MOE, CEC believes that ARRA funds are subject to the same SNS provisions required by IDEA 2004. Under IDEA 2004, the U.S. Secretary of Education may grant a waiver for SNS provisions to a state, if the state can provide clear and convincing evidence that all children with disabilities are receiving a free appropriate public education (FAPE).
The U.S. Department of Education is expected to release further guidance on this issue. Check CEC’s ARRA Web site for the latest information.
Q13. What are the key elements of the State Fiscal Stabilization Fund?
A13. The State Fiscal Stabilization Fund is an appropriation of $53.6 billion, intended to provide fiscal relief to SEAs to prevent tax increases and cutbacks in critical education and other services. To that end, $48.3 billion will be distributed in Grants to States for fiscal relief, mainly tied to education; $4.35 billion for State Incentive Grants (also referred to as the “Race to the Top Fund”), $650 million for the Innovation Fund (also referred to as the “Invest in What Works and Innovation Fund”); and the U.S. Secretary of Education is permitted to reserve $14 million for administration and oversight of the Fund. To see how much money your state will receive, please look to the Department of Education’s chart.
$48.3 billion in Grants to States:
- First 81%: Governors must use approximately 81% of their state allocation to support elementary, secondary and post secondary education, and, as applicable, early childhood education programs and services. The overall purpose of this money is to restore funding to education programs which may have been cut as a result of the current economic crisis and state budget shortfalls. Therefore, SEAs are required to use this money through existing formulas, to restore funding levels for elementary and secondary education, in the fiscal years 2009 – 2011 to the 2008 or 2009 fiscal year level, whichever is higher.
- Remaining 18%: Governors must use approximately 18% of their state’s allocation for public safety and other government services, which may include education, modernization, renovation, and repair of public school and higher education facilities.
- Funds used by LEAs for elementary and secondary education can be used for any activity permitted by ESEA, IDEA, the Adult Family Literacy Act, or the Carl Perkins Career and Technical Education Act.
LEAs are prohibited from using funds for maintenance costs, stadiums, and the purchase or upgrade of vehicles. - Institutions of higher education must use funds for education and general expenditures and to either “mitigate the need to raise tuition and fees for in-State students”, or for modernization, renovation, or repair of facilities that are primarily used for instruction, research, or student housing.Prohibitions here include: funds cannot increase endowment; maintenance of systems, equipment or facilities; modernization, renovation or repair of stadiums; modernization, renovation, or repair of facilities used for sectarian or religious instruction or in which a substantial portion of the functions of the facilities are religious in nature.
Prohibitions here include: funds cannot increase endowment; maintenance of systems, equipment or facilities; modernization, renovation or repair of stadiums; modernization, renovation, or repair of facilities used for sectarian or religious instruction or in which a substantial portion of the functions of the facilities are religious in nature.
$4.35 billion for State Incentive Grants (also referred to as the “Race the the Top Fund”):
- SEAs submit applications to the U.S. Secretary of Education for these funds. SEAs receiving a grant must distribute at least 50% to local school districts based on the Title I formula. To receive these funds, each state application must include the following assurances:
Providing maintenance of effort at least at FY 2006 level;
Achieving equity in teacher distribution;
Improving collection and use of data;
Enhancing the quality of state assessments and improving state; academic content standards and student academic achievement standards; and
Ensuring compliance with requirements related to schools identified for corrective action and restructuring under ESEA.
$650 million for the Innovation Fund (also referred to as the “Invest in What Works and Innovation Fund”):
- This is to provide academic achievement awards to LEAs, partnerships between nonprofits and LEAs or a consortia of LEAs, based on a variety of criteria including all of the following:
Making significant progress in closing achievement gaps; making AYP for two or more years;
Showing significant improvement in other areas such as graduation rates;
Serving as models for best practices;
Enhancing partnerships between private sector and philanthropic communities; and
Identifying and documenting best practices.
Q14. How does ARRA address maintenance of effort and supplement/not supplant provisions for the State Fiscal Stabilization Fund?
A14. ARRA contains only sparse information about MOE and SNS provisions for this fund. The U.S. Department of Education has provided limited interpretation on MOE under ARRA, but CEC is awaiting more detailed guidance on MOE and SNS provisions. CEC will update its website with pertinent information as it becomes available. Currently, it appears that:
- Base MOE Level is FY 2006:
ARRA requires SEAs to use the state fiscal stabilization fund monies to restore funding to the Fiscal Year 2008 or 2009 level, whichever is higher. If that is not possible, the state must maintain an MOE of at least Fiscal Year 2006, as a condition of accepting the funds.
Q15. Does ARRA include any reporting and accountability requirements for the use of the money? How will I know how the money is spent?
A15. ARRA requires all participants to report publically on their use of ARRA funds. First, in terms of IDEA, recipients will follow all guidelines currently set forth in funding formulas. But, to receive the second infusion of IDEA funds on October 1, 2009, SEAs must submit an amendment to their Fiscal Year 2009 applications, explaining what record keeping and reporting requirements LEAs will use to ensure transparency. It will be important for members to understand what information their states will require to track use of these funds.
In addition, all funds distributed from the State Fiscal Stabilization Fund contain very specific reporting requirements which include how and when money was spent and detail what if any progress was made as a result of the funding.
The U.S. Department of Education has stated more guidance and applications for these funds will be available by the end of March 2009. CEC will update its ARRA webpage with this information when it becomes available.
Q16. What other programs are funded by ARRA that impact children and youth with disabilities?
A16. A variety of programs funded by ARRA impact children and youth with disabilities. These include healthcare, research, school improvement, and child and family services. CEC’s chart of selected programs in ARRA provides highlights of many of these programs.
Q17. Does ARRA address Medicaid?
A17. Yes. Of great interest to CEC members is the extension of the current moratoria on controversial Medicaid regulations, which would cut or eliminate the reimbursement for targeted case management, rehabilitation services, transportation and administrative claiming for Medicaid-eligible children with disabilities. ARRA extends the current moratoria to July 1, 2009.
Q18. Where can I find more information on ARRA?
A18. CEC is committed to providing up-to-date information on ARRA and how it impacts special education on a specially designated area of the CEC website, which will include links to a variety of additional resources. CEC’s Policy Insider (weekly e-newsletter) will also provide several important and useful updates, so please visit for the latest information!
Q19. How can I share the impact the economic crisis has had on me, my school/early intervention program, and children and youth; and how ARRA is addressing these issues?
A19. CEC encourages you to take its short, five-question survey to provide feedback on how ARRA will address issues impacting personnel, schools, and early intervention programs. Your feedback will help CEC’s advocacy efforts for a sustained investment in special education and early intervention.
Glossary of Terms
ARRA: American Recovery and Reinvestment Act of 2009
EIS: Early Intervening Services
ESEA: Elementary and Secondary Education Act of 1965
IDEA 2004: Individuals with Disabilities Education Act of 2004
LEA: Local Education Agency
MOE: Maintenance of Effort
Part B: IDEA’s Grants to States program for school aged students
Part B Section 619: IDEA’s Grants to States program for preschool children
Part C: IDEA’s Grants to States program for infants and toddlers with disabilities
SEA: State Education Agency
SNS: Supplement not supplant
This ARRA Question and Answer is a publication of the Council for Exceptional Children (CEC). Subscribers may distribute published content for educational purposes only. © Council for Exceptional Children (CEC). All rights reserved.