2011-10224. Race to the Top Fund

ACTION:

Final requirements.

SUMMARY:

The U.S. Secretary of Education (Secretary) adopts as final, without changes, the interim final requirements for the Race to the Top Fund to incorporate and make binding for Phase 2 of the competition State budget guidance.

DATES:

These requirements are effective May 27, 2011.

FOR FURTHER INFORMATION CONTACT:

James Butler, Telephone: [phone] or by e-mail: [e-mail].

If you use a telecommunications device for the deaf (TDD), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or computer diskette) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

On April 2, 2010, the Secretary published interim final requirements for the Race to the Top Fund in the Federal Register (75 FR 16668). The interim final requirements became effective April 2, 2010. At the time the interim final requirements were published, the Secretary requested public comment on the interim final requirements.

In the interim final requirements, the Secretary made budget ranges for the Race to the Top Fund, which were originally included in the Race to the Top Fund NIA for fiscal year (FY) 2010, published in the Federal Register on November 18, 2009 (74 FR 59836), binding on applicants. In developing the budget ranges, the Department grouped the States into five categories by ranking every State according to its share of the national population of children ages 5 through 17 and identifying natural breaks in the population numbers. The Department then developed overlapping budget ranges for each category based on the student population data.

As explained in the preamble to the interim final requirements (75 FR 16668, 16669), the Secretary made the budget ranges a requirement in response to the unexpected budget requests received in Phase 1 of the Race to the Top competition, which varied widely and proposed, for the most part, budgets that were well above the suggested funding ranges. Additionally, the Department performed an analysis and did not find a relationship between States' scoring ranks in Phase 1 and the extent to which States exceeded the Department's suggested budget ranges. In balancing the need to fund high-quality reform plans and to ensure that a sufficient number of States received grants to serve as models of change for the Nation with the discrete amount of funding available, the Secretary determined that it was essential to make the budget ranges binding on applicants.

There are no differences between the interim final requirements and these final requirements.

Analysis of Comments and Changes

In response to our invitation in the interim final requirements, one commenter submitted comments.

Generally we do not address technical and other minor changes, or suggested changes the law does not authorize us to make under the applicable statutory authority. In addition we do not address general comments that raised concerns not directly related to the interim final requirements.

Comment: The commenter raised concerns about the impact of making the budget ranges mandatory on States for Phase 2 of the Race to the Top competition without first considering public comments. The commenter stated that the budget caps would force States to propose less ambitious activities than those proposed in their Phase 1 applications, and that this in turn would harm their ability to undertake the meaningful reform efforts sought under the Race to the Top program. The commenter also noted that limiting States' budgets would in turn limit the amount of funds that local educational agencies (LEAs), particularly small LEAs, would receive, thereby undercutting the capacity of those LEAs to implement bold reform plans. Additionally, the commenter expressed concern with the timing of the release of the interim final requirements, April 2, 2010, contending that States would have far too little time to effectively alter their Phase 1 applications to stay within the budget ranges before the Phase 2 application deadline of June 1, 2010. Finally, the commenter expressed concern with the fairness of creating such a requirement in light of the two Race to the Top Phase 1 winners that received awards in excess of their suggested budget caps. The commenter suggested that this lack of equitability in award amounts between Phase 1 and Phase 2 grantees would hinder the Department's ability to evaluate the effectiveness of the program.

Discussion: As explained in detail in the preamble to the interim final requirements, the Department did not have sufficient time to complete notice-and-comment rulemaking on the interim final requirements given that all funds under the Race to the Top program were required to be obligated by September 30, 2010. Completing notice-and-comment rulemaking would have taken four to six months, and, in consideration of the time needed to conduct Phase 2 of the competition, the time States needed to draft applications, and the impending September 30th American Recovery and Reinvestment Act of 2009 (ARRA) obligation deadline, we concluded that it would be impracticable and contrary to the public interest for the Department to complete notice-and-comment rulemaking.

In deciding whether to make the budget ranges binding on applicants, we considered whether States would be able to propose comprehensive and successful reform plans within the proposed budget ranges. Because we did not find a relationship between States' scoring ranks in Phase 1 and the extent to which States exceeded the Department's suggested budget ranges, we concluded that States could, in fact, develop comprehensive reform plans that met the Race to the Top selection criteria. We disagree with the commenter that States that submitted applications in Phase 1 were automatically forced to propose less ambitious activities in their Phase 2 applications. Requiring States to limit their budget requests only required State staff to make strategic decisions about where Race to the Top funds were most needed and where they could coordinate, reallocate, or repurpose other Federal, State, and local sources of funding to support Race to the Top goals, as evaluated under selection criterion (A)(2)(i)(d). While capping the amount of funds that a State could request necessarily limited the 50 percent of Race to the Top funds required to flow to participating LEAs under section 14007 of the ARRA, States could augment the amount of funds available for participating LEAs from the State portion of the award.

