Home AdvocacyPolicyWashington Notes2004 Feb

Senate Passes FY04 Omnibus Appropriations Bill

Administration Releases FY05 Budget

E-Rate Update

Senate Passes FY04 Omnibus Apppropriations Bill

Late last month, the Senate broke the stalemate over FY04 appropriations by passing the FY04 Omnibus Appropriations bill, which includes funding for all federal education programs. The President enacted the bill shortly thereafter. Action on this bill stalled over the holiday season and into January because of a number of controversial policy amendments, including the creation of a new voucher program for the District of Columbia Public Schools. However, the high number of member projects and the possible threat of funding FY04 programs at FY03 levels, resulted in the Senate voting 68 to 25 to adopt the FY04 Omnibus bill.

Overall, the bill provided $55.7 billion for federal education programs, an increase of $2.5 billion from FY03 levels. Education technology programs, though, sustained major setbacks. Although the bill funded the Education Technology Block Grant at FY03 levels for FY04, it lowered the total for this program to $691.8 million because of the 0.59% across-the-board cut that all programs received. Additionally, the Omnibus appropriations bill hurt education technology programs by eliminating the Preparing Tomorrow’s Teachers to Use Technology (PT3) program, and reducing funding for the Community Technology Centers (CTC) and Star Schools programs.

Here is a chart of the funding levels for key FY04 education programs:

See the glossary for a brief description of each program.

Administration Releases FY05 Budget

This week, the Administration released its FY05 budget, which provides $818 billion for discretionary programs, an increase of $31 billion from FY04 appropriations. The bulk of the funding increases in the budget are for the Department of Homeland Security ($3 billion increase) and the Department of Defense ($26 billion increase).

Although the Administration proposes $57.3 billion for Department of Education programs, an increase of $1.7 billion from the FY04 appropriations levels, the vast majority of the increases go toward major programs. Smaller programs, such as education technology grant programs, are receiving major cuts. The budget proposes to increase Title I and the Individuals with Disabilities Education Act (IDEA) by $1 billion for each program. The Administration proposes funding the education technology block grant program at the same level they have proposed for the second year in a row, $692 million. The budget compensates for these increases by eliminating many programs, including funding for the Star Schools program, the Community Technology Centers program, Ready to Teach, and the PT3 program. The State Data Grant Program, which has never received funding, continues without funding in the President's proposed budget.

Congress' consideration of the budget is expected to be contentious due to the projected $521 billion budget deficit and concerns about low funding levels for key discretionary programs, including education programs. These concerns coupled with the upcoming elections lead to much uncertainty about whether the House and Senate will be able to agree on a final budget and ultimately pass its appropriations bills in the upcoming year.

Here are the program funding levels in the Administration's FY05 budget request

ISTE went on record objecting to the cuts in education technology, stating in a joint press statement with CoSN: "In our view, this budget represents a major step back from the federal government's interest in and commitment to ensuring that our nation's educators and students gain access to the tremendous learning resources available online and the tools and skills needed to compete successfully in the 21st Century's job market. Moreover, we steadfastly believe that education technology has a strong role to play in helping implement the key provisions of the No Child Left Behind Act. Distance learning courses are already helping teachers to gain the accreditations necessary to qualify as highly qualified teachers and students throughout the country are going online to receive homework assistance and to perform research. We urge the Administration to reverse course on the damaging education technology cuts that it has proposed and to rededicate itself to supporting all that education technology has to offer."

E-Rate Update

The past few months have seen the E-rate program make more news. The event most likely to affect the future direction of the E-rate program occurred February 3rd. House Commerce Committee Chairman Billy Tauzin (R-LA), a persistent critic of the program, announced that he was resigning his chairmanship and would not seek reelection. Speculation has been rampant that Rep. Tauzin will become the top lobbyist for the pharmaceutical industry. House leaders are expected to tap Rep. Joe Barton (R-TX) to serve as the next Chairman of the Committee. Rep. Barton has little involvement on telecommunications matters and is not generally considered an opponent of the E-rate program. The leadership change at House Commerce may serve to reduce Congressional pressure on the program and forestall further investigative forays into E-Rate waste, fraud, and abuse issues.

In January, prior to his resignation announcement, Chairman Tauzin formally requested that the General Accounting Office launch an audit of the program. This request followed the widely-reported discovery that the Chicago Public Schools had failed to install more than $5 million of E-rate discounted equipment within the requisite installation period. Sources indicated that this investigation was likely to be part of expected House hearings on the program that had been slated for this spring. With Tauzin's resignation, the fate of those hearings is now in doubt.

