WASHINGTON — The $100 billion in emergency aid for public schools and colleges in the economic stimulus bill could transform Arne Duncan into an exceptional figure in the history of federal education policy: a secretary of education loaded with money and the power to spend large chunks of it as he sees fit.

But the money also poses challenges and risks for Mr. Duncan, the 44-year-old former Chicago schools chief who now heads the Department of Education.

Mr. Duncan must develop procedures on the fly for disbursing a budget that has, overnight, more than doubled, and communicate the rules quickly to all 50 states and the nation’s 14,000 school districts. And he faces thousands of tricky decisions about how much money to give to whom and for what.

“It’ll be wonderful fun for a time for his team — it’ll be like Christmas,” said Chester Finn, a former Department of Education official who has watched education secretaries or commissioners come and go here since the mid-1960s. “But the thing about discretionary spending is that it makes more people angry than it makes happy.”

The bill, which President Obama is expected to sign on Tuesday, doubles federal spending on disadvantaged and disabled children, includes hefty increases in the main federal college scholarship program and for Head Start, and, for the first time, makes billions in federal dollars available for school renovation.

Expectations are running so high, and the appetite for information is so large among the nation’s educators, that when Mr. Duncan organized a conference call last Wednesday to begin explaining the stimulus bill’s terms to a few dozen state and district superintendents, 800 callers swamped the switchboard.

Most of Mr. Duncan’s unusual power would come in disbursing a $54 billion stabilization fund intended to prevent public sector layoffs, mostly in schools. The bill sets aside $5 billion of that to reward states, districts and schools for setting high standards and narrowing achievement gaps between poor and affluent students. The law lets Mr. Duncan decide which states deserve awards and which programs merit special financing.

“It’s hard to imagine moving that much money that quickly,” said Margaret Spellings, Mr. Duncan’s predecessor, who turned her seventh-floor office over to him last month. “The point is, it’s never been done before, and as much confidence as I have in Arne Duncan, there’s an awesome opportunity for slippage with that much money moving through the meat grinder.”

Maybe Ms. Spellings is slightly jealous, since she and other secretaries stretching back decades had only small amounts of money for favored projects.

“Teeny, teeny,” said Amy Wilkins, who as vice president at the Education Trust, a civil rights group, has studied the budgets of several of Mr. Duncan’s predecessors. “Margaret was looking for quarters in her pencil drawer.”

Mr. Duncan said he understood the unusual circumstances.

“There’s going to be this extraordinary influx of resources,” he said in an interview. “So people say, ‘You’re going to be the most powerful secretary ever,’ but I have no interest in that. Power has never motivated me. What I love is opportunity, and this is a once-in-a-lifetime opportunity to do something special, to drive change, to make our schools better.”

Mr. Duncan said he intended to reward school districts, charter schools and nonprofit organizations that had demonstrated success at raising student achievement — “islands of excellence,” he called them. Programs that tie teacher pay to classroom performance will most likely receive money, as will other approaches intended to raise teacher quality, including training efforts that pair novice instructors with veteran mentors, and after-school and weekend tutoring programs.

The stimulus money will help states avert some, but most likely not all, of the education cutbacks for the 2009-10 school year resulting from state budget shortfalls that currently total some $132 billion. California, for instance, is facing a $41 billion budget shortfall, much of it in school spending, but will receive some $11 billion in education money from the stimulus, estimates the National Education Association, the nation’s largest teachers union.

The positions of deputy secretary, under secretary and chief of staff and dozens of other senior posts at the Education Department remain unfilled, so Mr. Duncan is relying on help from career officers and consultants. He has appointed teams to develop procedures for distributing the stimulus billions quickly, and many aides, he said, have been working evenings and weekends to begin organizing the effort.

“I want all of us to work hard enough and smart enough to take full advantage of this, because it’ll never happen again,” Mr. Duncan said last month in his first speech to hundreds of civil servants at department headquarters, as the outlines of the huge stimulus package were taking shape in Congress.

Urging department employees not to be deferential, he described the reception he got on his first visit to his headquarters.

