Our schools will have higher expectations. We believe every child can learn.
Our schools will have greater resources to help meet those goals.
Parents will have more information about the schools,
and more say in how their children are educated.
From this day forward, all students will have a better chance to learn,
to excel, and to live out their dreams.
George W. Bush
January 8, 2002
I. Summary of the 2003 Budget
Three days after taking office in January 2001 as the 43rd President of the United States, George W. Bush announced No Child Left Behind, the framework for bipartisan education reform that he described as "the cornerstone of my Administration." President Bush emphasized his deep belief in our public schools, but an even greater concern that "too many of our neediest children are being left behind," despite the hundreds of billions in Federal spending since the passage of the Elementary and Secondary Education Act (ESEA) of 1965. The President called for bipartisan solutions based on accountability for results, choice, proven educational methods, and flexibility and local control in Federal education programs.
Less than a year later, despite the unprecedented challenges of leading the Nation in the war on terrorism and engineering an economic recovery, President Bush secured passage of the landmark No Child Left Behind Act (NCLB Act). Signed into law on January 8, 2002, the new law reflects a strong, bipartisan consensus on how to improve the performance of America's elementary and secondary schools while at the same time ensuring that no child is trapped in an underperforming school.
The NCLB Act, which reauthorized the ESEA, incorporates the principles and strategies proposed by President Bush in his No Child Left Behind framework. These include increased accountability for States, school districts, and schools; greater choice for parents and students, particularly those from low-income backgrounds who attend low-performing schools; more flexibility for States and school districts in the use of Federal education dollars; and a stronger emphasis on teaching methods grounded in scientifically based research, especially in teaching our children to read.
At the same time that he led the effort to reform the education system through the NCLB Act, President Bush promised to provide more resources for education in exchange for stronger accountability for results and on condition that Federal funds be used to support proven educational methods. The President's 2003 budget for education fulfills this commitment by providing new resources to help States, school districts, and schools implement the NCLB Act and improve educational opportunities for all students.
The Federal role in education is a limited one, but President Bush's vision for the Department of Education is that Federal funds and Federal programs must be used as an investment in sound practices that will leverage change at the State and local levels. Overall, the Federal contribution to education will be approximately 8 percent of national expenditures on elementary and secondary education, but that investment is focused squarely on meeting the needs of students from economically disadvantaged and minority backgrounds. These are students who have been left behind for too long, and President Bush has committed his continuing support for the programs that will meet their needs at the K-12 level and beyond.
Total Department of Education Appropriations
(rounded program level, in billions of dollars)
The President is requesting $50.3 billion in discretionary appropriations for the Department of Education in fiscal year 2003, an increase of $1.4 billion or 2.8 percent over the 2002 enacted level. This request builds on the substantial Federal investment in education over the past six years, with discretionary appropriations rising from $23 billion in fiscal year 1996 to $48.9 billion in fiscal year 2002, an increase of 113 percent.
Unfortunately, this dramatically higher spending on education has failed to improve overall student achievement or close achievement gaps between poor and minority students and other students. For example, long-term trend data from the National Assessment of Educational Progress (NAEP) for 9-year-olds show that reading and math achievement has been nearly flat over the past decade. Results from the 2000 NAEP reading assessment confirmed that the reading skills of the Nation's 4th graders have remained unchanged for 8 years, with 37 percent of those tested scoring below Basic.
This is why President Bush has insisted on linking new investment in Federal elementary and secondary education programs with the fundamental reforms included in the No Child Left Behind Act. The new law will help ensure that both new and existing resources for ESEA programs are used more effectively to bring about real improvement in student achievement, particularly for those poor and minority students in high-poverty schools who are the focus of the Federal role in education.
Major increases in the President's 2003 request correspond to his determination to close the achievement and attainment gaps that persist among racial, ethnic, and socioeconomic groups across the country. The 2003 budget request for the Department of Education includes the following significant increases: $1 billion for Title I Grants to Local Educational Agencies, $1 billion for Special Education Grants to States, $549 million for Pell Grants--in addition to a $1.3 billion supplemental request for 2002 needed to address a funding shortfall, $100 million for Reading First State Grants, $100 million for Charter School Facilities, $50 million for a new Choice Demonstration Fund to demonstrate and evaluate expanded options for economically disadvantaged students, and $53 million for scientifically based research to help establish proven educational methods.
