Of the Education programs funded in the Recovery Act, the newly created SFSF program was the largest in terms of funding. It included approximately $48.6 billion awarded to states by formula and up to $5 billion awarded as competitive grants. SFSF was created, in part, to help state and local governments stabilize their budgets by minimizing budgetary cuts in education and other essential government services, such as public safety. SFSF funds for education distributed under the Recovery Act were required to first be used to alleviate shortfalls in state support for education to LEAs and public institutions of higher education (IHE). States were required to use SFSF education stabilization funds to restore state funding to the greater of fiscal year 2008 or 2009 levels for state support to LEAs and public IHEs. When distributing these funds to LEAs, states must use their primary education funding formula, but they can determine how to allocate funds to public IHEs. In general, LEAs maintain broad discretion in how they can use education stabilization funds, but states have some ability to direct IHEs in how to use these funds. Several other programs received additional funding through the Recovery Act. For example, the Recovery Act provided $10 billion to help LEAs educate disadvantaged youth by making additional funds available beyond those regularly allocated for ESEA Title I, Part A. These additional funds are distributed through states to LEAs using existing federal funding formulas, which target funds based on such factors as high concentrations of students from families living in poverty. The Recovery Act also provided $12.2 billion in supplemental funding for programs authorized by IDEA, the major federal statute that supports the provisions of early intervention and special education and related services for infants, toddlers, children, and youth with disabilities. Part B of IDEA funds programs that ensure preschool and school-aged children with disabilities have access to a free appropriate public education and is divided into two separate grants—Part B grants to states (for school-age children) and Part B preschool grants. While one purpose of the Recovery Act was to preserve and create jobs, it also required states to report information quarterly to increase transparency and SFSF required recipients to make assurances relating to progress on educational reforms. To receive SFSF, states were also required to provide several assurances, including that they will maintain state support for education at least at fiscal year 2006 levels; and that they would implement strategies to advance four core areas of education reform. The four core areas of education reform, as described by Education, are: 1. Increase teacher effectiveness and address inequities in the distribution of highly qualified teachers. 2. Establish a pre-K-through-college data system to track student progress and foster improvement. 3. Make progress toward rigorous college- and career-ready standards and high-quality assessments that are valid and reliable for all students, including students with limited English proficiency and/or disabilities. 4. Provide targeted, intensive support, and effective interventions to turn around schools identified for corrective action or restructuring. Education required states receiving SFSF funds to report about their collection and reporting of 34 different indicators and 3 descriptors related to these four core areas of education reform or provide plans for making information related to the education reforms publicly available no later than September 30, 2011. Previously, we reported that, while states are responsible for assuring advancement of these reform areas, LEAs were generally given broad discretion in how to spend the SFSF funds. It is not clear how LEA progress in advancing these four reforms would affect states’ progress toward meeting their assurances. Additionally, Recovery Act recipients and subrecipients are responsible for complying with other requirements as a condition of receiving federal funds. For example, for Recovery Act education programs we reviewed, states and LEAs must meet applicable maintenance of effort (MOE) requirements, which generally mandate them to maintain their previous level of spending on these programs. Generally, this also helps to ensure that states continue to fund education even with the influx of the Recovery Act funds. Specifically, the newly created SFSF program required states to maintain support for elementary and secondary education, in fiscal years 2009, 2010, and 2011, at least at the level that the state provided in fiscal year 2006, but did not place any MOE requirements on subrecipients. IDEA generally prohibits states and LEAs from reducing their financial support, or MOE, for special education and related services for children with disabilities below the level of that support for the preceding year. For ESEA, Title I, states and LEAs are also required to maintain their previous level of funding with respect to the provision of free public education. As long as states met certain criteria, including that the states maintained MOE for SFSF funding, this funding could be counted