“It was like, ‘Hello, Mr. Secretary-designate-nominee,’ and it didn’t feel right,” Mr. Duncan said. “My name is Arne. It’s not Mr. Secretary. Please just call me Arne.” That line drew a standing ovation.

He has hit it off well with Congress, too, so far. His wife, Karen, whom Mr. Duncan met in Australia, where he played professional basketball after his 1987 graduation from Harvard, accompanied him to his Senate confirmation, along with their daughter, Claire, 7, and son, Ryan, 4, who sat quietly during the hearing, reading storybooks.

“If you and your wife have done such a great job with Ryan, who is so well behaved, I hope you can do that with every child in American classrooms,” said Senator Johnny Isakson, Republican of Georgia.

Another Republican senator, Lamar Alexander of Tennessee, said Mr. Obama had made “several distinguished cabinet appointments.”

“I think you’re the best,” Mr. Alexander, who was education secretary under the first President Bush, said to Mr. Duncan.

But now comes the hard part.

Last year the Education Department distributed about $59 billion to states, school districts and colleges, most of it along well-worn financing paths mapped out by Congress.

“Congress usually spends two years debating the rules for how to spend $50 million,” said Jack Jennings, president of the Center on Education Policy, a research organization in Washington. “But this time they’re providing money without spelling out how it should be spent, so Arne Duncan and his staff are going to have to work out rules themselves in just weeks. He’s going to have his hands full.”

Congress has stipulated some rules, of course. To receive a share of the $54 billion stabilization fund, governors must make several “assurances” to Mr. Duncan, intended to drive school reforms: that they are developing statewide data systems that can allow schools to track individual students’ academic progress, that they are assigning experienced teachers fairly to rich and poor schools alike, and so on. Mr. Duncan has the ticklish job of ruling on whether the governors’ assurances are convincing.

And Congress has given him a $5 billion incentive fund that he can use to reward states that are raising student achievement and withhold money from states that are not. “We have states that tell the public that 90 percent of kids are meeting state standards,” Mr. Duncan said, “but when we look at how they’re doing on the National Assessment of Educational Progress, it’s nowhere close. I’m not going to reward that. I want to be transparent about the good, bad and the ugly.”

Some states and districts will get less than what they believe is their share, which could create powerful enemies.

“Secretary Duncan has a very challenging job,” said Joel Packer, a lobbyist for the National Education Association. “It’ll take a lot of effort to get this right.”

Chat Begins: Thursday, Feb. 19, 3 p.m. Eastern time

Obama’s Education Plan

About This Chat:

With the new administration in Washington comes the prospect of new approaches to education policy and practice that would directly affect schools and districts at the local level. Get an advance look at how decisions on the No Child Left Behind law, Title I, and other key legislation by President Barack Obama and U.S. Secretary of Education Arne Duncan may change the education landscape. Join us Thursday, Feb. 19, at 3 p.m. Eastern time for a free live chat with federal policy experts.

About the Guests:

Chester E. Finn Jr., President of the Thomas B. Fordham Foundation

Thomas Toch, Co-founder and co-director of Education Sector, an independent Washington think tank.

Gene Wilhoit, Executive director of the Council of Chief State School Officers.

Submit questions here.

2/17/09 EDUC. WEEK - Stimulus Aid to Schools a Management Challenge

By Alyson Klein

Education Week/2-17-09/The $787 billion economic-stimulus bill that President Barack Obama signed into law today presents an unprecedented opportunity—and an unprecedented management challenge—for new U.S. Secretary of Education Arne Duncan.

Cash-strapped states, districts, and schools are eager for their shares of federal support under the measure, which includes some $115 billion in precollegiate and higher education aid. That sum includes substantial increases for Title I grants to help disadvantaged students, an increase in special education money, and a nearly $54 billion fund to help make up for dramatic cuts in state-level support to schools.

Secretary Duncan—who has not yet filled top political jobs at the Department of Education, including a deputy secretary and undersecretary—will have to make sure all that money is sent to states, and in turn, to districts, in a timely fashion. Aides to Democrats in the U.S. House of Representatives say they hope a sizable chunk will make its way to states before July 1.

