U.S. Department of Education: Promoting Educational Excellence for all Americans
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FY 2006 Budget Summary
Current Page Summary of the 2006 Budget
Elementary and Secondary Education
Special Education and Rehabilitative Services
Vocational and Adult Education
Student Financial Assistance
Higher Education Programs
Institute of Education Sciences
Programs Proposed for Elimination
Departmental Management
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Fiscal Year 2006 Budget Summary — February 7, 2005

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It sounds odd, doesn't it, for the President to stand up and say, we need to focus on reading in high school. But that's the state of affairs. Someday, when No Child Left Behind is fully implemented and kicked in, there are not going to need to be early intervention programs or intervention reading programs in high school. But, today, we need them.

President George W. Bush
January 12, 2005

Section I. Summary of the 2006 Budget

Three years ago, President George W. Bush signed into law the No Child Left Behind Act (NCLB), which reauthorized the Elementary and Secondary Education Act (ESEA). The new law reflected an unprecedented, bipartisan commitment to ensuring that all students, regardless of background, have the opportunity to obtain a quality education and reach proficiency in core academic subjects. To reach this goal, NCLB refocused Federal education programs on the principles of stronger accountability for results, more choices for parents and students, greater flexibility for States and school districts, and the use of research-based instructional methods.

States, school districts and schools are still doing the hard work of implementing NCLB, but the early returns are promising. Recent studies of State achievement data show that reading and mathematics scores are up in most States, and that achievement gaps among racial and ethnic groups have begun to narrow. While many have claimed that NCLB sets the bar too high, a majority of States reported that more schools met adequate yearly progress (AYP) targets in the 2003-2004 school year than in the previous year.

Most of this progress, however, has been at the elementary school level, where No Child Left Behind programs target most of their resources. In too many school districts across the nation, the longer students stay in school, the more they fall behind, with far too many students dropping out altogether.

For this reason, President Bush begins his second term of office determined to finish the job with American high schools.

This vertical bar graph shows the annual growth in ED discretionary appropriations from $42.2 billion in FY 2001 to $56.0 billion in FY 2006.

For 2006, the President is requesting $56.0 billion in discretionary appropriations for the Department of Education, a decrease of $529.6 million, or .9 percent, from the 2005 level. Even after this small decrease, the Federal investment in education will have grown substantially over the past five years, with discretionary appropriations rising by $13.8 billion since fiscal year 2001, or nearly 33 percent.

The 2006 request includes nearly $1.5 billion for a new High School Initiative that would hold high schools accountable for teaching all students and provide timely intervention for those students who are not learning at grade level. The goal of this initiative is to ensure that every student graduates from high school prepared to enter college or the workforce with the skills to succeed.

In addition to the High School Initiative, the 2006 discretionary budget for education focuses on the following priorities: a $603 million increase for Title I Grants to Local Educational Agencies—the cornerstone of NCLB; a $508 million increase for the reauthorized Special Education Grants to States program; an $834 million increase for Pell Grants, which, combined with $420 million in new mandatory funding, would increase the maximum Pell Grant award to $4,150; and $500 million for a new Teacher Incentive Fund to encourage performance-based compensation systems that change the way school districts pay teachers.

The overall 2006 request—including both discretionary and mandatory funds—combines fiscal discipline with strong, continued commitment to longstanding priorities such as Title I Grants to Local Educational Agencies, Special Education Grants to States, and Pell Grants for postsecondary students. In addition, the request includes a comprehensive package of proposals for reauthorizing the Higher Education Act that would make the student loan programs more effective by reducing excessive subsidies and program costs. The resulting savings would be used to increase the Pell Grant maximum award by $100 a year over the next five years, from $4,050 to $4,550; to retire the cumulative $4.3 billion Pell Grant funding shortfall, and to expand loan benefits to students and their families. Discretionary and mandatory components of the request are shown below:

Total Department of Education Appropriations
(in billions of dollars)

