[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



            DEPARTMENT OF EDUCATION FISCAL YEAR 2010 BUDGET

=======================================================================

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 12, 2009

                               __________

                            Serial No. 111-7

                               __________

           Printed for the use of the Committee on the Budget


                       Available on the Internet:
       http://www.gpoaccess.gov/congress/house/budget/index.html

                                 ------

                  U.S. GOVERNMENT PRINTING OFFICE
47-993                    WASHINGTON : 2009
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office  Internet: bookstore.gov Phone: toll free (866) 512-1800 
Fax: (202) 512-2250  Mail: Stop IDCC, Washington, DC 20402-0001








                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ALLYSON Y. SCHWARTZ, Pennsylvania    PAUL RYAN, Wisconsin,
MARCY KAPTUR, Ohio                     Ranking Minority Member
XAVIER BECERRA, California           JEB HENSARLING, Texas
LLOYD DOGGETT, Texas                 SCOTT GARRETT, New Jersey
EARL BLUMENAUER, Oregon              MARIO DIAZ-BALART, Florida
MARION BERRY, Arkansas               MICHAEL K. SIMPSON, Idaho
ALLEN BOYD, Florida                  PATRICK T. McHENRY, North Carolina
JAMES P. McGOVERN, Massachusetts     CONNIE MACK, Florida
NIKI TSONGAS, Massachusetts          JOHN CAMPBELL, California
BOB ETHERIDGE, North Carolina        JIM JORDAN, Ohio
BETTY McCOLLUM, Minnesota            CYNTHIA M. LUMMIS, Wyoming
CHARLIE MELANCON, Louisiana          STEVE AUSTRIA, Ohio
JOHN A. YARMUTH, Kentucky            ROBERT B. ADERHOLT, Alabama
ROBERT E. ANDREWS, New Jersey        DEVIN NUNES, California
ROSA L. DeLAURO, Connecticut,        GREGG HARPER, Mississippi
CHET EDWARDS, Texas                  [Vacant]
ROBERT C. ``BOBBY'' SCOTT, Virginia
JAMES R. LANGEVIN, Rhode Island
RICK LARSEN, Washington
TIMOTHY H. BISHOP, New York
GWEN MOORE, Wisconsin
GERALD E. CONNOLLY, Virginia
KURT SCHRADER, Oregon

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                 Austin Smythe, Minority Staff Director















                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, March 12, 2009...................     1

Statement of:
    Hon. John M. Spratt, Jr., Chairman, House Committee on the 
      Budget.....................................................     1
    Hon. Paul Ryan, ranking minority member, House Committee on 
      the Budget.................................................     2
    Hon. Gerald E. Connolly, a Representative in Congress from 
      the State of Virginia, prepared statement of...............     4
    Hon. Arne Duncan, Secretary, U.S. Department of Education, 
      accompanied by Thomas P. Skelly, Director, Budget Service..     4
        Prepared statement of....................................     7
        Responses to questions for the record....................    46

 
                        DEPARTMENT OF EDUCATION
                        FISCAL YEAR 2010 BUDGET

                              ----------                              


                        THURSDAY, MARCH 12, 2009

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:07 a.m. in Room 
210, Cannon House Office Building, Hon. John Spratt [chairman 
of the Committee] presiding.
    Present: Representatives Spratt, Schwartz, Kaptur, Becerra, 
Doggett, Blumenauer, McGovern, Tsongas, McCollum, Andrews, 
DeLauro, Larsen, Bishop, Connolly, Schrader, Ryan, Hensarling, 
Jordan, Lummis, Aderholt, and Harper.
    Chairman Spratt. I would call the committee meeting to 
order.
    The Committee convenes today to hear Secretary Arne Duncan 
for his first time testifying on Capitol Hill as the Secretary 
of Education.
    Mr. Secretary, you certainly have hit the ground running. 
Since you were confirmed on January 20, the Congress has 
provided the Department of Education with almost $100 billion 
in the Recovery and Reinvestment Act to beef up State education 
efforts. The Recovery Act targeted vital funding to Title I, 
special education, to boosting college aid--primarily with a 
$500 increase in the maximum Pell Grant--and, finally, the bill 
gave the Department of Education an unprecedented $54 billion 
for the State Fiscal Stabilization Fund that we hope we will 
help keep States from laying off teachers and shutting down 
education services.
    On top of that, Congress this week approved the 
appropriations bill for 2009, which provides education with $63 
billion for its annual budget.
    In addition, the President has submitted his fiscal year 
2010 request, which is the subject of the hearing today. In the 
face of a crumbling economy and rising deficits, the Obama 
Administration has made getting the economy back on its feet 
its number one priority. I agree that is what it should be.
    As part of this effort to build a stronger economy, 
particularly for the future, the budget includes strategic 
investments in education, as well as health care and energy. 
With respect to education, the President's budget prioritizes 
college, making it more affordable and more accessible with a 
planned increase to the assistance provided through the Pell 
Grant program.
    Your budget also proposes to overhaul the current Perkins 
Loan program, to fund a new college access and completion fund 
to help low-income students attend and finish college, and to 
provide additional tax credits to help students cover the cost 
of college. In part to help offset the cost of the budget's 
increase in college aid, the budget proposes a significant 
change to the student loan programs, proposing to originate all 
new loans in the Direct Loan program, terminating future loan 
activity under the FFEL, the guaranteed student loan program. 
OMB scores this proposal as providing $48 billion in savings 
over 10 years, and we will certainly want to hear more about it 
in your testimony today.
    In elementary and secondary education, the budget 
enumerates goals amplified last week by the President in his 
speech that include supporting effective teachers, high student 
standards, and proven strategies. The President's budget has 
not identified funding levels for specific programs, but it 
clearly envisions reprogramming funds to match his priorities 
and to minimize waste and inefficiency.
    I am pleased today that we will have an opportunity to ask 
questions about the budget's education proposals. Secretary 
Duncan is well qualified to tackle all of these issues, having 
led the Chicago public system for at least the last 7 years in 
a reform effort that raised student achievement and engaged all 
stakeholders--teachers, principals, businesses and education 
advocates--and achieved, I am told, very impressive results. 
Now he is turning that same knowledge and enthusiasm to the 
Federal education program, and we welcome your hand at the helm 
and want to be of help and assistance to you throughout your 
tenure here.
    We understand that what the President submitted is just a 
budget outline with key mandatory spending proposals and just 
the top line for education appropriations. As a result, the 
budget still lacks the funding levels for specific 
discretionary programs which, I will tell you, Mr. Secretary, 
is of keen interest to those in this room. We look forward to 
reviewing those details when they are provided in the weeks 
ahead.
    Now, before your testimony, let's turn to Mr. Ryan, the 
ranking member, for his statement. Then we will hear from 
Secretary Duncan.
    Mr. Ryan.
    Mr. Ryan. Thank you, Chairman.
    And I want to also welcome Secretary Duncan. 
Congratulations on your post. You were in charge of the Chicago 
schools. You have tremendous experience, valuable experience; 
and we are glad you are bringing it here to Washington to put 
it to work. So congratulations and welcome to your first 
hearing as Secretary.
    I also want to commend President Obama for his emphasis on 
personal responsibility and accountability when it comes to our 
children's education, for his reminder that we parents are the 
biggest factor in ensuring our children's academic success. 
That often means turning off the TV and the computer games and 
helping with homework. I thought that was one of the best 
messages in the campaign.
    I also want to commend you, Secretary Duncan, for 
advocating such reforms as opening up more charter schools and 
introducing merit pay for teachers. I believe these types of 
innovations will go a long way toward increasing student 
achievement.
    But while I find these statements encouraging, what really 
matters is how that talk gets translated into policies. I am a 
little concerned that some recent actions by the President and 
Congress seem to be at direct odds with that rhetoric. The 
omnibus appropriations bill, for example, will effectively 
terminate the D.C. Opportunity Scholarship Program, taking away 
the opportunity for a better life for 1,700 disadvantaged kids 
and forcing them back into failing schools.
    I support the Pell Grant program, but I am disappointed by 
the President's choice to move this program onto the mandatory 
side of the ledger, effectively making it into another auto 
pilot entitlement, immune from congressional oversight at 
precisely the time when we should be reforming existing 
entitlements, not adding new ones to the mix.
    The budget also calls for the creation of a new college 
access and completion innovation fund, also to be added to the 
mandatory spending side of the ledger. I will note that this 
new program would duplicate two programs created just last 
year, the college persistence and access and the Project GRAD 
programs, both of which are intended to help increase college 
graduation, a worthy goal.
    I will also note that the budget only funds this new 
program for 5 years, after which time its funding is zeroed 
out. So we will be interested in exploring, first, why the 
Administration would use such tight resources on a duplicative 
program and, second, whether it is truly the Administration's 
intent to both create and then eliminate a new entitlement 
program in the span of 5 years.
    Finally, I would like to share my concern with the budget's 
proposed government takeover of all Federal student loans. I 
would like to hear if and how the Department was prepared to 
take on this new volume of student loans; and, also, I look 
forward to a serious discussion of the risks of all this extra 
borrowing and spending that will present to our already 
strained Treasury.
    Now, we have long known that higher spending doesn't 
automatically equal better schools or better student 
achievement; and I think we can all agree that, particularly in 
times such as this, we have got to be sure we are making the 
wisest, most fiscally responsible choices possible. For the 
education budget, that means ensuring we are directing dollars 
toward only those programs that truly work, demanding 
accountability from administrators for higher test scores, and 
injecting real competition into the public school system. From 
this focus, combined with transparency and accountability, I 
believe will come the gains in education that we are all 
seeking to achieve.
    I look forward to our discussion today on how we might 
better achieve those ends.
    Thank you, Mr. Chairman.
    Chairman Spratt. Mr. Secretary, before we proceed, we have 
a couple of housekeeping details.
    First of all, I would ask unanimous consent that all 
members be allowed to submit a statement for the record at this 
point.
    Hearing no objection, so ordered.
    [The prepared statement of Mr. Connolly follows:]