The Department's 2003 request is complemented by significant non-discretionary investments in education, such as a proposed refundable tax credit of 50 percent of the first $5,000 in tuition, fees and transportation costs incurred when parents transfer their child from an underperforming public school to another public or private school. The Administration also is renewing its proposal to allow teachers to deduct out-of-pocket classroom expenses. Other tax-related benefits include expanded education savings accounts (Coverdell IRAs) that permit up to $2,000 in annual contributions and tax-free withdrawals to pay educational expenses from kindergarten through college, tax-free withdrawals from qualified State tuition savings plans, up to $3,000 in above-the-line deductions for higher education expenses, and the HOPE and Lifetime Learning tax credits for postsecondary education tuition and fees.
These and other increases are offset in part by reductions that likewise reflect the President's priorities for the Department, including the elimination of categorical programs and low-priority activities in favor of funding through the flexible State grant programs created by the NCLB Act. The increases also are offset in part by the completion of one-time projects.
In addition to the discretionary priorities described above, the request includes funding for mandatory programs, such as Vocational Rehabilitation State Grants and the student loan programs. Mandatory costs fluctuate from year to year due to changes in inflation, interest rates, and other factors affecting the costs of subsidizing the student loan programs.
Because the fiscal year 2002 appropriation level for Pell Grants is insufficient to pay for a $4,000 maximum grant, the budget contains a supplemental request of $1.276 billion. The supplemental is offset by a proposed rescission of funds provided in the Fiscal Year 2002 Appropriations Act for the Departments of Labor, Health and Human Services, and Education and Related Agencies. The rescission would reduce 2002 appropriations for programs not included in the President's 2002 budget request, which totaled more than $2 billion. Under the supplemental proposal, Congress would determine specific program rescissions needed to fully offset the additional Pell funds. The 2003 request includes sufficient funds to maintain a $4,000 maximum Pell Grant.
The combination of discretionary and non-discretionary resources in the President's budget is targeted to the following areas:
Supporting State And Local Implementation of The NCLB Act
When President Bush signed the NCLB Act, he noted that while his signature marked "the end of a legislative process," it was "just the beginning of change." The Department of Education has moved quickly to reaffirm its partnership with States and communities in turning the principles of the NCLB Act into reality in our schools. The day after the Act became law, Secretary Paige met with the Chief State School Officers at Mount Vernon "to offer my help in a bold mission." The Department also immediately notified States and school districts of the new law's flexibility provisions, and of the significantly increased funding in the fiscal year 2002 Department of Education Appropriations Act, intended in large part to facilitate implementation of the NCLB Act. The President's 2003 budget request builds on these efforts by providing additional resources for priority programs, with a particular emphasis on the "change" required by the new law. The request includes the following:
$11.4 billion for Title I Grants to Local Educational Agencies, an increase of $1 billion or 9.7 percent, to give States and school districts additional resources to turn around low-performing schools, improve teacher quality, and ensure that no child is trapped in an underperforming school. The school improvement provisions of the NCLB Act reflect President Bush's determination to "never give up" on struggling schools, while at the same time recognizing that "parents must be given real options in the face of failure in order to make sure reform is meaningful." The increase for 2003 would be allocated through the Targeted Grants formula, which directs a greater share of funds to the highest-poverty schools than the other Grants to LEAs formulas.
$1 billion for Reading First State Grants, an increase of $100 million or 11.1 percent, for a nationwide effort to support comprehensive reading instruction for children in grades K-3. The request would help school districts and schools provide professional development in reading instruction for teachers and administrators, adopt and use reading diagnostics for students in kindergarten through third grade to determine where they need help, implement reading curricula that are based on recent findings of the National Institute of Child Health and Human Development, and provide reading interventions for young grade-school children reading below grade level. The request also would level-fund the new Early Reading First program at $75 million for competitive grants to develop and support the school readiness of preschool-aged children in high-poverty communities.