  2004 2005 2006
Request
 
Discretionary $55.7 $56.6 $56.0
Mandatory 11.6 14.9 13.4
Total
67.2

71.5

69.4

Mandatory costs for the student loan programs and Vocational Rehabilitation State Grants fluctuate from year to year due to changes in inflation, interest rates, and other factors. For 2006, new student loans provided under the Federal Family Education Loans and Federal Direct Loans programs will grow from $57.9 billion to $62.2 billion, an increase of $4.2 billion or 7 percent. For the first time in 2006, savings from reform of the mandatory student loan programs would be used to offset Pell Grant costs. The President is proposing $28 billion in new student benefits over 10 years, including $19 billion to increase the Pell Grant maximum by $500, to increase the number of Pell recipients by 138,000 to 5.5 million in 2006, and to retire the estimated $4.3 billion Pell Grant shortfall. The President's proposal also includes other mandatory savings that would be used to increase student loan benefits and contribute to deficit reduction.

Department of Education discretionary funds make up about 8 percent of the $514 billion that America spends annually on elementary and secondary education. Despite the size of this overall investment—more than we spend on national defense, and more per-pupil than any other nation in the world except Switzerland—educational achievement improved little over the past decade, and achievement gaps between minority students and their non-minority peers remain unacceptably large.

For this reason, President Bush has focused new education investments on programs with the most likely prospects for success in improving educational outcomes, and on programs that have been fundamentally reformed by the NCLB Act. In particular, the Administration has used the Program Assessment Rating Tool (PART) to guide its decisions on how best to allocate Federal education dollars in an increasingly tight fiscal environment, with increases in priority areas offset by reductions and program terminations in other areas.

The combination of discretionary and non-discretionary resources in the President's budget is focused on the following areas.

BRINGING NCLB TO THE HIGH SCHOOL LEVEL

President Bush has called recent evidence of poor performance by America's high schools "a warning, and a call to action." Only 68 of 100 9th graders in our public schools will graduate on time, and only 18 of those will go on to obtain a college degree. In addition, recent international assessments show that our high school students score well behind those of other nations in key subjects like mathematics. Since most well-paying jobs in our technology-based, globally competitive economy require at least some postsecondary education, the failure to prepare our high school students with the knowledge and skills to succeed literally places our national prosperity at risk.

In response, the President's 2006 request includes a comprehensive proposal that builds on the stronger accountability of No Child Left Behind to improve the quality of secondary education and ensure that every student not only graduates from high school, but graduates prepared to enter college or the workforce with the skills to succeed. The President's budget provides nearly $1.5 billion for his High School Initiative, which includes a High School Intervention program and new High School Assessments, along with an additional $329 million for related proposals:

  • $1.24 billion for a High School Intervention initiative that would focus on strengthening high school education and providing specific interventions, including assessment-based performance plans for each student, designed to improve the academic achievement of students at greatest risk of not meeting challenging State academic standards and not completing high school.

  • $250 million to help States develop and implement new High School Assessments in reading/language arts and mathematics. The proposal would provide State formula grants to add, by the 2009-2010 school year, annual assessments at two additional high school grades, which along with the one grade currently required by NCLB would ensure that students are assessed at least three times during high school. The request also includes a $22.5 million increase for the National Assessment of Educational Progress to implement State-level assessments in reading and mathematics at the 12th grade in 2007.

  • A $175 million increase for the Striving Readers program, funded for the first time in fiscal year 2005, to significantly expand the development and implementation of research-based interventions to improve the skills of teenage students who are reading below grade level.

  • $120 million for a new Secondary Education Mathematics Initiative under the Mathematics and Science Partnership program that would provide competitive grants to accelerate the mathematics learning of secondary-school students.

  • A $22 million increase for the Advanced Placement program to expand the availability of Advanced Placement and International Baccalaureate programs in schools with large populations of low-income students and to train teachers for those programs.

