Archive for the ‘budget’ Category

This week the fight over federal spending intensified on Capitol Hill when two bills — the House Republican version with large cuts to Head Start and other programs, and a Democratic version with far fewer cuts — both failed in the Senate.

The Republican bill would cut the program’s budget by $2 billion — nearly a quarter of President Obama’s 2011 budget request of $8.2 billion. Currently, the level is $7.2 billion.

According to a New York Times article, “Head Start was chosen for large cuts in the House spending bill because members of the Appropriations Committee concluded that the program was getting too much money given what they felt was its effectiveness, and that too much of its financing had gone to administrative costs rather than new enrollment. In addition, a Government Accountability Office report last year found eight instances of fraud, in which families with too high an income were enrolled in the program. Further, they cited research questioning the program’s effectiveness.” Read more in The New York Times.

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While giving a speech at TechBoston on Tuesday, President Barack Obama stressed that any shrinkage in money for education would be irresponsible and harmful to the long-term health of the nation’s economy.

“But, and I want everyone to pay attention, even as we find ways to cut spending, we cannot cut back on job creating investments like education,” he told a crowd at TechBoston Academy in Boston’s Dorchester neighborhood. “There’s nothing responsible about cutting back on our investment in these young people.”

He added: “Fixing our schools will cost some money. Recruiting and rewarding the best teachers costs money. Making it possible for families to send their kids to college costs money. Making sure that some of the state of the art equipment all of you are working on … that costs money.”

Sources: The Associated Press, Bloomberg and Whitehouse.gov

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So far it’s good news for 70 percent of the companies in the S&P 500 that have reported their quarterly results. Nearly three quarters of them have beat analysts’ earnings estimates. Compared to a year ago, profits for the S&P 500 were up 37 percent. In addition, sales were up 9 percent on average across all sector expect for the banking industry. Although this sounds like good news, CEOs are not celebrating yet.

“Sales are simply not keeping up with rising material costs,” Barry James, portfolio manager of James Advantage Funds, told CNNMoney. “They can’t pass off the costs to consumers yet, so profit margins are going to have to take a hit.”

Read more on CNNMoney.com.

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The Fed unveiled a new plan to buy $600 billion of U.S. Treasurys over the next eight months, hoping to spur growth in a disappointingly slow U.S. economy. Source: The Wall Street Journal

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Laura Tyson and Glenn Hubbard, former chairmen of the Council of Economic Advisors under U.S.Presidents Bill Clinton and George W. Bush respectively, debate about the need for a second stimulus. What do you think? (Source: Reuters)

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Economists might have said that the “Great Recession” officially ended last year. But school district budgets are not expected to regain their pre-recession (2008) funding levels until late in the decade, according to a new report.

Across the country, school districts are still making deep cuts in their budgets by laying off teachers, cutting instructional programs, and eliminating student activities, the Center for Public Education concluded in their report.

Just how bad is it you ask? In 2010, every state—with the exception of Montana and North Dakota—faced budget shortfalls totaling $200 billion, or about 30 percent of state budgeted general expenditures—the largest gap on record. This is very significant since most districts receive nearly half of its funding from state budgets.

The report cited that for the 2011 school year, 33 states, including the District of Columbia, cut essential K-12 funding areas to help balance the budget. On average cuts were made to:

  • General funds to districts
  • Funding for books and classroom supplies
  • Programs for gifted and talented
  • Pre-K and after-school programs
  • Funds for teacher preparation and training
  • Aid for school construction
  • Allocations for administration staff
  • Aid targeted to charter schools

“Some districts have managed to trim personnel costs while minimizing teacher layoffs by instituting furlough days, freezing salaries and reducing health and retirement costs,” the report states. “But the financial handwriting is on the wall: In upcoming years, more cuts will be necessary.”

Sources: The Center for Public Education and Education Week

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With the Obama administration sharply increasing federal financing to $3.5 billion this year to turnaround failing schools, and Secretary of Education Arne Duncan pushing to overhaul 5,000 of the nation’s 100,000 public schools in the next few years, scores of companies with little or no experience are portraying themselves as school-turnaround experts as they compete for the money, the New York Times reports.

For example: a corporation, which has run into trouble with parents and authorities in several states for its charter school management business, has now opened a school-turnaround subsidiary, and a husband-and-wife team, which specializes in teaching communication skills but never led a single school overhaul, is seeking contracts in Ohio and Virginia.

Jack Jennings, president of the Center on Education Policy, a nonprofit group in Washington told the New York Times that many of the new companies seem unprepared for the challenge of making over a public school, yet neither the federal government nor many state governments are organized to offer effective oversight. Read the entire article.

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