$175 million for Research and Dissemination, an increase of $53.2 million or almost 44 percent, to expand efforts to develop proven, research-based practices for improving student achievement and disseminate those practices to States and school districts across the country. Priorities in 2003 would include research regarding strategies to improve reading comprehension, randomized trials to determine the effectiveness of preschool curricula, and efforts to encourage the greater use of evidence-based research by teachers, school administrators, and policymakers.
$387 million for State Assessments and Enhanced Assessment Instruments, to help States develop and implement--by the 2005-2006 school year--the expanded annual assessments in grades 3 through 8 that are integral to the strong State accountability systems required by the NCLB Act. This request is particularly important because the Title I requirement for States to develop and administer the new assessments is contingent on continued Federal financial support for this purpose.
Expanding Options for Parents
A key principle of the No Child Left Behind Act is that when parents have the information and options they need to make the right choices for their children's education, our schools and our children will succeed. The new law requires States and school districts to report annually on how their schools and students are performing, and the new assessments will provide diagnostic information that will help parents and teachers to identify the strengths and weaknesses of individual students. Parents of students in underperforming schools will have the option of transferring them to a better public school or obtaining supplemental educational services from the provider of their choice. The 2003 request includes the following proposals to help ensure that parents have meaningful choices:
A new refundable tax credit for parents transferring a child from an underperforming public school would allow a credit of 50 percent of the first $5,000 in tuition, fees, and transportation costs incurred when a student's regular school is underperforming and he or she transfers to another public or private school. Eligible students would be those who would normally attend a public school that failed to make adequate yearly progress, as defined under the Elementary and Secondary Education Act, during the prior academic year.
$50 million for a new Choice Demonstration Fund to support research projects that develop, implement, and evaluate innovative approaches to providing parents with expanded school choice options, including both private- and public-school choice. This program would support research projects that demonstrate the greatest potential for measuring the effects of providing parents with expanded choice options for the education of their children.
$25 million for Voluntary Public School Choice grants to give families better education options by encouraging States and school districts to establish or expand public school choice programs across States or districts. Grants would support planning, transportation, tuition transfer payments, and efforts to increase the capacity of schools to accept students exercising a choice option.
$200 million to support continued growth in the number of Charter Schools, an important element of the Administration's proposal to increase choice for students and parents. The NCLB Act specifically includes public charter schools as an option when districts are required to permit students to transfer from a school identified for improvement to a better public school. The request would support approximately 1,800 new and existing charter schools.
$100 million for a new Credit Enhancement for Charter School Facilities program, which would assist charter schools in acquiring, leasing, and renovating school facilities. A major obstacle to the creation of charter schools is their limited ability to obtain suitable academic facilities. This new program would support competitive grants to public and nonprofit entities to help charter schools finance their facilities through such means as providing loan guarantees, insuring debt, and other activities to encourage private lending.
Increasing Flexibility and Reducing Bureaucracy
The NCLB Act provides unprecedented flexibility for States and local educational agencies (LEAs) to combine resources from selected State formula grant programs to pursue their own strategies for raising student achievement and ensuring that no child is left behind. For example, States and LEAs may transfer up to 50 percent of the funding they receive under four major formula grant programs to any one of the programs, or to Title I. The covered programs are Improving Teacher Quality State Grants, Educational Technology, Innovative Programs, and Safe and Drug-Free Schools and Communities. The new law also includes competitive flexibility demonstration programs that will permit up to 7 States and 150 LEAs to consolidate State formula grant funds in exchange for entering into performance agreements. Consolidated funds could be used for any educational purpose authorized under the ESEA. The President's 2003 budget funds the following programs that support this new flexibility:
$2.85 billion for Improving Teacher Quality State Grants, which give States and LEAs flexibility to select the research-based strategies that best meet their particular needs for improved teaching that will help them raise student achievement in the core academic subjects. In return for this flexibility, LEAs are required to demonstrate annual progress in ensuring that all teachers teaching in core academic subjects within the State are highly qualified.
$700.5 million for Educational Technology State Grants to support State and local efforts, particularly in high-poverty districts, to improve student achievement through the effective integration of technology into classroom instruction. Funds may be used, for example, to train teachers to use technology, to develop courses in information technology, and to purchase technology-based curricula.