  • $12 million for State Scholars Capacity Building to increase the number of States implementing State Scholars programs, which encourage high school students to complete a rigorous four-year course of study. This proposal would complement a $33 million request for Enhanced Pell Grants for State Scholars, which would increase Pell awards by up to $1,000 for students who complete a State Scholars program in high school.

IMPLEMENTING THE NO CHILD LEFT BEHIND ACT

Helping States, school districts, and schools meet the challenge of successfully implementing the No Child Left Behind Act remains one of President Bush's highest priorities. The 2006 request for education generally would support activities carried out in the 2006-2007 school year—the first year in which nearly all major NCLB requirements will be in place, including assessments in reading and math for all students in grades 3-8 and the requirement that all teachers be highly qualified. To help make the changes and improvements needed to continue delivering on the promise of No Child Left Behind, the 2006 request includes the following:

  • $13.3 billion for Title I Grants to Local Educational Agencies, an increase of $603 million, or 4.7 percent, to help States, school districts, and schools meet the strong accountability and teacher quality requirements of the No Child Left Behind Act. If enacted, the request would result in a $4.6 billion, or 52 percent, increase for Title I since enactment of NCLB.

  • $412 million for State Assessment Grants to maintain statutorily required levels of support for State-level development and implementation of the annual assessments required by NCLB, including the science assessments that States will implement by 2007-2008. The request would make available almost $12 million for new competitive grants focused on using technology to support innovative test design.

  • $2.92 billion for Improving Teacher Quality State Grants to help States ensure that all teachers of core academic subjects are highly qualified, as required by NCLB.

  • $500 million for a new Teacher Incentive Fund, which would provide formula grants to reward effective teachers and create incentives to attract qualified teachers to high-need schools, as well as competitive grants to design and implement performance-based compensation systems that change the way school districts pay teachers.

  • $1.0 billion for Reading First State Grants to maintain support for efforts under way in all 50 States to provide comprehensive, research-based reading instruction for children in grades K-3. The request would fulfill President Bush's commitment to provide $5 billion over five years to help ensure that all students can read on grade level by the end of the third grade.

  • $104 million for Early Reading First to continue the pre-school component of Reading First, which funds competitive grants to develop and support the school readiness of preschool-aged children in high-poverty communities.

  • $676 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. States must use a portion of their awards to increase the size of grants to districts that have experienced a significant increase in the percentage or number of recent immigrant students over the preceding two years.

  • $164 million for Research, Development, and Dissemination to maintain support for ongoing initiatives critical to the success of the NCLB Act, including research on reading comprehension, mathematics and science education, teacher quality, and cognition and learning in the classroom, as well as a new program of field-initiated evaluations of promising education products and approaches to find out what works in the classroom.

EXPANDING OPTIONS FOR PARENTS

The No Child Left Behind Act significantly expanded educational choice for students and their parents, primarily by requiring public school choice and supplemental educational services options for students attending schools identified for improvement, corrective action, or restructuring. In most school districts, however, there are too few alternatives for parents seeking a quality education for their children. The 2006 request includes the following proposals to help ensure that students and parents have meaningful choices:

  • $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. This proposal would complement $14.6 million in the 2006 request for the District of Columbia to continue funding opportunity scholarships for low-income students in low-performing schools.

  • $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 providing choice 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 State Charter School Facilities Incentive Grants 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.

  • $37 million for the Credit Enhancement for Charter School Facilities program to maintain assistance for charter schools in acquiring, leasing, and renovating school facilities by encouraging public and nonprofit entities to provide financing through such means as providing loan guarantees, insuring debt, and other activities to encourage private lending.

