The Goals 2000: Educate America Act, which became law in 1994 and was amended in 1996, is intended to promote coordinated improvements in the nation’s education system at the state and local levels. All states and the District of Columbia, Puerto Rico, and the U.S. Territories are currently participating in the program. Goals 2000 funds aim to support state efforts to develop clear standards for and comprehensive planning of school efforts to improve student achievement. Funds are provided through title III of the act and are to be used at the state and local levels to initiate, support, and sustain coordinated school reform activities. (See app. II for a listing of allocations.) States can retain up to 10 percent of the funds received each year, and the remainder is to be distributed to districts through a subgrant program. States have up to 27 months to obligate funds; after this time, unobligated funds must be returned to the federal government. Goals 2000 requires states to award subgrants competitively. To comply with this component of the law, states’ subgrant programs require districts to compete directly against one another for funding or compete against a standard set of criteria established by the state to determine levels of funding for individual applicants. Some states weigh districts’ subgrant proposals against one another and against standard criteria. Prior to the 1996 amendments, Goals 2000 was criticized as being too directive and intrusive in state and local education activities. The act initially required that states submit their education reform plans to the Secretary of Education for review and approval before they could become eligible for grants. The Omnibus Consolidated Rescissions and Appropriations Act of 1996 amended the law by providing an alternative grant application process that did not include the Secretary of Education’s approval of a state’s education reform plan and eliminated some requirements for state reporting of information to the Department of Education. The amendment also allowed local districts in certain states to apply directly to the Department for Goals 2000 funds, even if their state did not participate at the state level. As a result of the 1996 changes, the Goals 2000 program is essentially a funding-stream grant program with fiscal objectives. These types of grants differ from performance-related grants, which have more immediate, concrete, and readily measurable objectives. Funding-stream grant programs often confine the federal role to providing funds and give broad discretion to the grantee. They are also the least likely of various grant types to have performance information. Goals 2000 does not have specific performance requirements and objectives, and the Department of Education has issued no regulations specifically related to performance by states and districts concerning their activities under Goals 2000. Rather, the Department of Education provides states the latitude to merge Goals 2000 funds with other funds from state and local sources to support state and local reform activities. However, the Department has identified objectives in its annual performance plan that it expects to achieve as a result of this program, along with other education programs. Goals 2000 funds, totaling about $1.25 billion for fiscal years 1994 through 1997, have supported a broad range of education reform activities at both the state and local levels. Of this amount, states reported that about $109 million (9 percent) was retained at the state level where it was used for management, development of statewide standards, and other related purposes. The remaining funding was provided in the form of subgrants to local districts, consortia of districts, individual schools, and teachers. State program officials reported that subgrants supported a broad array of district efforts to promote education reform activities and keep up with new state standards and assessments. These efforts included developing district and school reform plans, aligning local curricula with new assessments, and promoting professional development activities for teachers. Subgrants, with few exceptions, were not used to support health-related activities. (See app. IV for additional information on state subgrants.) As permitted by the act, most states retained a portion of their total Goals 2000 funds at the state level and used it primarily to manage the subgrant program and support state-level activities. (See app. III for state-retained funds by cateogry and fiscal year.) Many states retained less than the maximum amount permitted, and a few states retained almost no funds at all. In some instances, state-retained funds were combined with subgrants to support local initiatives. In the 4-year period that we reviewed, states were able to provide detail on how $62 million in state-retained funds have been used. Of this amount, states primarily used Goals 2000 funds for personnel and benefits and contract services and consultants. (See fig. 1.) Funds were also used for training and travel; printing and postage; equipment and supplies; and rent, telephone, overhead, and other costs not classified elsewhere. The largest category of state-retained funds where detail was available was for funds reported as used for personnel and benefit costs (44 percent). These expenditures typically involved salaries and benefits for state-level staff who managed the state’s subgrant program and other state-sponsored education reform