Fiscal Year 2005 Budget Summary February 2, 2004
Our reforms insist on high standards because we know every child can learn. Our reforms call for testing because the worst discrimination
is to ignore a school's failure to teach every child. And our reforms identify underperforming schools because we need to direct our help to the schools that need it most.
President George W. Bush
Section I. Summary of the 2005 Budget
Two years ago President George W. Bush launched the most important reform of public
education in a generation by signing into law the No Child Left Behind Act (NCLB Act),
which reauthorized the Elementary and Secondary Education Act (ESEA). The new law
was based on stronger accountability for results, more choices for parents and students,
greater flexibility for States and school districts, and the use of instruction proven
effective through scientifically based research.
In response, State officials, administrators, and teachers across the country worked hard
to strengthen accountability systems, identify low-performing schools and make the
changes needed to improve, and provide new options to parents, such as the
opportunity to transfer to a better performing school or to obtain supplemental
educational services from the provider of their choice. The overall goal is to ensure that
by 2013-2014, every student who attends an American school will be proficient in
reading and mathematics.
The early results of these changes are promising. All 50 States and the District of
Columbia developed accountability plans, under which each State creates its own
assessments and sets its own levels for student achievement, school and district
accountability, and teacher quality. Under these plans, high average achievement by a
school can no longer mask low scores by poor and minority students, English language
learners, or students with disabilities. Districts and schools can meet adequate yearly
progress (AYP) goals only if individual student subgroupsnot just all students as a
wholereach the same academic proficiency targets.
States have identified more than 5,000 schools for improvement, and placed another
20,000 on "watch lists" for not making AYP for one year. These schools need to address
weaknesses that, in many cases, were identified for the first time under the NCLB Act,
and President Bush is committed to providing the resources needed to help these
For 2005, the President is requesting $57.3 billion in discretionary appropriations for the
Department of Education, an increase of $1.7 billion or 3.0 percent over the 2004 level.
The 2005 request would build on the substantial Federal investment in education over
the past five years, raising discretionary appropriations from $35.6 billion in fiscal year
2000 to $57.3 billion in fiscal year 2005, an increase of 61 percent.
These funds support educational opportunity and excellence at all levels of America's
education system. In particular, under No Child Left Behind, they reflect an effort to
leverage the nearly $500 billion that our Nation spends annually on elementary and
secondary education. Despite the size of this overall investmentmore than we spend
on national defense, and more per-pupil than any other nation in the world except
Switzerlandeducational achievement has improved little over the past decade, and
achievement gaps between minority students and their non-minority peers remain
Total Department of Education Appropriations
(in billions of dollars)
For this reason, President Bush has focused new education investments on programs
with a demonstrated record of success in improving educational outcomes, and on
programs that have been fundamentally reformed by the NCLB Act. The President also
has targeted new resources to programs that help to close the achievement gaps that
persist among racial, ethnic, and socioeconomic groups across the country.
The 2005 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, $823 million for Pell Grants, $333
million to support the President's Jobs for the 21st Century initiative, $113 million to
expand choices for students and parents, and $101 million for Reading First State
In particular, the Department's share of the Jobs for the 21st Century initiative reflects
President Bush's understanding of the challenges faced by young people in preparing
for future careers, and his determination to help them get the skills and training they
need to compete successfully in today's changing economy.
New money funds Jobs for the 21st Century, but other increases are offset in part by
reductions that 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. In addition, the Department
used findings from the government-wide Program Assessment Rating Tool, or PART, to
redirect funds from ineffective programs to more effective activities, as well as to identify
reforms to help address program weaknesses. Increases for 2005 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. For 2005, new student loans provided under the
Federal Family Education Loans and Federal Direct Loans programs will grow from
$52.2 billion to $56.9 billion, an increase of $4.7 billion or 9 percent.