SPECIAL EDUCATION AND VOCATIONAL REHABILITATION

On December 3, 2004, President Bush signed the Individuals with Disabilities Education Improvement Act of 2004. This legislation reauthorized the Individuals with Disabilities Education Act (IDEA) to improve educational results for students with disabilities by more closely aligning IDEA with NCLB in areas such as accountability for results, flexibility and reduced paperwork, enhancing the role of parents, and research-based instruction. For example, the bill clarifies and strengthens provisions requiring special education teachers to be highly qualified; reduces paperwork burdens on teachers and schools, as well as time spent in IEP and related meetings; and provides greater flexibility in the use of Federal funds. The 2006 request for Special Education includes increased funding for IDEA programs. The reauthorized IDEA also establishes a new Center for Special Education Research in the Department's Institute of Education Sciences (IES), so that special education research will meet the rigorous standards required by the Education Sciences Reform Act of 2002. Funding for research is included under IES.

The 2006 request also maintains support for comprehensive and coordinated vocational rehabilitation and independent living services for individuals with disabilities through research, training, demonstration, technical assistance, evaluation, and direct service programs. Consistent with the Administration's multi-year initiative to reform the Federal government's overlapping training and employment programs, funds are not requested for 3 vocational rehabilitation programs in this account: Supported Employment State Grants, Projects with Industry, and the Migrant and Seasonal Farmworkers program. These programs provide services to individuals with disabilities that can be funded by the larger VR State Grants program.

The 2006 request for these activities includes the following:

This graph shows the growth in funding for Special Education Grants to States from $6.3 billion in 2001 to $11.1 billion in the FY 2006 President's request.
  • $11.1 billion for Special Education Grants to States, an increase of $508 million over 2005, and a total increase of $4.8 billion, or 75 percent, since fiscal year 2001. The request would provide an estimated $1,599 per student for some 6.9 million individuals with disabilities ages 3-21. The 2006 budget would maintain the Federal contribution at about 19 percent of the national average per pupil expenditure for all children.

  • $2.7 billion for Vocational Rehabilitation State Grants, an increase of $84.3 million or 3.2 percent, which represents the amount necessary to satisfy the requirement to increase funding for the program by at least the percentage change in the CPIU for the 12-month period completed in October 2004.

POSTSECONDARY EDUCATION

In 2006, the Department of Education will administer over $78 billion in grants, loans, and work-study assistance to help students pay for postsecondary education, including $62 billion in guaranteed and direct student loans and over $13 billion in Pell Grants. While these funds help millions of Americans finance postsecondary education and training, rising college costs and the necessity of advanced training in today's technology-based economy require increased investment, especially in Pell Grants to low-income students. The President's 2006 request for Student Financial Assistance includes a comprehensive set of proposals to reauthorize the Higher Education Act (HEA) that would increase financial assistance to students while improving the effectiveness of the Pell Grant and student loan programs.

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 include the following:

This bar graph shows the growth in the number of Pell Grant recipients from 4.3 million in 2001 to 5.5 million under the 2006 President's request level.
  • A $1.3 billion increase for the Pell Grant program, including both discretionary and mandatory funding, for a total of $13.7 billion, to increase the maximum award to $4,150 and provide grants to 5.5 million low-income postsecondary students.

  • Increase the maximum Pell award by $100 annually over the next five years, from $4,050 to $4,550. Annual increases would be funded through mandatory savings in other student aid programs.

  • $4.3 billion in mandatory funding to retire the Pell Grant shortfall accumulated from 2002 to 2005, restoring the program to firm financial footing and ensuring that all eligible students receive awards.

  • $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 an estimated 36,000 first-year, full-time students who complete a rigorous State Scholars program of study in high school.

  • $50 million for a new Presidential Math-Science Scholars program, under which the Department of Education would enter into a public-private partnership to award $100 million annually in grants to low-income math and science students. Approximately 20,000 low-income students who receive Pell Grants would receive these separate, additional awards of $5,000 each.

  • $125 million for a new Community College Access program, which would provide incentives to States and partnerships to improve access to a college education, particularly for low-income and minority students, through "dual-enrollment" programs offering both high school and postsecondary credit to high school students who take college-level courses.

