Financial Transparency of the State Fiscal Stabilization Fund of the American Recovery and Reinvestment Act (ARRA)

Aligned to goals:
  • 1.2: Make more data and information available to the public.
  • 1.4: Increase the transparency of the grant application and award process.
  • 2.2: Provide regularly updated project maps, dated milestones, and financial data regarding open government and other key initiatives.

Historically, the federal government accounts for only 9 percent of total U.S. spending annually on public education, 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 balanced-budget 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 about a State's use of the program funds. The Department intends to build on this practice 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 SFSF funds at both the State and program levels. All SFSF 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 these 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 with regard to the education funding requirement that States use federal funding to maintain 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:

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.html

The Department intends to build on these SFSF/ARRA practices to enhance the transparency of all of its ARRA and ongoing grant programs at the State level.