The 2005 request is complemented by significant tax-related investments in education,
such as the Administration's proposal to expand from $250 to $400 the above-the-line
deduction for qualified out-of-pocket classroom expenses incurred by teachers. Other
existing tax-related benefits include 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, as well as tax-free withdrawals from
qualified State tuition savings plans. In addition, the Administration is proposing to
revise and simplify rules for three higher education tax benefitsthe Lifetime Learning
credit, the HOPE credit, and the above-the-line deduction for higher education
The combination of discretionary and non-discretionary resources in the President's
budget is focused on the following areas:
SUPPORTING STATE AND LOCAL IMPLEMENTATION OF THE NCLB ACT
States, school districts, and schools are meeting the challenge of successfully
implementing the No Child Left Behind Act. They are recognizing and addressing
achievement gaps that for too long were largely ignored. They are identifying schools
for improvement, and making the changes needed to turn these schools around. They
are giving parents new informationsuch as online data about school performance and
teacher credentialsand new choices such as the option to transfer their child to a
better school, or to obtain supplemental educational services from more than 1,700
To help States and school districts to stay the course and continue delivering on the
promise of No Child Left Behind, the President's 2005 request includes the following:
$13.3 billion for Title I Grants to Local Educational Agencies, an increase of $1 billion
or 8 percent over the 2004 level, to give States and school districts additional
resources to turn around low-performing schools, improve teacher quality, and
expand choices for students and parents. States would reserve approximately
$520 million of these funds for assistance to school districts with the greatest need
for improvement efforts. If enacted, the request would result in an overall increase of
$4.6 billion, or 52 percent, in Title I Grants to LEAs funding since the passage of the
$1.1 billion for Reading First State Grants, an increase of $101 million, or 10 percent,
to expand the 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 diagnostic assessments for students in kindergarten through
third grade to determine where they need help, implement reading curricula that are
based on recent findings of the 2000 National Reading Panel report, and provide
reading interventions for young school children reading below grade level.
$132 million for Early Reading First, an increase of $38 million, or 40 percent, for the
pre-school component of the Reading First initiative, which funds competitive grants
to develop and support the school readiness of preschool-aged children in high-
$333 million in new funding to initiate or expand activities that help meet the goals of
the President's new Jobs for the 21st Century initiative by ensuring that all students
are prepared to succeed in postsecondary education and the workforce. Specific
proposals include the following:
$100 million for a secondary school reading initiative, Striving Readers, that
would focus on developing and implementing research based interventions to
improve the skills of teenage students that are reading below grade level;
$120 million for a new Secondary Education Mathematics Initiative under the Mathematics and Science Partnership program that will make 100-140
competitive grants to ensure that secondary-school mathematics teachers are
highly qualified and help mathematics teachers meet the needs of struggling
$40 million for an Adjunct Teacher Corps Initiative to support approximately 60 to 100 awards to partnerships to create and implement arrangements for utilizing
well-qualified individuals from business, technology, industry, and other areas as
teachers in secondary schools on an adjunct basis;
$33 million for Enhanced Pell Grants for State Scholars to provide an additional
Pell Grant award of up to $1,000 to low-income students who participate in the
State Scholars program by taking a rigorous high school curriculum.
$12 million under the Administration's reauthorization proposal for "Secondary
and Technical Education State Grants" to increase the number of States
implementing State Scholars programs that encourage high school students to
complete a rigorous four-year course of study.
$28 million for the Advanced Placement program to ensure that teachers in low-income schools are well-trained to teach AP and International Baccalaureate courses and to increase the rigor of the high school curriculum.
$100 million to double funding for the Mentoring program to support the
development, expansion, and strengthening of exemplary school-based mentoring
programs that meet the needs of at-risk middle school students. The initiative draws
on the expertise and resources of the USA Freedom Corps to encourage citizen
service to help improve public education outcomes.
$10 million for a Military Families Initiative to address the challenges faced by
students from military families that frequently change duty stations, promote
smoother transitions to new schools, enable them to continue their education without
disruption, and graduate on time.
$185 million for Research, Development, and Dissemination, an increase of
$19 million to further our understanding of how students learn and to develop
effective practices for improving student achievement through investments in
research on reading comprehension, mathematics and science education, and
$410 million for State Assessment Grants to maintain statutorily required levels of
support for State-level development and implementation of annual reading and math
assessments in grades 3 through 8 by the 2005-2006 school year. The request
would make available $10 million for new competitive grants focused on improving
the assessment of limited English proficient students and students with disabilities.