  • $418.5 million for the Aid for Institutional Development (HEA Title III) programs to maintain support for institutions that help close achievement and attainment gaps between minority students and their non-minority peers, including Historically Black Colleges and Universities and Historically Black Graduate Institutions.

  • $95.9 million for Developing Hispanic-serving Institutions to maintain support for postsecondary education institutions that serve large percentages of Hispanic students. This program is a key part of the Administration's effort to increase academic achievement, high school graduation, postsecondary participation, and life-long learning among Hispanic Americans.

  • $106.8 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.

  • $11 million for the new Loans for Short-Term Training program, jointly administered by the Departments of Education and Labor, to help dislocated, unemployed, transitioning, or older workers and students. This market-oriented program, capped at $284 million in loans to 377,000 students in 2006, will allow participants to acquire or upgrade specific job-related skills through short-term training programs not currently eligible for Federal student aid.

Student Loan Reauthorization

The Administration's proposals for reauthorizing the student loan programs of the Higher Education Act would increase benefits to students through higher loan limits, lower interest rates, and more flexible and lower-cost repayment options. Proposed reforms would make the student loan programs more efficient, cost-effective vehicles for helping students finance their postsecondary educations, in part through reductions in loan subsidies to financial participants in the Federal Family Education Loans Program. Highlights of these proposals include the following:

Benefits for Students

  • Maintain the current variable interest rate formula on student loans so that students and families continue to benefit from projected low interest rates. Absent this proposal, the statute would fix borrower interest rates on student loans at 6.8 percent beginning July 1, 2006, substantially increasing interest rates for most borrowers. The variable-rate formula also would be applied to all Consolidation Loans.

  • Increase annual subsidized loan limits to $3,500 for first-year students, $4,500 for second-year students, and annual unsubsidized loan limits to $12,000 for graduate and professional students, with corresponding increases in aggregate loan limits.

  • Provide all Federal Family Education Loan borrowers with immediate access to extended repayment to allow more flexible debt management.

  • Make permanent the expanded loan forgiveness provisions of the Taxpayer-Teacher Protection Act of 2004, which forgive up to $17,500 in student loans for highly qualified math, science, and special education teachers serving low-income communities.

Increase Risk-Sharing and Reduce Loan Subsidies

  • Reduce the percentage of Federal loan principal guaranteed against default, from 98 percent to 95 percent for most lenders. The Administration also proposes to reduce reinsurance for most guaranty agencies from 95 percent to 92 percent.

  • Reduce the amount that guaranty agencies may retain from collections on defaulted loans to the average paid to the Department's private collection agents.

  • Establish a 0.25 percent annual loan holder fee on the outstanding balance of non-consolidation loans to reduce Federal subsidies, in recognition of the increased financial return available to loan holders through the use of innovative financial instruments, especially through participation in the loan securitization market. A June 2004 Congressional Budget Office study found lenders earn approximately 0.25 percent in excess interest over the statutory return level.

  • Make permanent the moratorium on loans qualifying for 9.5 percent special allowance subsidies because they are funded through tax-exempt securities.

  • Require guaranty agencies to collect the statutory 1 percent insurance premium on all loans guaranteed or disbursed after July 1, 2006.

  • Eliminate the statutory provision limiting a borrower's ability to choose a consolidation lender, create a 1 percent origination fee in recognition of the financial advantage of reconsolidation, and increase the one-time lender fee on all new Consolidation Loans from 0.5 percent to 1 percent.

  • Recall the Federal portion of the $8 billion in Perkins Loans revolving funds held by participating institutions. The Program Assessment Rating Tool (PART) found the Perkins Loan program to be duplicative of the larger guaranteed and direct student loan programs, and its fixed 5 percent rate is more costly to students. The Administration believes the Federal share of funds held by the small number of participating institutions would better serve students if invested in Pell Grants.