$665 million for English Language Acquisition to support flexible, performance-based formula grants to help ensure that limited English proficient (LEP) students learn English and meet the same high academic standards as all other students. The NCLB Act replaced a complex series of categorical grants to school districts and institutions of higher education with a flexible program that will enable States to design and implement statewide strategies, grounded in scientifically based research, for meeting the educational needs of LEP and immigrant students.
$644.3 million for the Safe and Drug-Free Schools and Communities program, including $472 million for State Grants and $172 million for National Programs. The NCLB Act requires States to develop a definition of a "persistently dangerous school," report on safety on a school-by-school basis, and provide victims of serious school-based crimes and students trapped in persistently dangerous schools the option to transfer to a safe alternative.
$385 million for State Grants for Innovative Programs, the successor to Title VI and the most flexible of the Department's State formula grant programs, to help States and school districts implement innovative strategies, including expanded school choice options, and other reforms to improve student achievement. Innovative Programs funds may be used by States, for example, to support charter schools or pay for urgent school renovations, as well as to augment funding available for supplemental educational services for students attending schools identified for improvement, corrective action, or restructuring under Title I.
$1 billion for 21st Century Community Learning Centers to provide before- and after-school academic enrichment opportunities, particularly for children who attend high-poverty or low-performing schools. The request would fund supplemental academic assistance in safe environments for about 1.3 million children.
President Bush is committed to ensuring that no child is left behind by our education system, including children with disabilities. This is why he believes it is important for the Federal government to continue providing additional support, through the Individuals with Disabilities Education Act (IDEA), for State and local efforts to help children with disabilities meet the same challenging State standards as other children. In addition, the President has established a Commission on Excellence in Special Education, which as part of the reauthorization process will assist the Administration in a comprehensive, evidence-based review of the IDEA. The 2003 request for special education includes the following:
$8.5 billion for Special Education Grants to States, an increase of $1 billion or 13.3 percent over the 2002 level, would provide an estimated $1,300 for each child with a disability--the highest level of Federal support ever provided for children with disabilities. Funding for Special Education Grants to States more than tripled from fiscal years 1996-2002, helping States and school districts pay for the rising costs of services and increasing numbers of children served.
A major goal of the President's New Freedom Initiative is to increase the ability of individuals with disabilities to integrate into the workforce. Although many people with disabilities are obtaining and retaining jobs, the unemployment rate for people with disabilities is unacceptably high. The Vocational Rehabilitation State Grants program is the primary Federal vehicle for assisting individuals with disabilities, particularly individuals with the most significant disabilities, to prepare for, obtain, or retain employment. Highlights of the request include:
$2.6 billion for the Vocational Rehabilitation (VR) State Grants program, an increase of $134.9 million or 5.4 percent, to help State VR agencies increase the participation of individuals with disabilities in the labor force. With the fiscal year 2003 budget, the Administration is launching the first year of a multi-year reform of the Federal government's overlapping training and employment programs. Consistent with this crosscutting reform, the request consolidates $62.6 million in funding for Supported Employment State Grants, Projects with Industry, and the Migrant and Seasonal Farmworkers program into the VR State Grants program. In addition, the budget provides $20 million more than the amount of the inflationary increase ($52.1 million) required under current law to help States improve their employment outcomes.
$30 million for a new Vocational Rehabilitation Incentive Grant program to improve State performance under the VR State Grants program. As part of the President's initiative to allocate Federal funds based on performance, the Administration is proposing a new program that would make incentive awards to State VR agencies based on their performance in helping individuals with disabilities obtain competitive jobs.
$42.6 million for the Training program, an increase of $3 million or 7.6 percent, to help ensure that rehabilitation counseling personnel have the skills need to assist individuals with disabilities to obtain high quality employment outcomes.
The No Child Left Behind Act, with its promise of ensuring over time that all students--including poor and minority students--reach challenging State academic standards, will increase the need for high-quality postsecondary educational opportunities once those students complete high school. Combined with an economy that increasingly demands highly skilled workers with college degrees, it is easy to see why postsecondary enrollment is expected to rise to 17.5 million by the year 2010, an increase of 20 percent from 1998. The 2003 President's budget includes the following proposals to help ensure equal access to quality postsecondary education opportunities for all Americans:
$10.9 billion for the Pell Grant program, an increase of $549 million or 5.3 percent, to increase access to postsecondary education for students from the neediest families. Under current estimates, the 2003 request would support a maximum grant of $4,000 for nearly 4.5 million students. President Bush also is seeking a $1.3 billion supplemental for 2002 to address the underfunding of Pell Grants and maintain the maximum award level specified in the 2002 Department of Education Appropriations Act.
