Obama budget's big education items: Preschool for All, college Race to the Top

President Obama's budget proposal gives the Education Department $71.2 billion in discretionary spending for fiscal year 2014. Preschool for All would be funded by a tax hike on cigarettes.

With his budget proposal Wednesday, President Obama signaled once again that education – from early childhood all the way through college and career training – is a priority investment.

Education advocates have their chance to cheer now, but they know that many of their hopes may be dashed by a Congress that’s holding the purse strings tight.

The Department of Education would receive $71.2 billion in discretionary spending for fiscal year 2014. That’s up 4.5 percent from the 2013 funding before the “sequester” kicked in, but it doesn’t add to the deficit because of other offsets, the administration noted. Overall spending is increased by 2.5 percent in the $3.8 trillion budget.

Mr. Obama’s signature education proposal – Preschool for All – would cost $75 billion over 10 years, to be funded by a tax hike on cigarettes. The federal government would partner with states to expand high-quality preschool to all low- and moderate-income 4-year-olds (children below 200 percent of the poverty level). Some of the funding would also support younger children and encourage expansion of full-day kindergarten.

An additional $750 million is proposed for FY 2014 to help states prepare if they aren’t yet ready to expand pre-K.

Obama “understands that the stubborn opportunity gap that confronts far too many American children ... often begins before they even enter school,” said Education Secretary Arne Duncan in a press call Wednesday. The preschool proposal, he said, “would constitute the largest expansion of educational opportunity in the 21st century ... and will also pay huge dividends down the road.”

Although attempts to boost funding for early-childhood development aren’t new for this administration, it is a new approach to put the issue front and center under the authority of the Education Department, and to propose offsetting revenue, education analysts say.

“Trying to push for this new investment in pre-K programs, and [the] tax on cigarettes – that’s where the president is going to spend any education capital in the coming year,” says Michael Petrilli, an education expert at the Thomas B. Fordham Institute in Washington. But responses so far from House Republicans to the preschool program, which Obama first proposed in the State of the Union address, indicate “it will continue to be a very tough sell,” he adds.

“This will ruffle some feathers in the tobacco industry ... but it gives members of Congress something to debate – whether this is a viable funding vehicle for the expansion of pre-K,” says David DeSchryver, co-director Whiteboard Advisors, a policy consulting firm in Washington.

Pre-K advocacy groups are doing their part to “sell” the president’s proposal – their best chance in years to get considerable dollars instead of just supportive rhetoric.

“This solution comes at the right time ... [and] business and education leaders, researchers, advocates and policymakers on both sides of the aisle are pointing to early childhood education as a bargain investment whose costs are easily offset by short- and long-term economic and societal benefits,” said Kris Perry, executive director of the First Five Years Fund, in a statement Wednesday.

In the K-12 realm, the budget largely attempts to hold the line – bringing spending on major formula grant programs back to 2013 levels before automatic cuts took hold through the sequester. For instance, Title I for districts, based on the level of low-income students, would get $14.5 billion. IDEA grants for special-education students would get $11.6 billion.

Among the proposals for K-12:

• A new $300 million High School Redesign competitive grant program for districts that partner with colleges, businesses, and nonprofits to develop the skills needed for future jobs.
• A new $112 million fund to help schools develop emergency plans, create safer environments through evidence-based practices, and provide support services to children exposed to pervasive violence. (The Departments of Justice, Health and Human Services, and Homeland Security are also budgeted to address school safety and mental-health services.)
• $659 million for School Turnaround Grants to improve low-performing schools.
• A consolidation of programs to boost science, technology, engineering, and math (STEM) education, including a $150 million program to reform STEM instruction, $35 million to set up a STEM Master Teacher Corps, and $80 million to recruit effective STEM teachers for high-needs schools.
• $12.5 billion to help districts prevent additional teacher layoffs and hire teachers as the economy tries to recover.
• $300 million for Promise Neighborhoods, a sizable increase for cradle-to-career services in high-poverty communities.
• $215 million for Investing in Innovation grants to help districts and other groups expand effective programs.

Notable proposals in higher education include a $1 billion Race to the Top competition designed to boost college affordability, a return to a variable interest rate for student loans, and an $8 billion fund for partnerships between community colleges and businesses to align education with workforce needs.

The original Race to the Top competition came through economic stimulus grants to states and has been touted by the Obama administration as a catalyst for significant reforms in K-12.

The new proposed version, giving states an incentive to make higher education more affordable and boost college graduation rates, could gain traction because Congress has a history of supporting the president in recent years in K-12 competitive programs. But a lot “depends on the details and whether the higher-ed lobby is willing to accept it,” says Mr. Petrilli of Fordham.

It could face opposition from Republicans, many of whom feel the administration “went much further in the K-12 Race to the Top than they ever envisioned,” says Terry Hartle, a senior vice president at the American Council on Education in Washington. 

But more likely to be the subject of active debate is the interest-rate proposal, Mr. Hartle says. For one, the current fixed rate of 3.4 percent on federal student loans is due to go up to 6.8 percent in July if Congress doesn’t act.

This same expected increase was averted last year by a temporary measure. To avoid such periodic battles, the Obama administration and some senators have proposed tying student interest rates each year to a market rate (though each loan would then be fixed for the life of the loan). The rate would be close to what the government pays to borrow money.

Moreover, rather than proposing a cap on the interest rate, the administration wants to expand to all student borrowers a program that currently allows some to cap their repayment rate at 10 percent of their discretionary income.

The Obama budget would also increase by $150 million the Federal Work-Study Program, which could double the number of participants over five years. It would direct the funding to institutions that have a good track record of helping students from low-income families complete college.

Rep. John Kline (R) of Minnesota, chairman of the House Education and the Workforce Committee, issued a statement in response to the president’s budget Wednesday, indicating openness to discuss the student-loan interest-rate proposal, but criticizing the elements pertaining to job training, which “would pile even more programs and spending onto the broken workforce development system.”

The Senate, controlled by Democrats, has put forth a budget outline more supportive of investments in education, including a nonspecific plan for early-childhood education.

One of the big topics going forward, says Mr. DeSchryver of Whiteboard Advisors, will probably be “the role of competitive grants ... that have been the crown jewels for this administration in education – a discussion of how effective they’ve been and whether they deserve more funding.” The Obama administration has seen the federal government’s role not just as a supplier of funds for disadvantaged students, but also as a promoter of innovation and reform, he says. “But given the fiscal scarcity at the federal level, will that continue?”