BUDGET AND PERFORMANCE INTEGRATION

As part of the President's Management Agenda, the Administration developed the Program Assessment Rating Tool (PART) to assess and improve program performance so that the Federal government can achieve better results. Each program receives scores for program purpose and design, strategic planning, program management, and program results, as well as an overall rating of effective, moderately effective, adequate, ineffective, or results not demonstrated.

This pie chart shows the 2 programs were rated Effective, 14 programs were rated Adequate, 5 programs were rated Ineffective, and 35 were rated Results Not Demonstrated.

Of the 56 programs in the Department assessed since the 2004 budget using the PART, the Administration rated 2 programs Effective, 14 programs Adequate, 5 programs Ineffective, and 35 programs Results Not Demonstrated (RND).

A rating of RND often indicates management issues because it typically involves problems such as the lack of long-term goals, annual performance measures, or reliable data. However, program statutes often contribute by failing to give ED the necessary tools to demonstrate success: clear and measurable objectives; strong accountability mechanisms or other means of ensuring participants focus on achieving results; and mechanisms for gathering high quality, reliable data on program outcomes. Outside of the annual budget process, to the extent possible under current law, the Department is working to improve the effectiveness of its programs. In addition, the Department hopes to work with Congress to improve program statutes by clarifying program objectives and measures and by strengthening accountability and data quality.

In the current fiscal environment, Federal discretionary programs not related to national defense or homeland security are facing an overall reduction in spending for the foreseeable future. Accordingly, the Administration is using the PART in the annual budget process to better focus the Department's limited resources on those programs and activities most likely to achieve positive results for our education system.

In general, this means investments will continue to be made in programs receiving a PART rating of Effective or Adequate, while programs rated Ineffective will be proposed for elimination. For programs rated RND, the Administration is taking a careful look to determine whether the programs are likely to demonstrate results in the future. If so, the Administration will generally support continued funding along with management or legislative improvements. However, the Administration will propose the termination of RND programs that unnecessarily duplicate other activities or suffer from such major flaws in design or execution that they are unlikely to improve their performance in the future.

While lack of reliable performance data hindered efforts to fully integrate performance information and budget policy for the Department of Education, the Administration was able to use PART ratings to inform key 2006 budget policy decisions.

For example, the PART played an important role in shaping the President's High School Initiative. Few current Department programs that focus on high school have been able to demonstrate positive results, as is reflected in Ineffective ratings for programs like Vocational Education State Grants and Upward Bound. In view of these PART results, it made sense to redirect resources from such programs to the more comprehensive, coordinated, High School Initiative, which will measure student outcomes based on test data and graduation rates and hold States and participating school districts accountable for improved student educational outcomes for at-risk youth.

PART ratings also guided the development of the Administration's proposals to reform the student aid programs. For example, the Administration is proposing to eliminate the Perkins Loans program, which received an Ineffective rating largely because it needlessly duplicates the larger and more widely available guaranteed and direct student loan programs, and redirect Perkins resources to the more effective and equitable Pell Grant program, which was rated Adequate by the PART.

PART ratings reinforced decisions to reduce or eliminate funding for a number of small, categorical programs for which RND ratings included findings regarding serious flaws in program design. These include Byrd Honors Scholarships, B.J. Stupak Olympic Scholarships, and the National Writing Project. However, for most programs rated RND, the Administration is requesting level-funding while the Department continues to follow up on recommendations identified by the PART process, including actions to establish appropriate performance measures, collect appropriate data on program outcomes, and use those data to achieve better program results.

For example, in response to PART recommendations for the Special Education Preschool Grants and Grants for Infants and Families programs, rated RND for the 2004 budget, the Department has undertaken a multifaceted approach to assist States in developing systems for collecting data on child outcomes, which can be used to assess program impact and improving program performance. The Department is making some progress to improve the quality of its data (such as data on graduation and dropping out) for the Special Education Grants to States program and is also working to develop a measure to track the post-graduation outcomes of students. The Administration is requesting increased funding for Grants to States in 2006.

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This page last modified—February 7, 2005 (mjj).