John F. Hood, President
MCH, Inc.

I have been in touch with the Department of Education and now have a better understanding of the distribution of funds.On April 1st 50% of the total authorized funds for Title I and IDEA were made available to the states to be distributed and spent according to previously established guidelines for those programs. This funding represents close to a 50% increase and is additional to the normal funds available each year. The second half will be distributed in about one year and is also in addition to normal funding.

The state stabilization funding, the largest of the ARRA education funding programs, is being handled differently. Two-thirds of the money, $32.6 billion, is available within two weeks of a completed application by the states. The last one third will be made available this Fall. $26.6 billion of the $32.6 billion is specifically for education, K-12 first and the rest, if any, for colleges. The other $6 billion is for government services which may include education.

As of this writing, money has been made available to the following states. See table below:

  
This way of distributing the funding clearly cries out for a state-by-state marketing strategy. The states will (eventually) report back to the Department of Education and at that point the spreadsheet I mentioned in May 4th’s blog will be updated to show the state/district spending by moving the funds to the “Outlay” column, in other words after the fact. The big question now is how fast the states will move.

I would expect that the states that apply and get the money the soonest are the most eager (or desperate) and will move it into the school district/local government pipeline quickly.

For instance, California required each district to complete a very simple on-line application to get their share. The deadline for the applications was May 4th. I expect that the state is now in the process of apportioning the money to the districts that applied and that it will be made available to them within the month. In Illinois, the districts had to apply by April 17th, 3 days before the state application was approved and the funds were made available.

However, Minnesota has to pass legislation to enable it to distribute the $547 million, and depending on the outcome of the legislation, may have to reapply to the federal department of education. This might take some time.

The districts have until September 30, 2011 to spend the money. They can start spending as soon as they receive their portion from the governor. The same rules apply generally to Title I and IDEA, except with more program restrictions. So the key to the timing of the stabilization funding lies with first with the states – which ones have the money, and then with the districts who get to spend it whenever they want.

Please keep an eye on StimulusMarketing.com where we will be posting information on states that are getting their stabilization money.

John F. Hood, President

MCH, Inc.

On March 7, 2009 U.S. Secretary of Education Arne Duncan announced that: “$44 billion in stimulus funding from the American Recovery and Reinvestment Act (ARRA) will be available to states in the next 30 to 45 days.” I might be crazy but that sounded to me like $44 billion would be at the states by April 21 at the latest. Well, guess what? It’s not.

I have advocated being in front of your customers so when the money hits you will be “top of mind”. As I have followed up with clients, none yet have been able to attribute sales to ARRA funding. Needless to say, this is very frustrating as all press releases speak with a sense of mission and urgency. In a March blog, I quoted from the press release above. I also noted that some exhibitors at NSSEA (education publishers and manufacturers at the National School Supply and Equipment Association conference which I had just attended) seemed skeptical about ARRA funding and the windfall headed their way. Guess who was right? The skeptics!

I have just reviewed a spreadsheet “Spending Reports by Program, April 24, 2009″.

This report shows that about $18 billion of ARRA money is available and obligated at the Department of Education. However, the amount distributed, the outlays, are about $350 million or 2%. To be technical, the press release said $44 billion “would be available to the states”. As of April 24th, $18 billion is available – available but not yet provided.

Of the $350 million that has moved beyond the Department of Education, 88% is for student assistance in the form of Pell grants. Below are outlays for the programs we have been watching:

• Title I (Aid for the Disadvantaged) $0.00
• IDEA (Special Ed) $1,400,000
• State Stabilization $0.00

In other words, virtually nothing!

On a more positive note, the Department of Education has released guidelines for the proper use of these funds. See Using ARRA Funds to Drive School Reform and Improvement. While there are program limitations with Title I and IDEA, the guidance document notes that the state stabilization funds (the largest of the funds) may be used for all the examples listed. Here is help on determining how well your products fit with the wishes of the Department of Education.

So when will the money hit the street? I don’t feel qualified to answer. However, the spreadsheet available at the link above is quite clear and will be updated periodically. We will keep an eye on it; you might want to also.

John F. Hood
President, MCH, Inc.

School districts across the US are beginning to understand the avalanche of money headed their way. A front-page article in the New York Times on Sunday, March 22, entitled “Some Rich Districts Get Richer As Aid Is Rushed To Schools”, discussed the impact of the $80 billion on a number of school districts.

Congress decided to use existing funding formulas to allocate the money, and the states and school districts now know how much they will get. While $25 billion is targeted by poverty level (Title I or NCLB) and to students with disabilities (IDEA), about twice as much, relatively speaking, is untargeted. This is the state stabilization funding, which benefits all school districts. And the formulas used for this money reward school districts that spend more with more money than districts that spend less. This money is intended to preserve educational jobs. Where jobs were in jeopardy, jobs will be preserved. But in states and districts where jobs are not at risk, the money is a gift, and may be spent the way the districts want to (for legitimate educational purposes).

So here’s the point. $25 billion is going to schools with disadvantaged students (NCLB money) and for students with disabilities (IDEA money). These funds will be spent on salaries and educational products and services that are tailored for these special needs. The companies who benefit will mostly be a relatively narrow group that specializes in these markets. But twice as much money will be distributed much more broadly and will be spent on a much more general or unspecialized products. Here’s the real opportunity for B2B marketing companies.

For example, according to the NY Times article, the Uinta County District 1 in Evanston, Wyoming “has enjoyed years of growing budgets. Students attend new or updated schools with plenty of computers; high-tech smart boards have replaced blackboards.” This district will receive $1.5 million in stimulus money. According to the superintendent, Dr. Bailey: “Out of the blue this money has dropped in, and it’s kind of a distraction.”

Your opportunity is to help Dr. Bailey and others like him get rid of his distraction.

The Department of Education has released an official guidance document that sets forth the principles governing use of the funds as well as when and how funds will be disbursed.

Before March 29, 2009, the Department of Education will release to states:

• 50% of ESEA Title I Part A Grants to Local School Districts ($5 billion)
• 50% of IDEA Part B State Recovery Grants and IDEA Preschool Recovery Grants ($5.8 billion)
  States should make these funds available to school districts by the end of April, 2009.
• A minimum of 50% of IDEA Part C Grants for Infants and Families ($250 million)
• A minimum of 50% of Vocational Rehabilitation State Grants ($270 million)
• All funds for Homeless Education ($70 million)
• 40% (or $40 million) of the Impact Aid Construction funds
• $52.5 million of the $140 million for Independent Living Services.

The Department of Education is providing streamlined applications for use by states in applying for the initial 67% of the State Fiscal Stabilization Funds. After “approvable” applications are received by the federal government, funds will be released to the states within 2 weeks.

The guidance document also includes a list of funds that will be disbursed on July 1, 2009 and in the fall of 2009.