The Race to the Top competition, even with the budget caps, made available the largest amounts of funding ever offered to States through a Department of Education discretionary grant program. We believe these amounts were sufficient to ensure a robust competition and to stimulate comprehensive education reform throughout the country.

Applicants had approximately two months from the announcement of the requirement that States conform to the previously suggested budget ranges until the application submission deadline for Phase 2. While we recognize that it would have been helpful to give applicants more time between the announcement of the requirement and the Phase 2 application deadline, we could not make the final decision about whether to make the budget caps binding until after the Phase 1 competition was complete, and we had the opportunity to analyze applicants' budget requests and scores. Specifically, we needed the results from the Phase 1 competition to investigate whether there was a relationship between the amount of funds requested and a State's rank in Phase 1 to ensure that making the budget ranges binding would not limit a State's ability to propose a successful reform plan in Phase 2. Additionally, applicants in Phase 1 of the competition had two months from the date of publication of the NIA to prepare their applications, just as applicants in Phase 2 had after publication of the budget requirements.

Finally, we do not believe that there will be difficulty comparing results across Phase 1 and Phase 2 grantees. The program is not focused on dollar-for-dollar spending, but rather on improved educational outcomes in winning States.

Changes: None.

Final Requirements

For the reasons discussed previously, the Secretary amends the Race to the Top Fund final requirements published in the Federal Register on November 18, 2009 (74 FR 59688, 59799) to include a new section under the heading Program Requirements, as follows:

Budget Requirements: For Phase 2 of the fiscal year 2010 competition, and for any subsequent competitions, the State's budget must conform to the following budget ranges: ^[1]

Category 1—$350-700 million: California, Texas, New York, Florida.

Category 2—$200-400 million: Illinois, Pennsylvania, Ohio, Georgia, Michigan, North Carolina, New Jersey.

Category 3—$150-250 million: Virginia, Arizona, Indiana, Washington, Tennessee, Massachusetts, Missouri, Maryland, Wisconsin.

Category 4—$60-175 million: Minnesota, Colorado, Alabama, Louisiana, South Carolina, Puerto Rico, Kentucky, Oklahoma, Oregon, Connecticut, Utah, Mississippi, Iowa, Arkansas, Kansas, Nevada.

Category 5—$20-75 million: New Mexico, Nebraska, Idaho, West Virginia, New Hampshire, Maine, Hawaii, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont, Wyoming, District of Columbia.

The State should develop a budget that is appropriate for the plan it outlines in its application; however we will not consider a State's application if its request exceeds the maximum in its budget range.

Program Authority: American Recovery and Reinvestment Act of 2009, Division A, Section 14006, Public Law 111-5.

Executive Order 12866

Under Executive Order 12866, the Secretary must determine whether a regulatory action is “significant” and therefore subject to the requirements of the Executive order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may (1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities in a material way (also referred to as an “economically significant” rule); (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impacts of entitlement grants, user fees, or local programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive order. The Secretary has determined that this regulatory action is not significant under section 3(f) of the Executive order.

We summarized the potential costs and benefits of these final requirements in the interim final requirements published in the Federal Register on April 2, 2010 at 75 FR 16668, 16670.

Paperwork Reduction Act of 1995

The final requirements do not contain new information collection requirements subject to review by OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

Intergovernmental Review

This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides notification of our specific plans regarding budget requirements for this program. Electronic Access to This Document: The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: http://www.gpo.gov/​fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Adobe Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

Dated: April 21, 2011.

Arne Duncan,

Secretary of Education.

Footnotes

1.  The Department developed budget ranges for each State by ranking every State according to its share of the national population of children ages 5 through 17 based on data from “Estimates of the Resident Population by Selected Age Groups for the United States, States, and Puerto Rico: July 1, 2008” released by the Population Division of the U.S. Census Bureau. The Department identified the natural breaks in the population data and then developed overlapping budget ranges for each category taking into consideration the total amount of funds available for awards.