U.S. Department of Education: Promoting Educational Excellence for all Americans
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Fiscal Year 2012 Budget Summary — February 14, 2011

If we want to win the future—if we want innovation to produce jobs in America and not overseas—then we also have to win the race to educate our kids.

President Barack Obama
January 25, 2011

Section I. Summary of the 2012 Budget

During his first two years in office, President Obama has combined unprecedented support for America's students and schools during tough economic times with extraordinary leadership in promoting transformational reforms at all levels of our education system. The American Recovery and Reinvestment Act of 2009 (Recovery Act) delivered nearly $100 billion to States and school districts to help address budget shortfalls and meet the needs of schools and students in the midst of the most severe economic recession since the Great Depression. This funding helped save or create an estimated 400,000 jobs, including 325,000 education jobs. The Education Jobs Fund, passed in late summer of 2010, is helping cash-strapped States and districts keep tens of thousands of teachers in the classroom during the 2010-2011 school year.

At the same time, President Obama recognized the need to not just recover from yesterday's economic recession, but to take bold action to ensure America's success in tomorrow's global economic competition. This is why the President used $4 billion in Recovery Act funds to create the Race to the Top program, an initiative he has described as "the most meaningful reform of our public schools in a generation." Race to the Top helped support more than 40 States in raising their standards for teaching and learning, and has brought together State and local leaders—Democratic and Republican—to work collaboratively to implement their best ideas for improving their schools.

Now President Obama is seeking to build on the success of Race to the Top by focusing on core reforms and flexibility in exchange for results in his proposal for reauthorizing the Elementary and Secondary Education Act (ESEA). In March 2010, the Administration released A Blueprint for Reform, which proposed changes in the ESEA intended to help give all children the world- class education that they deserve and that America needs to ensure our future economic prosperity. It does this not just by tinkering with existing law, but by re-envisioning the Federal role in education to support more flexible, innovative, locally driven approaches to teaching and learning that make better, more productive use of existing resources. As President Obama said in his 2011 State of the Union address, "this is our generation's Sputnik moment," and we can no longer afford to invest in the status quo in education.

The Blueprint envisions a smaller Federal role focused on key priorities aimed at improving educational outcomes for all students, including (1) recognizing and rewarding student academic growth and school progress; (2) ensuring that students complete high school prepared for college and a career, based on rigorous, State-developed standards; (3) putting a great teacher in every classroom and a great principal in every school; and (4) focusing intensive support and interventions on our lowest-performing schools that serve our neediest students and communities, including the "dropout factories" that account for one-half of the estimated 1 million students who leave school each year without a high school diploma. Together, these changes support the goal of ensuring that, by 2020, the United States will once again have the highest proportion of college graduates in the world—a key goal not only for restoring and increasing our economic prosperity, but also for securing the more equal, fair, and just society envisioned by our Nation's founders.

President Obama also delivered a significant down payment on his promise to make postsecondary education more affordable and help more Americans earn a college degree when he signed into law the Student Aid and Fiscal Responsibility Act (SAFRA) as part of the Health Care and Education Reconciliation Act of 2010. This historic legislation ended decades of Federal subsidies to banks and other institutions that made guaranteed loans to postsecondary students and, according to the Congressional Budget Office, saved an estimated $67 billion over 10 years that was re-directed to improving college affordability and reducing the deficit. SAFRA invested more than $40 billion to help Pell Grants keep pace with rising college costs, expanded the income-based student loan repayment program to reduce the burden of loan repayment for college graduates, provided $2 billion in new funding to community colleges to expand career training opportunities, and supported minority-serving institutions which currently enroll nearly 60 percent of all minority undergraduate students. In December 2010, the President also signed into law an extension of the American Opportunity Tax Credit, which in fiscal year 2012 will provide an estimated $7.1 billion in tax relief to students and families with postsecondary expenses.

The President's 2012 request for the Department of Education builds on this record of achievement and reform and reflects the critical importance of education to America's families and future.

The Administration is requesting $48.8 billion in non-Pell Grant discretionary appropriations for the Department of Education, an increase of $2.0 billion, or 4.3 percent, over the 2011 Continuing Resolution (CR) level.