$681 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 enables States to design
and implement statewide strategies, grounded in scientifically based research, for
meeting the educational needs of LEP and immigrant students.
EXPANDING OPTIONS FOR PARENTS
Expanding educational options for parents was a key achievement of the No Child Left
Behind Act and remains one of the President's highest priorities. No Child Left Behind
requires school districts to offer students attending schools identified for improvement,
corrective action, or restructuring, the opportunity to transfer to a better-performing
school, or to obtain supplemental educational services from a public- or private-sector
provider, which may include a faith-based organization. President Bush also has
provided strong support for the expansion of charter schools, and championed the
creation of a scholarship program for low-income students in the District of Columbia,
particularly those enrolled in low-performing schools.
The reality, however, is that in most school districts there are too few options for parents
seeking a quality education for their children. To help overcome this problem, the 2005
request includes the following proposals designed to ensure that parents have
$50 million for a new Choice Incentive Fund that would provide competitive awards
to States, school districts, and community-based nonprofit organizations to provide
parents the opportunity to transfer their children to a higher-performing public,
private, or charter school. A major objective would be to fund applicants proposing
to provide large numbers of students with expanded choice opportunities.
$27 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, including those across a State or across districts.
Grants support planning, transportation, tuition transfer payments, and efforts to
increase the capacity of schools to accept students exercising a choice option.
$219 million for Charter Schools Grants, which would support approximately 1,200
new and existing charter schools. The request includes $19 million for the Per-Pupil
Facilities Aid program, which assists charter schools in obtaining facilities by
matching funds from State programs that make payments, on a per-pupil basis, to
finance charter schools facilities.
$100 million for the Credit Enhancement for Charter School Facilities program, an
increase of nearly $63 million, to 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 program supports
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
No Child Left Behind provided unprecedented flexibility for States and school districts to
combine resources from selected State formula grant programs to pursue their own
strategies for helping all students reach proficiency in reading and mathematics. For
example, school districts 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. Covered
formula grant programs include Improving Teacher Quality, Educational Technology,
Innovative Programs, and Safe and Drug-Free Schools and Communities. The following
programs support this flexibility:
$2.9 billion for Improving Teacher Quality State Grants, which gives States and
school districts flexibility to select the research-based strategies that best meet their
needs for improved teaching that will raise student achievement in the core
academic subjects. In return for this flexibility, districts are required to demonstrate
annual progress in ensuring that all teachers teaching in core academic subjects
within the State are highly qualified.
$692 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.
$441 million for Safe and Drug-Free Schools and Communities State Grants, which
fund a variety of activities in school districts and communities to foster a safe and
drug-free learning environment that supports academic achievement.
$297 million for State Grants for Innovative Programs, 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.
SPECIAL EDUCATION AND VOCATIONAL REHABILITATION
President Bush has demonstrated a strong commitment to improving educational
opportunities for children with disabilities, both by requesting significant annual increases
for Special Education Grants to States and in his determination to apply the same
rigorous accountability demanded by the NCLB Act to the upcoming reauthorization of
the Individuals with Disabilities Education Act (IDEA). Drawing on the principles of the
NCLB Act, as well as from the recommendations of his Commission on Excellence in
Special Education, the President will work with Congress to make changes to IDEA
designed to strengthen accountability and improve student outcomes, improve
identification practices and promote early intervention, and reduce administrative and
The President also is committed to the wide-ranging reform of the Federal government 's
overlapping training and employment programs. This multi-year reform effort targets
resources to programs with documented effectiveness, and eliminates funding for
ineffective, duplicative, or overlapping programs. As part of this effort, the 2005 request
renews the Administration's proposal to consolidate three secondary vocational
rehabilitation programs (Supported Employment State Grants, Projects With Industry,
and the Migrant and Seasonal Farmworkers program) within the Vocational
Rehabilitation State Grants program.