Slicing the StimulusSOURCE: Education Week

Mr. Duncan also is in the enviable but high-pressure position of overseeing $5 billion in discretionary grants that will be given to states, school districts, and nonprofit organizations for school improvement.

That money, which Mr. Duncan has dubbed the “Race to the Top Fund,” includes incentive grants to states that have made progress in raising their standards, closing achievement gaps between poor and minority students and their more-advantaged peers, or ensuring that highly qualified, effective teachers aren’t concentrated only in wealthy suburban areas.

Mr. Duncan will also have wide latitude in awarding up to $650 million in “innovation grants,” which will go to districts, groups of districts, and nonprofits that are making gains in student achievement. Mr. Duncan said the money can help “scale up what works.”

But the grant process for those two pots of money could present some political pitfalls, said Margaret Spellings, who served as U.S. secretary of education during President George W. Bush’s second term.

“The opportunity for misdeeds and so forth is high with this big amount of money. It just is,” she said in an interview before the stimulus bill became final. There must be “strict grant criteria to wring the politics out of the process,” she said. “If I had a nickel for every member of Congress who called me up and said, ‘Won’t you look kindly on [a particular grant application]?’ … A good administrator has to guard against that.”

Ms. Spellings, now a private consultant in Washington, spoke highly of her successor’s capabilities, but pointed out that he doesn’t yet have his team in place.

“As hard-working as the department’s career staff are, the people who are ultimately accountable are the political appointees,” she said.

Hurdles Loom

Secretary Duncan appears well aware of those challenges.

“We have to implement and execute this in an absolutely impeccable manner,” he told about 500 people from education organizations during a Feb. 11 conference call. “We’re going to be very closely scrutinized.”

And, in an interview with Education Week last month, he said he was looking for good managers to serve in top roles at the Education Department. ("Education Aid in Stimulus Raises Eyebrows," Feb. 4, 2009.)

Meanwhile, school districts and education organizations already are pressing for more details on how much money they will receive and when. Some advocates for districts are worried there aren’t explicit provisions in the legisation, known as the American Recovery and Reinvestment Act, that require states to get the money out quickly to districts.

Secretary Duncan said in a separate conference call with reporters last week that the department plans to be “very fast, but also be very smart” in allocating the money and will give states “real guidance around speed.” He wasn’t specific about what those guidelines might look like.

Under the new law, the secretary is given authority to waive so-called “maintenance of effort” provisions, which require states to keep up spending at the level of fiscal 2006 to be eligible for money from a $53.6 billion state fiscal-stabilization fund. That fund is intended to help states shore up their budgets and restore education funding cuts.

The measure allows Secretary Duncan to waive the requirement for states in particularly dire economic circumstances, but it will be up to the Education Department to determine just which states are eligible for such an exception.

Some states, including Florida, which faces a yawning budget deficit, have already signaled that they will be asking for waivers. In the conference call with reporters, an Education Department consultant said that federal officials will examine states’ specific circumstances and don’t want to issue a “one-size-fits-all” blanket waiver.

Accountability Demands

And Secretary Duncan will have to hold school officials accountable for following through on “transparency” requirements in the stimulus measure, which call for schools to give public notice, on the Internet, of how the funds are being used.

Some pieces of the stimulus package may be tough for the department to enforce. For instance, to be eligible for all of the money in the $53.6 billion stabilization fund, states must assure the department that they will make progress in key education reform areas, including improving student assessments and teacher effectiveness. But there’s nothing in the legislation that spells out penalties for failing to make progress.

The Education Department consultant, who spoke on condition of anonymity, acknowledged as much, but pointed out that the education secretary’s $5 billion discretionary fund could be an enticing carrot. The secretary is supposed to award the grants based on progress made on those key education assurances. If a small number of states make big progress on those goals, they stand to gain an sizable additional chunk of money.

“All of these provisions are really powerful,” the adviser said.

Education Week Assistant Editor Michele McNeil contributed to this story.