  Prepared Statement of Hon. Gerald E. Connolly, a Representative in 
                  Congress From the State of Virginia

    Mr. Chairman, I would like to thank you for holding this hearing 
and asking Secretary Duncan to appear before the House Committee on the 
Budget to testify with respect to the Fiscal Year 2010 budget. The 
education of our children--preparing them to achieve their potential 
and to become productive, contributing members of society--is one of 
the highest priorities of government. Failure to properly invest in our 
children's education has many negative impacts, ranging from the 
increased costs of public benefits and public safety expenditures to 
decreased economic production and tax receipts. In today's 
interconnected economy, we cannot afford to lose our technological edge 
and allow American schoolchildren to fall further behind their global 
counterparts.
    I was pleased to see the President's focus on expanding investment 
in early childhood learning. Children don't begin to learn on the first 
day of kindergarten; the learning commences from the moment they are 
born. Too often, childhood development is ignored during the first 
years of a child's life, leaving our sons and daughters underprepared 
as they begin their schooling.
    As a former local government official, I know the importance of 
investing in our children's development. I initiated Fairfax Futures, a 
program to provide and advocate for greater investment in early 
childhood learning opportunities. We now know that these investments 
have long term returns in employment, educational advancement, and 
lower crime rates. The organization, now in its fifth year, represents 
a partnership with the business community, various public sector 
agencies, early childhood educators, community organizations and 
families.
    One component of the President's education budget that should give 
pause is the proposal to dramatically alter the student loan program. 
While I am in favor of encouraging greater efficiencies in government 
where feasible, there should be some concern with the government's 
proposed complete takeover of student loans. We have not yet 
ascertained the impact on the private sector of this sweeping change 
and I believe it important to investigate its entire effects on the 
budget, our students, and the thousands of private sector employees.
    As No Child Left Behind comes up for reauthorization, I would ask 
that the Administration will remember the impact on state and local 
governments. While encouraging greater scholastic accountability is a 
laudatory goal, the previous administration woefully underfunded No 
Child Left Behind and the program's extensive requirements were a 
significant unfunded federal mandate on our state and local 
governments. In Fairfax County in my district, the school system was 
forced to spend over one hundred and thirty million local tax dollars 
since the program's inception in 2002, simply to comply. Through the 
American Recovery and Reinvestment Act, President Obama and this 
Congress provided significant educational investment to our state and 
local governments. As currently established, No Child Left Behind 
represents a tax increase on state and local governments, and I hope 
that our commitment to enhanced education funding will continue.
    I look forward to Secretary Duncan's testimony and working with him 
as we fashion an education budget that improves upon our investment in 
the future of America's children.

    Mr. Secretary, your statement has been filed and will be 
made, in its entirety, part of the record. So you can proceed 
as you please and summarize it in any manner you wish. You are 
the only witness today. We have a lot to talk about, so the 
floor is yours, and take all the time you need.

    STATEMENT OF ARNE DUNCAN, SECRETARY, U.S. DEPARTMENT OF 
 EDUCATION, ACCOMPANIED BY THOMAS P. SKELLY, DIRECTOR, BUDGET 
                            SERVICE