Another significant event concerning E-rate occurred on February 2 with the release of the Administration's proposed FY05 Budget. In the Performance Evaluation portion of the Budget, the Office of Management and Budget (OMB) reviewed the E-rate program and found that it had failed to demonstrate results. While giving high marks to the program's purpose and admitting that "the program has been successful in promoting Internet connectivity," OMB gave low marks to its planning and management. OMB stated that the E-rate "lacks long term, outcome-oriented performance goals against which to measure this success and to improve and refine the program going forward." In response, ISTE in conjunction with the Education and Library Networks Coalition (EdLiNC) issued a press release decrying this rating. EdLiNC's release states in part: "Prior to the creation of the E-rate program, few of our nation's classrooms and libraries were connected to the Internet, which has become an indispensable information source and teaching and learning tool. Now, after six years of the E-rate program, 92% of America's public school classrooms and 95% of its libraries are connected to the Internet."

At the start of the holiday season, the FCC released two significant decisions, adopting several major rule changes, and resolving a number of application rejections. The first decision contains some particularly good news with the announcement that approximately $420 million in unused E-rate dollars will be made available to E-rate applicants in Funding Year 2004. These funds will likely go towards internal connections, thereby allowing more schools at lower discount levels to receive E-rate support for those services this coming year. The order also takes direct aim at waste, fraud and abuse issues by drastically limiting the ability of applicants to receive funding for internal connections and transfer E-rate discounted equipment. Specifically, the Commission instituted a new rule, effective for Funding Year 5, which limits applicants to receiving internal connections discounts to twice every five years. The restriction appears to be site specific, meaning that school districts can apply each year for funding but can only seek funding for specific buildings two out of every five years. The Commission also barred the transferring of E-rate purchased equipment before three years from the date of its purchase. This new rule seeks to curtail the practice of school districts using high discount rate schools to receive internal connections discounts and then transferring that equipment rapidly to lower discount rate schools that would have been unable to obtain that equipment.

The second major decision released by the Commission resolved a series of application rejections stemming from confusion over the competitive bidding rules of the program, which require applicants to enter into contracts with vendors only after their requests for services have been posted online for 28 days. During the last application cycle, a number of school districts used a two-step bid process through which they would seek bids online for a systems integrator who, in turn, would seek bids for E-rate eligible services. This system had been approved by the Schools and Libraries Division (SLD) in previous years and comported with state procurement laws in Texas. IBM won the first part of the two-step bid process for a number of major school districts. These districts filed Form 471s with SLD announcing that IBM won the bids. In the spring of 2003, SLD rejected more than $400 million worth of two-step bid applications from a number of major school districts, declaring that the two-step bid process undermined the program's competitive bidding process. In early December, the Commission upheld the SLD's rejections on appeal, stating that the failure to competitively bid for the actual E-rate eligible services constituted a violation of the program's rules. Because the districts had relied upon the past precedent of the SLD approving this process, the Commission granted a waiver for those districts appealing the ruling to conduct rebids for Funding Year 2003 and permitted IBM to participate in the rebids.

Glossary

Title I - Funding for the Title I program in the Elementary and Secondary Education Act represents the largest single investment that the federal government makes in elementary and secondary education. This formula grant program provides funding to schools and districts based on the population of disadvantaged students in order to support programs that improve their academic performance. Technology purchases are often made through Title I funds.

Professional Development - Under this program, states receive a formula grant from the Department of Education for professional development, teacher recruitment and retraining. States and districts may use their Title II money to foster technology mastery in teachers and principals and to employ technology to improve teaching and administrative skills. Among other things, grantees may use these funds to encourage and support the training of teachers and administrators to effectively integrate technology into curricula and instruction, including training to improve the ability to collect, manage, and analyze data to improve teaching, decision making, school improvement efforts, and accountability.

21st Century Community Learning Centers - This program provides formula grants to states to conduct competitive grant programs that stimulate the establishment or expansion of community learning centers that provide students with academic enrichment and other activities, including technology programs, during non-school hours or periods when school is not in session.

Reading First - This program aims to ensure that every student can read at grade level or above no later than grade three. Among other things, grantees may use funds for selecting and implementing instructional materials, including education technology such as software and other digital curricula, that are based on scientifically-based reading research.

Education Technology Block Grant - Through this program, states receive block grant funds to be used by districts for virtually any technology purpose. States distribute half of the money they receive to districts by formula and half by competition. Districts must set aside 25% of all block grant funds for professional development in technology, with a special emphasis on training in the integration of advanced technologies (including emerging technologies) into the curriculum.

PT3 - Preparing Tomorrow's Teachers to Use Technology - PT3 provides grants primarily to institutions of higher education train pre-service teachers in how to use technology and effectively integrate it into the curricula.

Star Schools Program - This competitive grant program funds distance learning projects nationwide and focuses on serving small rural and large urban schools. Projects use a variety of distance education technologies, including satellites, cable, and the Internet, to develop and deliver various instructional programs such as video field trips.

CTC - Community Technology Centers - This program provides grants to promote the development of model programs that demonstrate the educational effectiveness of technology in urban and rural areas and economically distressed communities. Typically, these programs provide access to computers and other forms of information technology as well as related learning services to adults and children in an educational setting.

State Data - Authorized as part of the Institute of Education Sciences, this program is intended to deliver grants to states to develop statewide longitudinal data systems to track student achievement and comply with the No Child Left Behind Act. It has not yet been funded.