Student financial aid available would expand to $54.9 billion, excluding the consolidation of existing student loans, an increase of $2.8 billion or 5 percent over 2002. The number of recipients of grant, loan, and work-study assistance would grow by 339,000 to 8.4 million students and parents.
Loan forgiveness for highly qualified math, science, and special education teachers serving low-income communities would be expanded from $5,000 to a maximum of $17,500. Schools in these communities often are forced to hire uncertified teachers or assign teachers who are teaching "out-of-field." This proposal would provide an incentive for highly qualified teachers in critical subjects to work in disadvantaged areas, and would help schools in these areas recruit and retain highly qualified math, science, and special education teachers.
$373.8 million for the Aid for Institutional Development (HEA Title III) programs, an increase of $12.7 million, demonstrates the Administration's commitment to assisting institutions that enroll a large proportion of minority and disadvantaged students, including Historically Black Colleges and Universities and Historically Black Graduate Institutions, in order to continue efforts to close achievement and attainment gaps between minority students and other students.
$89.1 million for Developing Hispanic-Serving Institutions, an increase of $3.1 million, would expand and enhance support to postsecondary education institutions that serve large percentages of Hispanic students. This program is part of the Department efforts to increase academic achievement, high school graduation, postsecondary participation, and life-long learning among Hispanic Americans.
$102.5 million for the International Education and Foreign Language Studies (IEFLS) programs, an increase of $4 million, to help meet the Nation's security and economic needs through the development of expertise in foreign languages and area and international studies. The increased complexity of the post-Cold War world and the events surrounding the September 11 terrorist attacks on the United States underscore the importance of maintaining and expanding American understanding of other peoples and their languages.
Level funding of $802.5 million for the Federal TRIO Programs and $285 million for Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), which provide educational outreach and support services to help more than 2 million disadvantaged students to enter and complete college.
In response to previous criticism and to implement the President's Management Agenda, Secretary Paige has taken the lead in personally directing a management improvement effort at the Department of Education. He began by ordering a hand-picked Management Improvement Team to undertake a six-month-long review, which resulted in the Blueprint for Management Excellence, a long-term action plan for improving Department management.
The Blueprint, which incorporated key features of the President's Management Agenda for Fiscal Year 2002, sets priorities for management improvement designed to facilitate effective monitoring of Department programs, eliminate financial management deficiencies, and prevent fraud, waste, and abuse of taxpayer dollars. These priorities include (1) developing and maintaining financial integrity and tighter internal controls; (2) modernizing and reducing the high-risk status of the student financial assistance programs; (3) expanding strategies for using human capital; (4) managing information technology to meet customer needs; and (5) establishing an "accountability for results" culture within the Department.
The 2003 budget for salaries and expenses would support the following management improvements:
Strengthen financial management to address audit deficiencies that have resulted in only one clean audit opinion for the Department since independent audits of government agencies were first required in 1996. Investment in updated financial reporting systems, the new Oracle general ledger system, and asset-tracking software will increase the reliability of financial data needed to support a clean opinion and prevent the improper use of government resources.
A new Performance-Based Data Management Initiative, funded at $10 million in 2003, will focus elementary and secondary education program management and reporting on student achievement. The initiative will support internet-based collection of timely data on student achievement and educational outcomes, reduction of existing reporting burdens on States and school districts, and expansion of the use of educational results to identify performance trends and inform management, budget, and policy decisions.
Consolidation of Student Aid Administrative Funds to improve accountability and ensure the efficient, cost-effective delivery of nearly $70 billion in Federal student aid. The Administration is proposing to consolidate more than $900 million in administrative funding, currently split among 3 separate accounts, into a new discretionary Student Aid Administration account. Most of these funds support payments to private-sector contractors or guaranty agencies that help administer the student loan programs.
For further information contact the ED Budget Service
Table of Contents
A. Elementary and Secondary Education
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