The 2005 request for these activities includes the following:
$11.1 billion for Special Education Grants to States, an increase of $1 billion over the
2004 level, and the fourth consecutive $1 billion increase requested by the President,
for a total increase of $4.7 billion, or 75 percent, since 2001. The request would
provide an estimated $1,612 per student for some 6.9 million individuals with
disabilities ages 3-21. The 2005 budget also would raise the Federal contribution to
about 20 percent of the national average per pupil expenditure for all childrenthe
highest level of Federal support ever provided for children with disabilities.
$2.7 billion for Vocational Rehabilitation State Grants, an increase of $113 million or
4.4 percent, to help State VR agencies increase the participation of individuals with
disabilities in the labor force. The increase includes $51.7 million to satisfy the
statutory requirement to increase funding for the program by at least the percentage
change in the CPIU for the 12-month period completed in October 2003 as well as
$61.8 million in consolidated funds.
VOCATIONAL AND ADULT EDUCATION
Decades of Federal investment in vocational and adult education programs have
produced little in the way of measurable benefits either in improved vocational outcomes
or significant improvement in reading and math skills that can lead to job placements.
To ensure that this educational investment produces measurable results, the
Administration is proposing a stronger emphasis on high levels of academic
achievement in vocational education programs and increased accountability in adult
education programs. The following requests will support the Administration's strategy in
$1 billion for a new Secondary and Technical Education State Grants program would
create a coordinated high school and technical education improvement program in
place of the current Vocational Education State Grants program. The new program
would support and complement the achievement and accountability goals of No
Child Left Behind by requiring States and school districts to focus more intensively
on improving academic achievement and outcomes in career and technical
education programs, as well as ensuring that students are being taught the
necessary skills to make successful transitions from high school to further education
and training and into the workforce. States would use most of their formula
allocations to make competitive grants to partnerships between school districts and
community and technical colleges. The request includes $12 million to expand the
number of States supporting State Scholars programs, which encourage high school
students to complete a rigorous curriculum needed to succeed in postsecondary
education and the workforce.
$590 million for Adult Basic and Literacy Education, including State formula grants,
national leadership activities, and the National Institute for Literacy. The request
assumes reauthorization of the Adult Education and Family Literacy Act to support a
stronger focus on building skills in basic reading, math, and English acquisition for
adults who need to improve their literacy or who want to earn their high school
diploma or its recognized equivalent (the GED). Key changes to be sought by the
Administration during reauthorization include assessment-based accountability
measures and expanded use of research-based instructional practices.
The Administration's 2005 request would expand overall student aid available for
postsecondary education to more than $73 billion, an increase of $4.4 billion, or
6 percent, over the 2004 level. The number of recipients of grant, loan, and work-study
assistance would grow by 426,000 to 10 million students and parents, reflecting both an
increase in the amount of student aid available and growth in postsecondary enrollment,
which is expected to jump about 20 percent between 1998 and 2010.
The request also increases support for institutional development at colleges and
universities serving large percentages of minority students, funds opportunities for
students to gain international expertise and training as language and area specialists,
and promotes access to postsecondary education through outreach and student support
services. Highlights of the President's 2005 request include the following:
An $856 million increase for the Pell Grant program, for a total of $12.9 billion, to fully
fund the cost of maintaining a $4,050 maximum award for over 5.3 million students in
award year 2005-2006, and to support new Enhanced Pell Grants for State Scholars.
Since 2000, the number of Pell recipients has grown by nearly 25 percent, thanks in
part to the overall boom in college enrollment.
Although funding for Pell Grants has increased since fiscal year 2000 by $4.4
billion, or nearly 60 percent, in recent years both insufficient Pell appropriations
and a surge in the number of Pell Grant recipients is expected to result in a $3.7
billion funding shortfall at the end of the 2004-2005 award year. The
Administration is committed to working with Congress to address this problem
and put the program on firm financial footing.
Within the Pell Grant total, $33 million for Enhanced Pell Grants for State Scholars to
encourage States to offer and students to take demanding high school courses by
increasing Pell Grants by up to $1,000 for first-year, full-time students who complete
a rigorous State Scholars program of study in high school. This proposal is part of
the President's Jobs for the 21st Century initiative.