    Secretary Duncan. I will keep my remarks pretty brief and 
look forward to the conversation.
    Thank you so much, Mr. Chairman and members of the 
Committee. And before I begin, I want to introduce our 
wonderful Budget Director, Tom Skelly, who you probably know 
much better than I, because he started coming to these hearings 
in 1974. So he has got a great history, and we are lucky to 
have him as part of the team.
    Thank you so much for this opportunity to testify on behalf 
of President Obama's fiscal year 2010 budget for the Department 
of Education.
    The 2010 budget needs to be viewed in the context of the 
American Recovery and Reinvestment Act, because both of them 
will drive education spending in our country over the next 2 
years.
    Despite two wars, a struggling economy, and competing 
priorities from health care to energy reform, this President 
has put the full weight of his office behind the effort to 
improve education. He and his wife have visited schools. They 
have used every opportunity to link their powerful personal 
stories to education.
    Taken together, the President's budget proposal and the 
stimulus package represent a historic commitment to improve the 
quality of learning in America. We have a real chance to lay 
the foundation for a generation of reform that can restore 
American leadership in education. To do that, however, we must 
ask much more of ourselves and each other.
    In his speech on Tuesday, the President issued a series of 
challenges to every single stakeholder in this issue, to States 
and to districts, to unions and to reform groups, to elected 
officials and to parents, to teachers and, importantly, to our 
students themselves. He called for an end to the finger 
pointing, the end of worn out debates and of low expectations. 
He asked us to set aside ideology and politics. In short, he 
asked us to stop fighting with each other and start fighting 
for our children. Thanks to his leadership and the support of 
Congress, we have never been in a better position to do just 
that.
    Today, we have the money to stabilize States to prevent 
teacher layoffs; and we have seen recent studies from the 
University of Washington that talked about as many as 600,000 
teacher jobs being cut. We have the opportunity now to save 
literally hundreds of thousands of teachers' jobs so we can 
keep our teachers teaching and our students learning.
    There is a significant boost in Title I funding to help 
low-income children achieve an education that is more on par 
with children from middle- and upper-income backgrounds. We can 
support programs for students with disabilities so that they 
can share more fully in all of the opportunities of life in our 
country.
    We have created a competitive grant program to encourage 
States to aggressively pursue needed educational reforms, and 
we are making the biggest boost in higher education funding 
since the GI bill.
    Because the Recovery Act provides over $100 billion in 
additional funding for everything from early childhood through 
college, the 2010 budget seeks only a modest increase. And 
behind the numbers is a clear philosophy. We believe that all 
kids can learn. Low expectations are the one sure way to 
guarantee failure. High expectations are absolutely a 
prerequisite for success.
    That is why we must raise standards. Fifty States with 50 
different standards is not good enough. We need to stop the 
race to the bottom and create a race to the top. Many State 
standards are well below other countries, and the President has 
called on States to begin moving towards college and career-
ready standards.
    We have to improve teacher quality. Nothing is more 
important than getting a great teacher in front of every single 
classroom in this country. And there are many proven 
strategies, from national board certification, to alternative 
routes into teaching to get more talent into the pool, to 
rewarding excellence through performance pay. And we must fund 
new and innovative programs that work for our students, 
including charter schools. The President called on States 
across America to lift charter caps in States where we have the 
artificial cap there.
    We also must increase time in the classroom--afternoons, 
evenings, weekends, and during the summer months. As he noted, 
our academic calendar is based on the agrarian calendar, so 
many of our students go through what we call summer reading 
loss; they get to a certain point in June and when they come 
back to us in the fall they have fallen further behind. And I 
worry lots about low-income children who don't have 
opportunities to visit college campuses and go to libraries and 
get read to over the summer. We have to think very, very 
differently about how we spend our time.
    This budget also reflects the President's belief that in 
today's highly competitive global economy more young people and 
adults must go to college; and so he proposes that Pell Grants 
be guaranteed, instead of discretionary. He also wants to boost 
Pell Grant funding and have it rise each year by inflation plus 
a point to keep up with rising costs. This is in addition to 
the added higher education funding in the stimulus package, 
which provides $31 billion more for college access and Pell 
Grants and higher tax credits for the middle class. This will 
serve literally millions of additional students, and it will 
bring us closer to the extraordinarily important goal outlined 
by the President last week: to be number one in the world in 
graduating young people from college by the year 2020.
    Today, about 40 percent of our 25- to 34-year olds have 
either a 2-year or a 4-year college degree. Said another way, 
less than half of our country's young people have a college 
degree. We have to get that number up to at least 60 percent. 
The new economy demands it. We have growing jobs in areas like 
health care and technology and green energy, and our young 
people have to have the skills and the opportunity to enter 
those fields.
    Education, we firmly believe, is the only real solution to 
our long-term economic security. We must educate our way to a 
better economy. As the President has said, the nation that out-
teaches us today will out-compete us tomorrow.
    Finally, the combination of the Recovery Act and the 
proposed budget reflect a deeply held belief that education is 
the civil rights issue of our generation. It is the only real 
and lasting path out of poverty for people who have been 
stifled for generations, victims of inadequate schooling and 
limited opportunity. All of the poverty programs in the world 
will never accomplish as much as a quality education for our 
children.
    Education is absolutely at the heart of the American dream. 
And so today, on behalf of President Obama and the 
schoolchildren of America and the 22 million adults who attend 
college with Federal support, I respectfully request your 
support for this budget.
    Thank you so much for the opportunity, and I look forward 
to taking any questions you might have.
    Chairman Spratt. Thank you very much, Mr. Secretary.
    [The prepared statement of Arne Duncan follows:]

           Prepared Statement of Hon. Arne Duncan, Secretary,
                      U.S. Department of Education

