Last week, Education Week released its 15th edition of the Quality Counts annual report, entitled Uncertain Forecast: Education Adjusts to a New Economic Reality. The report provides an assessment of American public schools and focuses on the impact of the economic crisis on educational achievement, programs, and policy in the short-term.

As the financial crisis wrecked havoc on the labor and housing markets, public education has taken a hit as well. The Quality Counts report offers an update on how states have performed during these challenging times, but notes that the economic toll has been unevenly distributed on state budgets (California, Nevada and Florida suffered more than others). The recession has caused many schools districts to deal with diminishing budgets, in turn creating a widespread effort to make cuts in staff and resources while searching for additional savings.

During this critical time for our economy, the federal government intervened with the American Recovery and Reinvestment Act of 2009, which included a $787 billion economic stimulus package. One-third ($79.3 billion) of the package was directed to K-12 programs and $20 billion for higher education. Another $10 billion (in August 2010) was provided to help states prevent teacher layoffs. With $5 billion being set aside for incentive and innovation grants in K-12 (Race to the Top, Investing in Innovation), it became the goal of the administration to spur educational innovation with the hope of igniting academic growth.

While the report provides a detailed analysis of the impact of stimulus funding and portrays a vivid picture of our current educational performance and policymaking, the main takeaway is that the economic crisis serves as a strong reminder that when it comes to public education, money matters. In addition, the reforms offered by the stimulus were not systemic, nor long-term.

As these federal resources disappear, the follow up conversation should encompass the types of structural changes we can pursue, such as ESEA reauthorization, that will create better policy and programs to address student needs under the umbrella of educational equity. For example, while innovation in education is critical there may be some work to do in striking a balance between innovation and equity, especially when a challenging economy results in funding challenges for public schools. To that point, not all states received funding from Race to the Top and therefore not all states can move forward with reforms. How does that promote equity? Furthermore, the highest need schools in this country are so overwhelmed that innovation is not something they consistently think about. Finally, if innovation is an element that the administration will continue to push, how do we help schools that want to make educational quality a reality when they did not receive any Race to the Top funding, and are losing staff and resources? Realistically, financial resources will still be limited during the next few years. Therefore, we must consider how we can give schools and states flexibility by loosening funds that were allocated for specific programs or subgroups. This might be one of the few ways we can better address student needs at current level funding.

The stimulus package was an unprecedented federal intervention that called for innovation, mitigated deeper cuts into education programs, and averted teacher layoffs. With that said, another round of stimulus funding seems unlikely during the 112th Congress. It is difficult to imagine what this will mean for educational equity and the state of education if schools are to continue to face budgetary pressures.

To order the 2011 Quality Counts report click here.