$419 million for the Aid for Institutional Development (HEA Title III) programs, an
increase of $18.8 million or 4.7 percent, to help close achievement and attainment
gaps between minority students and their non-minority peers by assisting institutions
that enroll a large proportion of minority and disadvantaged students, including
Historically Black Colleges and Universities and Historically Black Graduate
$96 million for Developing Hispanic-serving Institutions, an increase of $1.9 million,
to maintain support for postsecondary education institutions that serve large
percentages of Hispanic students. This program is a key part of Department efforts
to increase academic achievement, high school graduation, postsecondary
participation, and life-long learning among Hispanic Americans.
$104 million for the International Education and Foreign Language Studies (IEFLS)
programs 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, the events surrounding the
September 11 terrorist attacks on the United States, and the war on terrorism
underscore the importance of maintaining and expanding American understanding of
other peoples and their languages.
$833 million for the Federal TRIO Programs and $298 million for Gaining Early
Awareness and Readiness for Undergraduate Programs (GEAR UP), which provide
educational outreach and support services to help an estimated 1.8 million
disadvantaged students to enter and complete college.
STUDENT LOAN REAUTHORIZATION
The Administration's 2005 request for postsecondary education also includes a package
of loan program proposals for the upcoming reauthorization of the Higher Education Act
of 1965. These proposals are intended to make college more affordable for students
and their families and to strengthen the financial stability of the student loan programs.
These reforms would:
Increase loan forgiveness for mathematics, science, and special education teachers
serving poor communities;
Reduce interest rates for most borrowers, under the current interest rate
environment, by retaining the variable interest rate structure after July 1, 2006;
Increase loan limits for first-year students from $2,625 to $3,000. The current loan
limits have remained essentially unchanged since the early 1970s;
Broaden the availability of extended repayment options;
Phase out higher special allowance payments to lenders for loans funded with the
proceeds of certain tax-exempt securities;
Allow low-default schools more flexibility in disbursing loan funds;
Clarify that student aid applicants who are convicted of a drug-related offense are
ineligible for Federal student aid only if the offense was committed while they were
receiving Federal student aid and enrolled in a postsecondary institution;
Strengthen the financial stability of the FFEL system by requiring guaranty agencies
to collect the currently optional 1 percent insurance premium on all loans guaranteed
or disbursed after October 1, 2004; and
Reserve $3 billion in future years for additional student benefits. These additional
proposalswhich could include reduced fees, default prevention activities, or
additional loan limit increaseswill be developed in consultation with Congress as
part of the HEA reauthorization process.
The Department continues to implement its Blueprint for Management Excellence, a
long-term action plan for improving Department management that incorporates key
features of the President's Management Agenda. The Blueprint 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. The 2005 request for Department Management would
support the following priorities:
Improving financial integrity/management and internal controls. The Department
demonstrated continued progress in the area of financial management and integrity
by receiving a "clean" opinion on the audit of its fiscal year 2003 financial
statementsits second consecutive "clean" audit. The 2005 request will support
efforts to further strengthen management and internal controls, as well as to
implement an action plan for correcting remaining weaknesses in management
systems and processes.
Ongoing modernization of student aid systems. The Department is implementing a
5-year plan aimed at improving system integration and strengthening default
management strategies. Recent accomplishments include the new Common
Services for Borrowers contract, which will consolidate loan servicing and default
collection activities currently performed under four separate contracts. The
Department estimates that costs over the 10-year contract period will be as much as
$1 billion below projected levels under the antecedent contracts.
Consolidation of student aid administrative funding. To improve accountability and
ensure the efficient, cost-effective delivery of over $100 billion in Federal student aid,
the Administration is again proposing to consolidate nearly $935 million in
administrative funding, currently split between two 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.
Competitive sourcing. The Department is using its "One ED" plana blueprint for
finding the best way to perform its missionto identify new opportunities to improve
Department performance while lowering costs, such as reengineering of business
processes or outsourcing. The Department recently announced competitions for its
Human Resources and Payment Processing functions, and expects to announce
additional competitions in the coming year.
Elementary and Secondary Education
For further information contact the ED Budget Service.
This page last modifiedFebruary 2, 2004 (mjj).