to meet MOE for other programs including ESEA, Title I, and IDEA. In addition, section 1512 of the Recovery Act requires recipients to report certain information quarterly. Specifically, the Act requires, among other types of information, that recipients report the total amount of Recovery Act funds received, associated obligations and expenditures, and a detailed list of the projects or activities for which these obligations and expenditures were made. For each project or activity, the information must include the name and description of the project or activity, an evaluation of its completion status, and an estimate of the number of jobs funded through that project or activity. The job calculations are based on the total hours worked divided by the number of hours in a full-time schedule, expressed in FTEs—but they do not account for the total employment arising from the expenditure of Recovery Act funds. The prime recipient is responsible for the reporting of all data required by section 1512 of the Recovery Act each quarter for each of the grants it received under the act. According to our nationally representative survey of LEAs conducted in spring 2011, nearly all LEAs reported that they had obligated the majority of their Recovery Act funds, primarily for retaining instructional positions, which assisted LEAs in restoring shortfalls in state and local budgets that LEAs have had to cope with over the past few school years. As a result of the fiscal stress states faced during the recession, a number of state educational agencies (SEA) and LEAs have had difficulty meeting their required MOE requirements for IDEA. States that do not either fully meet their MOE requirements or receive a waiver from Education may face a reduction in future IDEA allocations. State and LEA officials we visited stated that the actions they have taken to deal with decreased budgets and the expiration of their Recovery Act funds—such as reducing instructional supplies and equipment and cutting instructional positions— could have a negative impact on the educational services they provide to students. According to our survey, the majority of LEAs reported they had already obligated most of their SFSF; ESEA Title I, Part A; and IDEA, Part B funds. Nearly all of the LEAs—99 percent for SFSF; and 97 percent for ESEA Title I and IDEA, Part B—reported that they expected to obligate all of their Recovery Act funds prior to September 30, 2011. However, approximately one-quarter (23 percent) of LEAs reported that uncertainty about allowable uses of the funds impacted their ability to expend them in a timely and effective manner. According to data from Education, as of September 9, 2011, about 4 percent of the states’ obligated Recovery Act funds remain available for expenditure. See appendix II for percentages of awarded Recovery Act funds drawn down by states. As of September 9, 2011, two states had drawn down 100 percent of their ESEA Title I, Part A funds. Additionally, 27 states had drawn down all of their SFSF education stabilization funds, while Wyoming, for example, had the lowest drawdown rate for SFSF— 34 percent. Drawdowns can lag behind actual expenditures for various reasons. For example, SEA officials in Wyoming stated that funds for certain uses, such as professional development, tended to be expended in large amounts during the middle and end of the school year which did not require them to draw down funds at a constant rate throughout the school year. Additionally, SEA officials in Alaska told us their drawdown rates appeared low because the state draws down funds on a quarterly basis to reimburse LEAs after their allocations have been spent. SEA officials in the states we visited told us they provided guidance on obligating Recovery Act funds in an effort to assist LEAs in meeting the deadline for obligation of the funds. For example, SEA officials in Massachusetts told us that they sent four communiqués and conducted teleconferences with LEAs with the goal of ensuring that SFSF funds were spent appropriately and in a timely fashion. In Wyoming, SEA officials stated they requested that districts submit Periodic Expenditure Reports on a quarterly basis so that they could assess districts’ spending of Recovery Act funds. They also told us that they contacted districts to determine if they were having challenges obligating the funds by the September 2011 deadline and sent e-mails to their districts notifying them of the amount of funds they had remaining. Retaining staff was the top use cited by LEAs of SFSF; IDEA, Part B; and ESEA Title I, Part A Recovery Act funding over the entire grant period. According to our survey, about three-quarters of LEAs spent 51 percent or more of their SFSF funds on job retention (see fig. 1). A smaller, but substantial, percentage of LEAs also reported using 51 percent or more of their ESEA Title I, Part A and IDEA, Part B Recovery Act funding—an estimated 43 percent and 38 percent, respectively—for job retention. Specifically, in the 2010-2011 school year, the large majority of LEAs (84 percent) used Recovery Act funds to retain instructional positions, which typically include classroom teachers and paraprofessionals.