    Mr. Chairman and Members of the Committee: Thank you for this 
opportunity to testify on behalf of President Obama's fiscal year 2010 
budget for the Department of Education, and to talk with you about how 
we plan to invest in our economic future by providing the high-quality 
education our kids need to compete in the global economy.
    President Obama is asking for $46.7 billion in discretionary 
funding for the Department in fiscal year 2010, or roughly a $500 
million increase over the 2009 level, that would build on the historic 
increases provided for education in the American Recovery and 
Reinvestment Act (ARRA, or the Recovery Act). We will release the 
details of this request next month.
    Today I want to share with you the priorities of the President's 
plan to strengthen and reform America's education system.
    The President believes strongly that one key for both individual 
and national success in the global economy is a college education. This 
is why he has set a national goal of ensuring that America is number 
one in the percentage of citizens holding college degrees. Today 
roughly 40 percent of 25-34 year-old Americans hold college degrees, 
and we want to raise that to 60 percent.
    To reach this goal we have to overcome two core problems: Too many 
young people are unprepared for college and too many others cannot 
afford it. The President's 2010 budget for education addresses both of 
these problems.
    First, because the President believes that the road to college 
begins at birth, the 2010 request will provide additional resources to 
help States build high-quality ``Zero to Five'' early childhood 
programs. These resources, in the President's request for both the 
Department of Education and the Department of Health and Human 
Services, will leverage State and local investment in early childhood 
education, raise the bar on the quality of early education, support 
coordination at all levels of government to ensure seamless delivery of 
services, and help give parents the information they need to choose a 
high-quality program that meets the needs of their children.
                    strengthening our public schools
    The Department of Education request is focused on strengthening our 
public schools. We will help States develop and implement rigorous, 
college-ready academic achievement standards along with improved 
assessments, including assessments for students with disabilities and 
English language learners, to accurately measure students' knowledge 
and skills.
    Another key focus of our 2010 request is improving the quality of 
the education workforce. The request will include proposals to bring 
greater accountability to teacher and principal preparation programs, 
to improve systems and strategies for recruiting, evaluating, and 
supporting teachers, and to provide incentives that will both reward 
effective teachers and encourage them to teach where they are most 
needed.
    We also plan to work very hard at scaling up success in our 
education system. Under our 2010 budget, the Department would continue 
to use the Innovation Fund created by the Recovery Act to identify and 
replicate successful models and strategies that raise student 
achievement. We know that there are many school systems and non-profit 
organizations across the country with demonstrated track records of 
success in raising student achievement, and our 2010 request would help 
bring their success to scale. Our budget also would support 
comprehensive approaches such as Promise Neighborhoods, which would be 
modeled after the Harlem Children's Zone, that aim to improve college-
going rates by combining a rigorous K-12 education with a full network 
of neighborhood-based social services. In addition, we want to partner 
with States to build their capacity to diagnose and address the root 
causes of low-performing schools.
                    helping more kids go to college
    All of these efforts--improved early childhood education, stronger 
standards and assessments, improved teaching, and scaling up successful 
models of high-quality teaching and learning--will help ensure that all 
of our children have the knowledge and skills they need for success in 
the workforce or further learning.
    And to ensure that as many kids as possible are able to take that 
second option--to pursue further learning--our 2010 request includes 
four major proposals to expand opportunities for students to enter and 
complete a college education. These are in addition to our ongoing work 
simplifying the student aid application process to make it easier and 
less confusing to apply for Federal student financial assistance.
    First, we want to create a stronger and more reliable Pell Grant 
program by moving the program to the mandatory side of the Federal 
budget. For the first time ever, Pell Grants will not be subject to the 
politics of the moment or the whims of the market--they will be a 
commitment that Congress is required to uphold each and every year. 
Further, because rising costs mean Pell Grants cover less than half as 
much tuition as they did 30 years ago, we are raising the maximum Pell 
Grant to $5,550 a year and indexing it above inflation.
    Second, we are proposing to stabilize the postsecondary student 
loan programs and save taxpayers $4 billion annually by originating all 
new loans in the direct lending program and tapping experienced private 
sector companies to collect and service the loans. It no longer makes 
any sense to heavily subsidize a guaranteed student loan program that 
is barely functioning in the current financial crisis when we have a 
stable, lower-cost method of meeting the needs of all eligible 
students.
    Third, our request would significantly expand the Perkins Loan 
program to give students with extra borrowing needs a better 
alternative to high-cost private loan programs. Our proposal would 
expand the number of schools offering Perkins Loans from 1,800 to up to 
4,400, and potentially more than quintuple the number of students 
receiving Perkins Loans, from 500,000 to 2.7 million, and better 
distribute student aid among schools. The loans would carry a 5 percent 
interest rate, with interest accruing during school, and would be 
handled by private sector servicers instead of colleges shouldering the 
responsibility for loan collection. Since the budget was announced, we 
have heard a lot of excitement about this expansion. Let me address a 
few of the questions we have been getting about our proposal:
     The loan limits would be the same as in the current 
Perkins program: $4,000 per year for undergraduate students, $6,000 per 
year for graduate and professional students. As with the current 
program, these loans would not count as part of the total Stafford loan 
limits.
     The financial aid office at the college would determine 
who would be offered loans. We envision greater flexibility for the 
college than in the current Perkins Loan program.
     Borrowers would have access to the same repayment and 
forgiveness programs as are available in the Stafford loan program.
     Our proposal would not affect borrowers who already have 
Perkins loans made under the pre-2010 program. As those borrowers repay 
their loans, the participating schools would remit the Federal share to 
the Department of Education.
    While we are expanding financial aid, colleges and universities 
have a responsibility to control their own costs. Under the current 
distribution formula for Perkins Loans and other campus-based aid, the 
more that a college increases tuition, the more money the college 
stands to receive from the Federal Government. This sends precisely the 
wrong message to institutions. We look forward to working with Congress 
to develop a formula for distributing the new Perkins loan funds that 
would reward institutions for providing more need-based aid and having 
reasonable tuition charges relative to comparable institutions.
    Finally, our 2010 request will launch a 5-year $2.5 billion Access 
and Completion Incentive Fund that will support innovative State 
efforts to improve college completion rates for low-income students. 
This Federal-State partnership builds on ideas Congress included in the 
Higher Education Opportunity Act, such as the State Grants for Access 
and Persistence program designed to complement LEAP. A key goal of this 
program is to learn more about what works, and what doesn't work, in 
improving student persistence to degree. The Administration also 
intends to reach out to the philanthropic community as potential 
partners, and expects to make use of the Experimental Sites authority 
that we already have, to issue regulatory waivers for the purpose of 
research on programs to improve persistence. States would have 
considerable flexibility in the types of programs that can be funded, 
but they all must include a rigorous research component.
    States would be allowed to set aside a portion of their funding to 
continue college outreach and information activities now made through 
FFEL subsidies.
                               conclusion
    The Recovery Act provided unprecedented levels of Federal support 
for our schools in return for a commitment to meaningful reform 
strategies. President Obama and I believe that the Recovery Act has 
created a historic opportunity to improve the quality of our education 
system, and we are determined to make the most of that opportunity. Our 
2010 budget request would build on the resources and reforms in the 
Recovery Act to help create a public school system that prepares more 
students for the opportunities provided by a college education and 
helps ensure that they can afford to take advantage of those 
opportunities. I believe these are goals we all can agree on, and I 
urge you to support the President's fiscal year 2010 request for 
education.
    I will be happy to take any questions you may have.