The 3-year table below displays the Department's discretionary request without Pell Grants, as well as the net discretionary request for the Pell Grant program (assuming enactment of the Pell Grant Protection Act, a set of cost-reduction and savings proposals).

Department of Education Discretionary Appropriations
(in billions of dollars)

  2010 2011 CR 2012
   (w/o Pell Grants)
$46.6 $46.8 $48.8 +$2.0
Pell Grants
   (net discretionary request)
$17.5 $23.2 $28.6 +$5.4



       (may not add due to rounding)

The 2012 request for education would (1) sustain State and local reform momentum by providing significant competitive funding for key initiatives like Race to the Top, while maintaining critical formula programs for at-risk students; (2) support the aggressive consolidation and restructuring of Federal education programs to emphasize fewer priorities and provide greater flexibility for local innovation; (3) eliminate ineffective programs and earmarked activities not aligned with reform priorities; and (4) expand investments aimed at improving college access and success.

The request also reflects considerable evidence that the Administration's education reforms are leading to significant change across America. For example, 46 States and the District of Columbia prepared comprehensive Race to the Top applications, 139 applicants for the Teacher Incentive Fund demonstrated a willingness to take on the challenge of reforming teacher evaluation and compensation systems, and the Investing in Innovation (i3) program generated 1,700 applications proposing a wide range of innovative and entrepreneurial strategies for improving our education system.

Moreover, this momentum for reform has already generated concrete results, with 41 States and the District of Columbia adopting State-developed, rigorous, common college- and career-ready standards in reading/language arts and mathematics; 44 States and the District of Columbia participating in Race to the Top Assessment Grant consortia that will develop a new generation of assessments aligned with college- and career-ready standards; and 34 States changing laws or policies to support promising reforms.

While the 2012 request demonstrates the President's commitment to making the critical investments in education needed to ensure our future economic prosperity, it also shows his determination to reduce the overall Federal budget deficit. For example, the President's budget would help offset increases in the 2012 request by eliminating 13 programs for a savings of $147 million. These proposed eliminations build on $360 million in savings from four program terminations enacted in 2010. The request also redirects funding from less effective programs to programs that will maximize results for students under a new framework for the ESEA.

The 2012 request also includes a Pell Grant Protection Act that responds to growth in the demand for Pell Grants by protecting the maximum grant level, while proposing tough changes in postsecondary grant and student loan programs in order to ensure the long-term viability of this bedrock student aid program. The Pell Grant Protection Act would end the availability of a second Pell grant in the same award year, eliminate the interest subsidy for graduate and professional student loans, and allow students whose debt is split between Department of Education contractors and Federal Family Education Loan (FFEL) lenders to convert their FFEL debt. Eliminating "two Pells" would save an estimated $7.6 billion in fiscal year 2011 and 2012 discretionary funding, while the proposed mandatory savings from changes in the student loan programs would total an estimated $4.3 billion in 2012 ($4.0 billion in outlays). Concurrent with the release of the 2012 budget, the Department also is announcing administrative actions to implement enhanced income verification procedures for student aid applicants as part of improvements in the processing of the Free Application for Federal Student Aid (FAFSA).

The overall 2012 budget request for the Department of Education is organized around the following priorities:


The Recovery Act provided the down payment needed to change the culture of America's education system by rewarding excellence and promoting innovation. The early results have been extraordinary, with States and school districts breaking ground in the areas of common college-and career-ready academic standards, teacher evaluation, and tackling the lowest- performing schools, and 1,700 educational entrepreneurs seeking to test or expand their ideas for improving outcomes in the classroom. The 2012 President's budget for education would continue to build on the revolutionary investments launched by the Recovery Act.


A key goal of the Administration's ESEA reauthorization plan is to create incentives and supports to help States, LEAs, and schools recruit, prepare, support, reward, and retain effective teachers and school leaders, with a priority on improving the effectiveness of teachers and leaders in our lowest-performing schools. The 2012 request includes a wide range of key investments and new resources to help accomplish the Secretary's goal of "getting great teachers into our classrooms and great principals into our schools."


The Administration's ESEA reauthorization plan recognizes that the children and young people most at risk for academic failure too often attend schools and live in communities that fall short in meeting their basic needs. The 2012 request includes a total of $1.8 billion to support comprehensive services, safe school climates, student health and well-being, full-service community schools, and expanded school schedules to accommodate both additional learning opportunities and access to comprehensive services outside the traditional school day.


