U.S. Department of Education: Promoting Educational Excellence for all Americans

A r c h i v e d  I n f o r m a t i o n

FY 2003 Budget Summary - February 4, 2002


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.

ED Discretionary Appropriations

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)

 200120022003
Request
Discretionary$42.2$48.9$50.3
Mandatory-0.25.56.2
TOTAL42.154.556.5

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.

NAEP Math Reading Scores (9-year olds)

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:

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:

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:

Special Education

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:


Special Education Grants to States

Vocational Rehabilitation

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:

Postsecondary Education

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:

Department Management

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:


For further information contact the ED Budget Service


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