May Government Relations Update

Education Funding Update This year, a 15% carryover of Title 1 funds are allowed, so there is still some money to be spent. However, under sequestration, federal education funds will be cut around 5 to 7 percent; as these funds are often used by districts for content purchasing, the publishing industry will be hit harder. At the state level, only eight states are currently reporting a budget gap, and in the fiscally healthier states, many legislatures are looking at education investments, but much of that looks to be earmarked for increased pension and salary costs, rather than material and content investments.

In other hot education policy topics (highlighted at the recent SIIA Ed Tech Government Forum in Washington, DC), the common core state standards and assessments (set to start for the 2014-15 school year) are presenting a challenge for many states and teachers – which means challenges and opportunities for education companies.  Many districts lack sufficient computers and bandwidth to administer the assessments, and with no new money in sight, will most likely pull money from other areas to fund these initiatives.  States also continue to negotiate two-year waivers with the Obama administration from the requirements of NCLB in return for adopting “rigorous standards.” This lack of a consistent, long-term national policy will remain a challenge for companies looking to provide solutions based on federal policy guidelines.

Education in the FY2013 and 2014 Budgets The federal budget for FY2013 is final, with the continuing resolution keeping FY2013 spending level with that of FY2012. The President’s FY 2014 budget has $71.2 billion in discretionary appropriations for the Department of Education, an increase of $3.1 billion, or 4.5 percent, over the fiscal year 2012 level. Key education numbers include:

  • $750 million for preschool development grants (through part D of title V of ESEA)
  • $1.3 billion for preschool for all (mandatory)
  • $12.5 billion for teacher stabilization (mandatory)
  • $3.1 billion for STEM programs
  • $300 million for high school transformation