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Get creative with new federal education cash

Ben DeGrow, Mackinac Center for Public Policy

An unprecedented volume of education dollars from Washington is flooding into Michigan schools. While most of the money is set aside to prop up the status quo, Lansing lawmakers should push forward bold strategies to help families directly.

Pushed across the finish line by President Biden and Democrats in Congress, the American Rescue Plan Act adds to the national debt while providing the third, and largest, dose of extra federal aid since the onset of the pandemic. The first two bills, both passed in 2020, brought a combined $2.1 billion to Michigan public schools. This amount represents extra dollars above and beyond those provided to preserve schools’ primary formula funding levels, as their total revenues reached record levels last year.

The Mackinac Center has joined other Michigan groups in calling for a fiscally responsible approach to the $5.7 billion torrent of ARPA funds that will pour into the state’s general fund, an amount that represents about 10% of the state’s total annual budget. The coalition not only prescribes dedicating the money to one-time expenses that have long-term benefits without creating extra budget obligations. It also offers a reminder that schools are getting their own new pots of federal aid.

One analyst cited by the editors at The Detroit News labels the $3.7 billion education deposit from ARPA (separate from the $5.7 billion reserved generally for state government) the “single largest investment” Michigan K-12 schools have ever received. Off the top, 90% of the $3.7 billion will go to districts and charter schools according to a formula that produces some wildly unequal results. One-fifth of the dollars received by districts must support programs that address learning loss, especially for students from vulnerable and disadvantaged groups.

The remaining 10% of the $3.7 billion is reserved for the state to use with some discretion. Half of that amount is supposed to address learning loss, too. The Legislature should direct some of this money to districts and charters that are shortchanged by the formula used to pay out the 90%. State lawmakers ought to make sure schools have an incentive to help the students who have suffered from lost learning. For example, they can give more money to schools that administer state tests to a large percentage of their students. That would limit schools’ ability to hide data that shows who needs the most help.

The state must also set aside 2% of the ARPA education funds to underwrite other programs that aim to meet, in the words of the act, students’ “academic, social and emotional needs” – 1% each for summer school and after-school programs. And one-half of one percent will go to the state department of education for administrative overhead.

That leaves 2.5% of the $3.7 billion, or roughly $93 million, to distribute. Though the federal law sets some boundaries, state officials could make policy decisions that benefit students and families with new opportunities rather than merely perpetuate old systems and approaches.

After all, billions of dollars in federal COVID relief is already available for doing things the old way. From the remaining $93 million, if not from other sources, state policymakers should designate federal funds for some or all of the following creative alternatives:

A Flex Learning pilot program that could enable some middle school and high school students to customize their path to graduation through a mixture of courses and learning opportunities from various education providers

Scholarships designated for struggling elementary school readers, which their parents could use to purchase tutoring and curricular materials, similar to the $500-per student stipend enacted in Florida

Parent-directed online accounts to pay for supplemental services that support learning opportunities for students with disabilities (last year, Texas offered such federally funded accounts worth $1,500 for each participating family)

Student Mobility Scholarships for low-income learners and their families to craft creative transportation solutions that can help get them to educational options beyond their neighborhood, capped at an estimated $1,400 each

Conventional schools are not starving for cash. In fact, some systems are coming into so much money they will have trouble allocating it effectively. Leftover funds should go to those who have the greatest stake in making up for lost learning time.

Editor’s note: Ben DeGrow is the Mackinac Center for Public Policy’s director of education policy.

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