    Chairman Spratt. One of the key initiatives that Congress 
has taken in the previous administration was to leave no child 
behind. You didn't directly address that, and we would like to 
hear your thoughts about ESEA and ``No Child Left Behind'' and 
the funding level for those programs in particular.
    Secretary Duncan. We look to coming back later in the year 
for reauthorization and want to really think through how we 
continue to improve upon it. So let me tell you what I have 
liked about what has happened in the past, and where we want to 
go, and where we disagree with things that have happened.
    First, what No Child Left Behind, I think, will always get 
credit for is shining an absolute spotlight on the achievement 
gap; and by that I mean the differences in educational outcomes 
between white children and children from the Latino and the 
African American community. This tough reality, this harsh 
reality is something none of us can be proud of, but it is also 
something that can no longer be swept under the rug. And we 
want to continue to look at data and do everything in our power 
to challenge that achievement gap and see that shrink.
    What didn't happen before is the program wasn't funded. 
With the President's support and your leadership, we are 
putting significant, literally billions of additional dollars 
into Title I funding to help poor children, into IDEA funding 
to help those children with disabilities, and really putting 
our resources where our mouth is and helping schools and school 
districts in States have the opportunity to be successful.
    Where I think we need to think very differently as we go 
forward towards reauthorization is that the No Child Left 
Behind law, I think, got backwards the idea of what needs to be 
tight in this country and what needs to be loose. The Federal 
role is always going to be a very limited one. Education is 
always going to be a local issue. What we need to do is provide 
clear guidance and clear goal posts.
    Under No Child Left Behind, 50 different States set their 
own benchmarks, set their own goalposts. What that led to, I 
think maybe unintentionally, but what it led to is what I call 
a race to the bottom, States dumbing down their standards to 
hit some political goal. And so while No Child Left Behind was 
very loose about the goal, it was very tight, very 
prescriptive--I would argue overly prescriptive--about how you 
get there.
    I want to try and flip that. I want to be much tighter on 
what the goal is. I want our States thinking about college-
ready, career-ready, internationally benchmarked standards. Our 
students today aren't competing against children down the block 
or in the district or in the State. They are competing with 
children in India and China. And we need to be very cognizant 
of what it takes to be successful in the new global economy.
    So I want to be much clearer about the goal. I want to have 
much higher expectations. I want to eliminate the race to the 
bottom and create a race to the top. And then I want to have 
clear ways to measure States' progress against that. But give 
States flexibility and the chance to innovate to achieve those 
loftier goals.
    Chairman Spratt. Can you give us some ballpark idea of what 
the likely increased spending will be for Title I elementary 
and secondary education, and No Child Left Behind?
    Secretary Duncan. Well, there are significant increases, as 
you know, in the stimulus package; and going forward we would 
like to see those numbers continue to increase.
    Chairman Spratt. Now, another function of the Federal 
Government for--ever since Sputnik, when I was in high school--
--
    Mr. Ryan. I wasn't even born.
    Secretary Duncan. Congressman Ryan read about it in his 
textbooks.
    Chairman Spratt. The Federal Government understood that it 
had a distinct stake in the quality of elementary and secondary 
education, and collegiate education of America's youth. We 
began guaranteeing and funding directly student loans in the 
early 1960s, and it is a big part of the responsibility you are 
assuming as the Secretary of Education. You are making a far 
reaching proposal about the design and operation of those 
programs.
    First of all, we are going from, per your proposal, a 
program that issues and guarantees loans to students, about 35 
percent of which originate with the Department of Education 
today, 65 percent with banks and entities spread across the 
country. Are you satisfied that you have the infrastructure, 
the personnel, the capacity to handle this additional burden?
    Secretary Duncan. I am. And let me start back where you 
started, which I think is a critical point, with Sputnik. I 
think Sputnik was a wake-up call for the country that we needed 
to think differently about education. And I would argue today 
we are not only at a point of economic crisis, I would argue we 
are at a point of education crisis, and that we need to, as a 
country, dramatically improve both the quality of education and 
raise the bar. But we need to see many more of our students 
graduate from high school and graduate from college. So we want 
to push to get dramatically better and increase those high 
school and college graduation rates.
    I am absolutely convinced we have the staff to do this. We 
don't need to increase staff significantly at all. Many of the 
borrowers are serviced by the private side, and we are going to 
continue to do that.
    What I think is so important today, Congressman, is, given 
how important it is for all of our young people to have the 
opportunity to go to college, given how much families, parents 
are losing jobs and taking pay cuts, there is tremendous 
uncertainty there. And we want our young people, not just 
juniors and seniors, but we want our third graders and fourth 
graders and fifth graders to really believe that, despite their 
family's lack of resources or whatever challenging 
circumstances they face, we want our young children to know 
that they are going to have the opportunity financially if they 
work hard to go to college.
    Too often, we see those dreams start to die, not in junior 
and senior year but third and fourth and fifth and sixth grade, 
and students start to believe this isn't for them. So 
dramatically increasing access, dramatically increasing 
opportunity, trying to significantly alleviate the financial 
barriers for our young people going on to higher education is 
critically important.
    There are very, very few good jobs out there, as you well 
know, for students with just a high school diploma; and we have 
to be thinking of about some kind of 4-year institutions, 2-
year community colleges, technical schools, whatever it might 
be, and making sure every child in this country knows if they 
work hard and want to go on to some form of higher education 
the resources are going to be there for them.
    Chairman Spratt. How do you reach out and serve students 
from here to the Pacific coast, all over this great continental 
democracy? How do you reach everybody that aspires to a college 
education with a Federal student loan?
    Secretary Duncan. That is a great question, and I think we 
need to do a much better job of really marketing what is 
available. So we are talking about sending letters to literally 
every high school principal in the country, to every college 
guidance counselor who works in the high schools and letting 
them know about the dramatic increases in funding, whether it 
is Pell Grants or Perkins Loans or the tuition tax credits for 
the middle class, that there are resources on the table that 
have never before been there.
    We anticipate over the next 2 years an additional $31 
billion being out there, again, the largest increase since the 
GI Bill. It is absolutely historic. We anticipate as many as 
2.7 million additional students having access to financial aid 
who haven't had that historically and well over 7 million 
students having more money coming towards them.
    So this is a fundamental change, a huge breakthrough. And, 
again, I think it couldn't come at a more critical time, when 
the opportunity to go to higher education is so critically 
important, and it has never been more expensive. And, 
unfortunately, our families have never had fewer resources to 
send their children on to higher education.
    We haven't talked about there are many--not just, you know, 
18-year-olds going to school--many 28-year-olds and 38-year-
olds and 48-year-olds going back to school and going back to 
community colleges to get retrained; and we have to support 
them. We have to get them trained in these new economies so 
they can get jobs and continue to support their families. So it 
is hugely important that we increase access and opportunity to 
college.
    Finally, I will say there is significant money, which you 
touched on, $2.5 billion over the next 5 years to make sure our 
colleges are not just admitting students but graduating them at 
higher rates. We really want to challenge all of us and hold 
ourselves accountable to increase those graduation rates. I 
worry a lot about students who are the first generation going 
to college and haven't had family members who have done these 
things. I worry about students who are learning English for the 
first time. And we want to put out there on a competitive basis 
and really challenge States to innovate and think about driving 
up completion rates. That is very important to me as well.
    Chairman Spratt. In your printed testimony, you claim 
substantial savings, about $50 billion over 10 years, by going 
to Direct Loans administered by the Department of Education. 
What are those subsidies and fees and interest rate markups 
that you save or avoid as a result of going to Direct Loans?
    Secretary Duncan. I will turn to Mr. Skelly to walk through 
details, but we sort of think philosophically and fundamentally 