The Administration is committed to an early learning strategy that supports a continuum of learning in the early years from birth through third grade. Significant evidence from research and evaluation demonstrates that high-quality early learning programs and services are among the most cost-effective investments in improving health, social-emotional, and cognitive outcomes; increasing school readiness across a range of domains; and closing and even preventing achievement gaps. In addition to the Promise Neighborhoods program described above, the following investments in early learning would help prepare children to thrive in and graduate from school ready to succeed in college and a career:


The 2012 request would continue to support President Obama's focus on improving STEM education by (1) increasing STEM literacy so that all students can master challenging content and think critically in science, technology, engineering, and mathematics fields; (2) improving the quality of math and science teaching so American students are no longer outperformed by those in other nations; and (3) expanding STEM education and career opportunities for underrepresented groups. Key activities include:


The Administration's ESEA reauthorization proposal is based on high expectations and accountability for all student groups to ensure that all students, including poor and minority students, graduate from high school college- and career-ready. To help States and LEAs close longstanding achievement gaps between poor and minority students and their more advantaged peers, the 2012 request would provide significant resources to improve services to students from low-income families, students with disabilities, and English Learners.


College- and career-readiness is the new standard for K-12 education—and the centerpiece of the Administration's proposal to reauthorize the ESEA—because most students will need some postsecondary education to compete successfully for jobs in the technology-enabled, globally competitive, 21st century American economy. To help students and their families pay for postsecondary education, the 2012 budget for education includes a combination of discretionary and mandatory funding that would make available $167 billion in new grants, loans, and work- study assistance—an increase of $37.6 billion, or 29 percent, over the amount available in 2009—to help nearly 16 million students and their families pay for college.

The foundation of need-based Federal assistance to postsecondary students and their families is the Pell Grant program, which has experienced rapid growth in both benefits to students and costs to taxpayers in recent years. In 2012, the Pell Grant program will provide more than $36 billion in grant aid to over 9.6 million needy postsecondary students, reflecting a doubling of grant assistance over the past 3 years.

This increase reflects a number of factors, but is primarily attributable to growing demand for Pell Grants. In addition, Pell Grant costs have grown in recent years due to an expansion of benefits to students and other legislative changes. For example, since fiscal year 2007 the Pell Grant maximum award has risen from $4,310 to $5,550, an increase of $1,240, or 29 percent. Also, while student aid applicants previously could earn no more than $20,000 in annual household income to qualify automatically for the maximum $5,550 Pell Grant, in 2008 this threshold was raised to $30,000, sharply increasing the percentage of Pell Grant applicants who qualify for the maximum award. In 2012, the Department projects that more than 75 percent of Pell recipients will be eligible to receive the maximum grant of $5,550. Finally, the "two Pells" provision, under which a student may receive up to two Pell Grants in one academic year, has proven far more costly than expected.

To protect the maximum Pell grant level, while responsibly ensuring the long-term sustainability of the program, the Administration is proposing a Pell Grant Protection Act. This proposal includes tough changes to student aid programs that would generate savings which would be appropriated back to Pell Grants as additional mandatory funds, thus reducing the need for future discretionary annual appropriations. Over 10 years, these changes would reduce future appropriation needs by $104 billion. Proposed changes include the following:


In addition to helping students and families pay for college, the 2012 request includes funds to help disadvantaged students enroll in and complete postsecondary education.


The 2012 request includes funding for a variety of programs targeting adult learners—including career and technical education, adult basic and literacy education, and vocational rehabilitation and independent living programs—that provide essential support for State and local activities to help millions of Americans navigate the ever-changing job market and overcome the career challenges created by the combination of global competition and the economic recession.


The Administration is seeking a total of $760.5 million, an increase of $101.5 million over the 2011 CR level, to support the Department of Education's longstanding role in sponsoring education research and development activities, gathering and making available to researchers and the public a wide range of data on our education system, and measuring the performance of American students through a rigorous assessment program in a variety of academic subjects. The 2012 request includes the following:


Table of contents  Elementary and Secondary Education


For further information contact the ED Budget Service.

This page last modified—February 14, 2011 (mjj).