activities. Generally, these personnel were responsible for disseminating information on the Goals 2000 program, providing technical expertise to districts regarding grant requirements, assisting district personnel with proposal writing, reviewing districts’ subgrant proposals, and managing the subgrant selection process. These staff also typically monitored subgrantees’ expenditures and reviewed reports that subgrantees submitted regarding their projects. The remaining state-retained funds where detail was reported were used for contract services, training and travel, printing and postage, equipment and supplies, and other activities. Contract services and consultant fees constituted about 28 percent of state-retained funds. These expenditures were often associated with state efforts to create new standards and assessments, develop new curricula in alignment with the standards, and use outside experts to research and develop these measures. Travel, training, and conference costs, accounting for about 9 percent of total expenditures, typically supported state Goals 2000 panel activities and training for teachers and administrators. These funds were also used to support state conferences designed to educate district and school officials about Goals 2000 and allow them to share information and collaborate on projects. Printing and postage made up 7 percent of state-retained funds, and funds used for equipment and supplies, such as purchasing computer hardware and software, made up another 7 percent. Other expenses—such as rent, telephone costs, overhead, and other costs not classified elsewhere—accounted for the remaining 5 percent of the identified funds.The additional $47 million identified by states as having been retained at the state level had either not yet been spent or could not be identified in detail. Most state officials said that Goals 2000 funding has been an important resource in their states’ development of new standards and assessments, but they were unable to estimate how much future Goals 2000 funding they would need to complete these activities. Generally, officials said they were unqualified to make this estimate because their involvement in the state’s overall education reform efforts was limited or they viewed the development of standards and assessments as an iterative process that will never be fully complete. We identified 16,375 local subgrants totaling over $1 billion that were awarded with funding provided in fiscal years 1994 through 1997. As shown in table 1, the number of subgrants and total dollar amount of subgrant awards rose each year between fiscal years 1994 through 1996. (Amounts for fiscal year 1997 are incomplete because several states had not yet awarded their subgrants for that year at the time of our review.) Subgrants ranged from a $28 subgrant that funded a reading professional development activity in a single California school to a $6.1 million subgrant for fourth- to eighth-grade reading instruction awarded to the Los Angeles Unified school district. More than 34 percent of the 14,367 school districts nationwide that provide instructional services received at least one Goals 2000 subgrant during the 4-year period reviewed. Many districts received Goals 2000 funding for 2 or more of the years we reviewed. Over the 4-year period reviewed, Goals 2000 subgrants funded several general categories of activities: local education reform projects, professional development, computer equipment and training, preservice training, and standards and assessments. Local education reform projects and professional development, the two largest categories, together account for about two-thirds of the subgrant funding. Some activities fell into a “crosscutting and other” category that reflected activities that had been combined or were too infrequent to categorize separately. In cases where states could not identify a single primary activity for a grant, we classified the grants as having had a crosscutting purpose. (See fig. 2.) Standards and Assessments $50,871,015 Table 2 summarizes some of the activities undertaken with subgrant funds under each of the general categories. Local education reform activities, constituting about 39 percent of total subgrant funding, included activities such as the development of district improvement plans, alignment of local activities with new state education reform plans, and efforts to update curriculum frameworks. For example, Indiana awarded a subgrant to align curricula and instruction and to design and implement an improvement plan that allows secondary schools to build on foundations developed at the elementary schools. In Kentucky, state officials reviewed their comprehensive reform activity and concluded that their plan was missing a public engagement program for parents and community members that would sustain education reform. Thus, the state awarded subgrants to improve public information, boost parental understanding, increase families’ understanding of technology, engage parents, and broaden the reach of the school into the community. Professional development activities, representing about 28 percent of Goals 2000 subgrant funding over the 4-year period reviewed, included activities such as updating teacher skills in new teaching approaches and providing enrichment courses for teachers. For example, Tennessee provided a grant for 11 teachers to complete a year-long Reading Recovery training program in strategies to teach the most at-risk first-graders to read.