that rather than subsidizing banks we should be putting that 
money into our young people and giving more and more, giving 
millions of young people the chance to go to school and to go 
to school for less money. So we just think directionally this 
is the right thing to do.
    There is a huge chance for the private providers to help on 
servicing the borrowers, and so we want to keep that private 
competition going and private industry engaged with us. But, 
fundamentally, we think we have to invest more in the young 
people of the country.
    Mr. Skelly can walk you through the details.
    Mr. Skelly. The main difference between the two Federal 
loan programs is that in a direct student loan program, the 
interest that the borrower repays comes back to the government. 
In the guaranteed student loan program, the interest stays with 
the banks. So there is about a 5 percent difference overall 
between the two programs, on average, using our interest rate 
assumptions.
    Chairman Spratt. Origination fees or anything like that?
    Mr. Skelly. Both programs have origination fees. Both 
programs subsidize students in need when they are in college. 
Both programs have the same interest rates for students. The 
programs are really very similar. The only difference is the 
delivery mechanism in a direct student loan program where you 
rely on private contractors. In a guaranteed student loan 
program, the lenders also rely on some of those same 
contractors. The programs are really very similar.
    Chairman Spratt. With respect to the Perkins Loan program, 
there is a substantial sum of money, as I understand it, that 
the participating educational institutions have access to and 
lend as a revolving fund. And your proposal, as I understand 
it, is to recall those funds over some period of time. What 
would you do then with the rest of the Perkins program? Would 
you contract out the operation of it, or would you administer 
it from Washington?
    Mr. Skelly. It would also be administered from Washington.
    The Perkins Loan program started with Sputnik in 1958. 
Loans were made to students. As those students repay those 
loans, the schools have to service them or arrange for a 
contractor to service them. But the money goes back to the 
schools.
    There is about $6 billion still left in those revolving 
funds from Federal funds that were contributed to them for the 
loans. That money, under the proposal, would be returned to the 
Federal Government as the loans are repaid.
    In addition, though----
    Chairman Spratt. Would the schools be the intermediary 
still for originating loans?
    Mr. Skelly. We would make the loans in the program, taking 
the burden off the schools. There are only about 1,800 schools 
that participate in the Perkins Loan program currently, and 
under our proposal we would have 4,400 schools participate in 
the program.
    Secretary Duncan. If I could, Mr. Chairman, just add, 
because of these actions we are going to go from $1.1 billion 
available in Perkins Loans to about $6 billion. As Mr. Skelly 
said, we are going to go from about 1,800 schools to over 4,400 
schools, so more than doubling the number of schools that have 
access; and, most significantly, go from 500,000 students now 
who have access to Perkins Loans to 2.2 million. So 
dramatically increasing, exponentially increasing the number of 
young people with access to Perkins Loans.
    Chairman Spratt. Thank you both for your testimony.
    Mr. Ryan.
    Mr. Ryan. Thank you, Mr. Chairman.
    I had a question about your budget; and, Mr. Skelly, you 
may want to get into this as well.
    If you go to table S-6 in your budget blueprint, mandatory 
and receipt proposals, go down to the education column and look 
at ``Create a new College Access and Completion Fund.'' It 
shows that you are creating a new entitlement program, a new 
mandatory spending program, spending $2.5 billion between 2010 
and 2015. But then you terminate the program after that, and it 
is zeroed out.
    So my basic question is, if this is designed to be a pilot 
program, which is what that usually indicates--you fund it for 
a few years, then it goes away--why put it in the mandatory 
column? Why make it an entitlement and then zero it out in 2016 
and onward? That doesn't seem to make much sense to me.
    And, also, if it is a pilot program, why not have it 
discretionary, where you have more congressional involvement, 
more congressional oversight, more congressional year-to-year 
oversight to see if it is being successful or not?
    So I don't understand creating a new entitlement program, 
funding it for 5 years, and then zeroing it out.
    Mr. Skelly. There are different ways to approach these 
kinds of proposals, and certainly the Administration wants to 
work with Congress on how it could evolve. But the idea is to 
make sure that States have an incentive to help students 
complete college. They haven't had enough of an incentive yet.
    Mr. Ryan. Well, sure. But it is a mandatory program, so 
Congress--their involvement is very limited. It is not--we 
don't do year-to-year oversight when it becomes mandatory.
    Mr. Skelly. You still have some oversight, as do we. We 
would have to pass legislation in addition to the budget, 
making sure that this program lasted. And you could have a 
program longer than 5 years. We just did the 5-year window for 
this budget blueprint.
    Mr. Ryan. So is it the Administration's intent to do what 
it says in the budget, to zero this program out in the sixth 
year?
    Mr. Skelly. We were asking for funds for the first 5 years 
of the program in the budget blueprint.
    Mr. Ryan. So it is the Administration's intent to zero it 
out in the sixth year.
    Mr. Skelly. After 5 years under this budget blueprint there 
wouldn't be additional budget authority for it.
    Mr. Ryan. Okay. That is why I don't understand why it is a 
mandatory program then. If we are planning on eliminating it in 
2016, I don't understand why we would make it a mandatory 
program. That is what I just don't get.
    Mr. Skelly. Well, the mandatory program would provide the 
funding for 5 years. On discretionary programs, you in Congress 
do an annual appropriation. So the decision about whether funds 
are there is made each and every year. Five years is still a 
lot better than 1 year if you are doing long-term planning.
    Mr. Ryan. I won't belabor it anymore. I don't understand 
why--obviously, you are saying you are going to eliminate this 
program in 6 years. I don't know why it would be a mandatory 
program then. That doesn't seem to make sense from a budget 
standpoint. But let me go on.
    On the D.C. scholarship program. This budget--and all new 
administrations--I am not criticizing the fact that you gave us 
a small blueprint, because every new administration does that. 
There is no way you can prepare a large, detailed budget in the 
beginning of a new administration. We are expecting your large, 
detailed budget in some time in April.
    Mr. Skelly. That is correct.
    Mr. Ryan. What about the D.C. program--there is nothing in 
here about the D.C. Opportunity Scholarship Program. Will your 
April budget propose funding for the program? Will you address 
the details of the D.C. Opportunity Scholarship Program in your 
detailed budget? Will you propose that it continues or not?
    Secretary Duncan. What both the President and I have 
repeatedly said is that school vouchers are not a long-term 
solution to our educational challenges. But, in this instance, 
we believe that we should find a way to keep from disrupting 
the students currently involved and enrolled in this program; 
and we look forward to working Congress to find a solution.
    Mr. Ryan. Okay. So you think--so you will, in your detailed 
budget in April, propose continuing the D.C. opportunity 
program.
    Mr. Skelly. The D.C. choice program is not part of the 
Department of Education appropriations bill. It is in the 
financial services appropriation.
    Mr. Ryan. But, obviously, you have interaction with it. 
Will OMB, when they give us the detailed budget, propose to 
continue the program?
    Mr. Skelly. We will have a lot of details in the end of 
April when we do our budget, but, right now, we don't have all 
the details of the budget.
    Mr. Ryan. Not sure yet? Okay.
    Another question. I think it is refreshing that you come 
from a large inner-city school district. I think that 
perspective and experience is definitely very welcomed. And 
given that 9 cents on every dollar of education spending from K 
through 12 comes from local and State sources, not the 
Federal----
    Secretary Duncan. Ninety-one cents.
    Mr. Ryan. Yeah, the other way around. Ninety-one cents on 
the dollar comes from local and State, what is your attitude on 
just the whole concept of local control versus Federal control?
    A concern that many of us have--and, gosh, I have met with 
so many administrators, principals, teachers, over the last 
number of years about the last administration's No Child Left 
Behind Title I program, that it was kind of moving us in this 
direction of federalizing the curriculum. And the concern that 
many of us have, from both sides of the aisle, I think, is that 
since Washington only controls a small fraction of the money, 
Washington is going to dictate the terms of curriculum in our 
local school districts. And there are those of us who believe 
that some of the best ideas come from the grass roots, come 
from local administrators and local school districts that have 
unique problems.
    I live in Janesville, Wisconsin. It is quite a bit 
different in Janesville, Wisconsin, the problems we have in our 
school district there than probably in Chicago, even though we 
are about an hour and a half drive away from each other. What 
is your attitude toward that? Do you believe that we are sort 
of on an alarming trend in the wrong direction toward 
federalizing our curriculum, and do you believe that we should 
