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March 23, 2009

Stimulus Plan Unworkable
for Education Funding

In a March 20, 2009, memorandum, Dr. Gary Gronberg, Assistant Superintendent of Public Instruction, writes Most North Dakota school personnel are probably aware of what climate conditions are involved in weather “storm watches” and “storm warnings,” however, the ARRA (American Recovery and Reinvestment Act) is creating the potential for “perfect storm” conditions for our schools for the 2009-2011 biennium. We currently have two “fronts” moving to collide. One “front” is comprised of HB 1400 and the funding hoped for by the Commission on Education Improvement of nearly $120 million new general fund dollars to fund a variety of new programs and requirements. The second “front” is comprised of over $151 million in one-time ARRA stimulus dollars for education for the disadvantaged in North Dakota. If these two “fronts” get together or replace one another in the wrong way, the “perfect storm” could be disastrous for funding equity and adequacy.

As of today, the Governor’s office has not changed its proposal for use of federal stabilization money for education. (See March 13 issue of this newsletter for NDSBA’s initial concerns with the proposal.)

A whole new set of problems with workability of the proposal came to light this week. There appears to be no agreement among the Department of Public Instruction (DPI), the Governor’s office, the U.S. Department of Education, and the education community as to acceptable use of stabilization dollars or process for distribution.

DPI’s position on distribution and acceptable use of stabilization dollars includes the following:

1. School districts would be required to go through multiple application processes with DPI to receive stabilization dollars.

2. Stabilization dollars would NOT be front-funded but rather be paid out on a reimbursement basis.

3. Stabilization dollars cannot be used for across-the-board salary increases.

This interpretation further complicates the process and reduces flexibility in use of the funds. The reimbursement bombshell is an interesting concept since schools would have to borrow the money first, spend it, and hope to get reimbursed. Given these new developments, it is misleading for the Governor’s office to give legislators and the education community the impression that federal money would be similar, in any fashion, to basic foundation aid.

The bottom line is that many states, including North Dakota, are trying to create their state budgets around this temporary federal money. The reason it becomes complicated is that it was never intended for that purpose.

It is clear the Governor and some legislators do not want to forego available federal dollars and they believe this complicated scheme is the only way the state can make use of the money. NDSBA disagrees! There is a much simpler way. The legislature should appropriate the state’s general fund dollars to fully fund the foundation aid formula and adequacy recommendations in HB1400. Then, distribute the federal dollars to schools on the Title I formula for permissible one-time expenditures—as they were intended.

Contact your legislators and the Governor’s office to express your support for funding foundation aid increases in the Governor’s original budget with general fund dollars distributed on the foundation aid formula!

Senate Education Committee Amends HB1400

In what appeared to be a rejection of several recommendations of the North Dakota Commission on Educational Improvement, the Senate Education Committee changed multiple sections of HB1400, including amendments that would:

  • Eliminate the option for four early dismissal days and add a day for professional development that can be used in the same manner as the two development days currently allowed. They did NOT provide additional state funding for the added day.
  • Remove all language and appropriations related to Pre-K programs.
  • Change use of the mentorship appropriation allowing it to be used for instructional coaches in districts with no first-year teachers.
  • Remove instructional coach grant program and use that $500,000 to create a trust fund—directing the interest earned to provide stipends for teachers seeking national certification.
  • Change levels of ELL categories from 4 to 2 and give Level I (immigrant ELL) a .20 weighting and the other level .10 weighting.
  • Require administration of a career interest inventory to all students in 7th or 8th grade and in 9th or 10th grade.

The Senate Education Committee adopted an amendment making it clear that federal stimulus money should be used for one-time spending only.  Because stimulus dollars cannot be used for ongoing operational costs of school districts, NDSBA has grave concerns that foundation aid will not fund the new mandates in HB1400 if $63 million in state general fund dollars is replaced with stimulus dollars as the Governor is proposing.

If the Governor’s stimulus recommendation is adopted, the base per pupil payment will be reduced by as much as $300, which means the product of every factor in the formula applied to that base will be drastically reduced as well. Examples of the factor amounts that will be reduced include: school size, special education ADM, special education extended year, English language learners, alternative high school, summer school, at-risk students, small isolated schools, and REA payments.

If this happens, all of the excellent work developing equity and adequacy recommendations over the past three years will be lost for at least two years and possibly longer. This is just another example of the disastrous consequences of supplanting state general fund dollars with federal stimulus money.

The number of amendments adopted on HB1400 made it necessary to rewrite the bill. To access the new bill go to Adequacy Study.

Let your legislators know the negative impact underfunding HB1400 will have on your districts.

Other action this week included:

SB2199 (property tax relief bill) came out of House Finance and Tax with a DO PASS as amended. Amendments were adopted on the House floor. Districts with excess or unlimited levies should access the bill as engrossed with House amendments to determine if the language helps their situation. The bill was re-referred to Appropriations.

SB2289 relating to corporal punishment policies and SB2357 that requires an administrative law judge to preside over discharge hearings both passed the House in the same form as passed by the Senate, so there will be no conference committees on these two bills. NDSBA worked with bill sponsors to amend the bills into acceptable form.

Surprisingly, with North Dakota being in good financial condition, funding is shaping up to be our biggest problem. Stay tuned!




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Everyone has access to bill topics and texts, hearing schedules, and bill status reports at the Legislature’s Web site. NDSBA’s Web site includes this weekly Legislative Newsletter, hearing schedules for the upcoming week, and the list of bills NDSBA is tracking. Updated information will be posted Thursday or Friday each week depending on when information becomes available.

ADDITIONAL INFORMATION:

ND State Web site: www.nd.gov

ND Legislative Information Web site: www.legis.nd.gov

Legislature Toll Free # 1-888-635-3447

Bismarck Legislative # 328-3373