reemphasize local control? Or what is your take on that?
    Secretary Duncan. Let me be very clear. When I was in my 
other job a couple of months ago, I didn't want Washington 
running my business; and now that I am in Washington I am less 
interested--even less interested in having Washington run 
things at the local level.
    What I see as our role is very simple. I want to spur 
innovation, I want to reward creativity, and I want to scale up 
what works. And it is easy for me to say this, and it is harder 
to do. You know, culture change is very, very hard.
    But when the Department of Education used to call me, that 
wasn't a call I always welcomed; and it wasn't always a call 
saying, how can I help you get better? And what I want to do--
easier to say than to do--is can we be the Department that 
drives best practices, that shines the spotlight on what is 
working and takes that to scale?
    One of the reasons I am so optimistic about where we can go 
as a country is there have never been more great examples of 
great schools, great districts, great nonprofits, great charter 
organizations making a Herculean difference in students' lives 
in some of the toughest communities, most depressed areas you 
have ever seen. Many of these examples, frankly, didn't exist 
10 or 15 or 20 years ago; and what I want to do is take to 
scale what works.
    So my job is not so much to come up with great ideas. I am 
not that smart anyway. My job is to do a great job listening. 
All the really good ideas are already out there. And if we can 
share those best practices, if we can figure out what is 
working, reward excellence and, frankly, stop doing what is not 
working and get out of things that we shouldn't be in, I think 
we have a chance to make a dramatic impact in our students' 
lives.
    Mr. Ryan. That is encouraging. I think we all agree with 
everything you just said. The question is on implementation of 
driving best practices. Does implementation of driving best 
practices mean telling local school districts how to do it? Or 
does it mean encouraging laboratories of innovation of 
different ideas and encouraging that differentiation? I mean, 
not sort of heavy handed from the Federal perspective. And, 
look, the last administration, I have complaints with the way 
they did this, too. That is the concern here.
    Secretary Duncan. Let me be very, very clear. I am simply 
interested in dramatically improving student achievement. I am 
the most nonpolitical, nonideological guy you will ever meet. I 
want to look at the data very closely. If groups can show us--
again, districts, schools, nonprofit charter groups--can show 
us that they are making a demonstrable difference, really 
dramatically accelerating student achievement, I want to do 
everything we can to support that.
    Mr. Ryan. You want to get out of their way and let them do 
that and not----
    Secretary Duncan. I want to go further. Not only get out of 
their way, I want to fund them and invest in them to do more of 
what they are doing.
    Mr. Ryan. The issue probably then becomes, with money comes 
strings; and that is just something I would encourage you to 
think about.
    Secretary Duncan. I absolutely hear you. But let me just 
tell you, where you have groups that are doing a great job with 
a school or a handful of schools, if we can help them work with 
more children and more communities, that is the right thing to 
do. And you are starting to see, again, best practices in a 
wide variety of communities that are doing an extraordinary 
job.
    Let me tell you how I want to do it. In the stimulus 
package we have $5 billion for what we call the Race to the Top 
Fund. $4.35 billion of that we want to incentivize States. Not 
mandate, not dictate, but reward those States that 
voluntarily--let me be very clear about that--voluntarily 
choose to think about a number of reforms that we think are 
critical. Think about college-ready, career-ready 
internationally benchmarked standards. Think about great data 
systems so we can track students' progress throughout their 
educational career. I want to be able to look a sixth-grader or 
eighth-grader in the eye and say, you are on the track to go to 
college and be successful, or you are not.
    I am very concerned, honestly, that in many States today, 
because standards have been dummied down and we have had this 
race to the bottom, we are actually lying to children and we 
are telling them they are on track because they are meeting a 
low bar. When the child or a parent hears ``I am meeting State 
standards,'' they probably think that they are in good shape. 
In many cases, unfortunately, that is not the case; they are 
barely prepared to graduate from high school and absolutely 
inadequately prepared, underprepared, woefully underprepared to 
go on to college.
    So we want to incentivize States to think about common high 
standards. We want to incentivize States to think about great 
data systems that track students' progress, that track teachers 
against students and track teachers back to their schools of 
education so we can see where there is added value.
    We want to think very differently about how we reward 
excellence among teachers and principals and again shine a 
spotlight on those that are making a great difference on 
students' lives. And we want to think about how we turn around 
struggling schools. I really worry about those schools at the 
bottom, where the schools are, I would argue, perpetuating 
poverty and perpetuating students for failure.
    So, on a voluntary basis, we want to work with a set of 
States that want to come forward and lead what we are calling a 
Race to the Top and really drive the country where I think we 
need to go.
    Mr. Ryan. And they lead and they define and they choose the 
methodology, not the other way around.
    Thank you. Appreciate it.
    Chairman Spratt. Ms. Schwartz.
    Ms. Schwartz. I thank you, Mr. Chairman; and thank you, Mr. 
Secretary.
    I wanted to ask a question about something that you haven't 
mentioned yet and I think you will want to talk about.
    First, congratulations and welcome. You have been very well 
received.
    Education has sometimes been controversial, and it doesn't 
have to be. I think we have similar goals, but some of us have 
different ways of getting there.
    So, first, I really appreciate your advocacy for scaling up 
best practices and getting this right. The dramatic investment 
in education and focus on education by the President and the 
Administration is important to our economic competitiveness; 
and I appreciate that being such a big focus of, first, the 
recovery package and now, of course, the budget in terms of 
investments we have to make for the future.
    The issue I want to ask about is, I think that we do all 
agree--and I heard Mr. Ryan; we don't always agree, but I agree 
with him on this one--that we ought to really focus on what 
works and make investments in what works. And the area that I 
wanted to ask about was specifically on pre-K, on child care, 
and the issue that money has been dedicated in the Department 
of Education, rather than HHS, the fact that early education 
begins in child care and in pre-K and I would even say in 
kindergarten. The quality of what happens in child care matters 
a lot to whether children are prepared to learn, whether they 
are ready to learn. We use a lot of slogans on this. But if 
there is one thing we know, we know this works.
    We also know that when children fail in their early years, 
I can tell you--this is your work--but when children fail in 
the early years, whether it is first grade or second grade, 
they almost never make up. And we can almost tell who is not 
going to graduate from high school by some of these statistics. 
And we know all of this.
    And I understand that there is $5 billion in the Recovery 
Act and additional resources potentially in the budget. Could 
you speak more specifically to whether in fact this will focus 
not just on quality and how you anticipate doing that and how 
you might work with HHS that actually funds a lot of the child 
care slots to incentivize quality and to make sure that our 
children are really getting an education component in child 
care?
    Secretary Duncan. I really appreciate the question. Let me 
just state philosophically how I feel about this, and I'll get 
into the specifics.
    I think a great case could be made that this is the best 
investment we could make, that nothing is more important to get 
to our 2-year-olds, our 3-year-olds, our 4-year-olds, our 5-
year-olds--I would like to think about the zeros and the ones 
and how we can get to them earlier. But if our children hit 
kindergarten ready to learn and ready to read and with their 
literacy skills intact and their socialization skills intact, 
they have a world of opportunity before them. And we know all 
the studies.
    But my daughter was in kindergarten last year. And it was 
fascinating to watch that she had a set of classmates who, like 
my daughter, had been read to at home and had a house filled 
with books. But she had other classmates that hadn't quite had 
those opportunities. And to see the tremendous disparity in 
ability of children coming into the kindergarten and thinking 
about--she had a phenomenal teacher, but thinking about that 
teacher working with 31 children at this tremendous range of 
ability level and how can the best of teachers in the country 
do that well when there is such great disparity?
    So whatever we can do to make sure every child hits 
kindergarten ready to learn, ready to read, knowing how to 
interact with other children, there is nothing more important 
we can do. So, as you said, there are significant dollars in 
the stimulus package, $5 billion for early childhood education.
    I think we have to do two things. I think we have to 
dramatically increase slots and increase access for children 
there; and we have to, as you said, really think about quality. 
If this is glorified babysitting, then we are not changing 
students' lives.
    And we talk about accountability at K to 12 and higher 
education. We want to really look at what school systems, 
school districts, as well as nonprofit providers and community 
providers, are doing to really, you know, make a difference in 
students' lives. If this is glorified babysitting, if children 
are at a child care center and they are watching TV all day, we 
are really not changing their life circumstances.
    Ms. Schwartz. Are you looking to help them meet national 
standards or national accreditation? That is an elaborate 
process for some of these small groups to do. Are you looking 
at teacher training? What are you looking at?
    Secretary Duncan. We have to look at all of that. We have 
to look at teacher professional development. We have to look at 
accreditation.
    My understanding is that, historically, the relationship of 
HHS has been less than functional; and I don't, frankly, care 
about budgets. I don't care who owns what. We have got to do a 
better job for kids.
    So I am absolutely committed. I am looking forward. I am 
getting to know her, and I think Governor Sebelius will be 
wonderful if she is confirmed. I think we have a chance to 
really work in a very, very different fashion, combine all our 
resources, work much smarter and at the end of the day, do a 
much better job for our young children who need the most help.
    Ms. Schwartz. I look forward to hearing more of the detail. 
I know that in Pennsylvania we actually have some really good 
models and we have done some really good work on this. I know 
many States have. But we would love to see that really come, as 
you point out, to scale. That would be great.
    Secretary Duncan. You have some great models in 
Pennsylvania that I am pretty aware of. Thank you.
    Chairman Spratt. Mr. Hensarling.
    Mr. Hensarling. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary, good to see you. And if I heard you 
correctly, we may share something in common if you had one in 
kindergarten last year. I had one in kindergarten last year as 
well.
    Mr. Secretary, I am certainly encouraged by much of what I 
hear from you. I like to hear words like results and innovation 
and parental involvement.
    However, I have concerns about some of the things that I 
see. I actually want to look even further past the budget 
window that is being presented here today. Under this budget, 
the Administration is proposing more entitlement spending. 
Prior to the Administration proposing that, already--it is well 
documented by GAO, CBO, anybody who looks at the budget--that 
the next generation--I guess, our two first-graders--are going 
to look at a Federal Government by the time they are our age 
that consists of nothing but Medicare, Medicaid, and Social 
Security and little else. There will be no room for all the 
Federal programs, Federal education programs proposed in your 
budget.
    The President's budget is calling for an increase in the 
national debt of $2.7 trillion, which is about $23,000 per 
household over 8 years. The budget will double the national 
debt.
    Now, maybe those of us in this room who enjoy 
administration and congressional salaries, we will be able to 
fund the education of our children. But, ultimately, what is 
the Administration doing to actually reform entitlement 
spending? And if we are drowning in a sea of debt, how are 
people going to be able to afford to send their kids to 
college?
    Secretary Duncan. I will start and then turn it over to Mr. 
Skelly.
    My clear understanding is the President is trying to cut 
the deficit in half over the next 5 years to really go the 
direction that you want to go. You may be asking specifically 
on the Pell Grants, why that would move from discretionary to 
mandatory. Is that part of your question?
    Mr. Hensarling. Well, my broader question is what is being 
done within these programs to ultimately ensure that families 
can afford to send their kids to college in 10 and 20 years?
    Secretary Duncan. Well, I will speak to what we are trying 
to do on the Pell Grant side. By making it mandatory I think 
what we are doing is really creating a sense of stability. And 
I worry a lot about children in low-income families where the 
children are very smart, parents are working hard with them, 
they are turning off the TVs at night, they are doing the right 
thing, but family members have never gone to college, and they 
just don't think they belong to that world. They have never 
been exposed to it. The degree of isolation is tremendous.
    And if we can say to young people around the country that 
there is going to be money for you and, again, tell them that 
in fifth grade and sixth grade and seventh grade and that they 
know that they are going to have real access and real 
opportunity----
    Mr. Hensarling. Well Mr. Secretary, if the debt doubles in 
10 years, I ultimately don't know where that money is going to 
come from.
    Forgive me. I have limited time here. I want to switch 
subjects here and read from an editorial that appeared recently 
in the Washington Post. Not the National Review, not the Weekly 
Standard, it comes from the March 2nd edition. It is titled 
Potential Disruption.
    ``Representative David Obey and other congressional 
Democrats should spare us their phony concern about the 
children participating in the District's school voucher 
program. If they cared for the future of these students, they 
wouldn't be so quick as to try to kill the program that affords 
low-income minority children a chance at a better education.''
    Again, this comes from the Washington Post.
    ``The Democrat-controlled House passed a spending bill that 
spells the end after the 2009/10 school year of the federally 
funded program that enables poor students to attend private 
schools with scholarships up to $7,500. We would like Mr. Obey 
and his colleagues to talk about possible disruption with Debra 
Parker, mother of two children who attended Sidwell Friends 
School because of the D.C. Opportunity Scholarship Program. The 
mere thought of returning to public school frightens me, Ms. 
Parker told us.
    ``But the debate unfolding on Capitol Hill isn't about the 
facts. It is about politics and the stranglehold the teachers' 
unions have on the Democratic Party. Why else has so much time 
and effort gone into trying to kill off what, in the grand 
scheme of government spending, is a tiny program? Why wouldn't 
Congress want to get the results of a carefully calibrated 
scientific study before pulling the plug on a program that has 
proven to be enormously popular? Can the real fear be that 
school vouchers might actually be shown to be effective in 
leveling the academic playing field.''
    My understanding is the Sidwell school is where the 
President is sending his children. The President signed the 
omnibus bill that kills off this particular program, which 
means effectively some of the President's children's classmates 
could be sent into other schools.
    You say that you want to somehow prevent this potential 
disruption. But how are you going do it if you just signed the 
bill that kills the program?
    Secretary Duncan. First of all, Congress can reauthorize 
the program. And, as I said earlier, both the President and I, 
while we don't think vouchers are the answer long term, neither 
one of us wants to see these children's education disrupted. If 
children are in a school and they are happy and they are 
learning and they are safe, to pull them out of that school 
doesn't make sense.
    Mr. Hensarling. But you could have put it in your budget 
and you chose not to, correct?
    Secretary Duncan. No--go ahead.
    Mr. Skelly. The omnibus bill said that the money is there 
for students who are still in the program. But additional funds 
wouldn't be provided unless Congress reauthorizes the act. So 
it is up to Congress. The President's budget in detail will 
come out in April.
    Mr. Hensarling. Thank you.
    Chairman Spratt. Mr. Doggett.
    Mr. Doggett. Thank you, Mr. Chairman. Thank you Mr. 
Secretary.
    I have two separate concerns, both of which derive from the 
economic recovery law; and my questions are long. I am going to 
pose both areas and ask you to respond briefly to each and then 
to follow up with a timely written response on these questions.
    Secretary Duncan. Yes, sir.
    Mr. Doggett. My first area of concern is the one you were 
discussing with Ms. Schwartz, and that is quality early 
childhood education. I think the economic recovery law is the 
first measure of the Administration's commitment to what you 
just described as the best investment that we can make.
    I am very familiar with what was done for child care, 
which, unfortunately, in too many States is glorified 
babysitting, necessary but glorified babysitting, Early Head 
Start and Head Start. However, other than perhaps the educating 
children with disabilities program, IDEA, there are no funds 
that have been specifically designated under your jurisdiction 
in the Education Department for quality early childhood 
education after the 15 percent provision in the Senate bill was 
abandoned, which would have been focused in that direction.
    You indicate in your budget outline that you will have 
early learning challenge grants, and that sounds good, but it 
is hard to tell whether that will be too little, too late. This 
is an initiative that is not authorized. I don't believe the 
legislation has even been introduced yet; and if it does pass 
in the form you describe, then we will have to appropriate for 
it down the road.
    I am concerned that the speeches on this are very good but 
that the follow-through needs to be now so that the States can 
be encouraged to develop, especially for 3- and 4-year-olds, 
quality pre-kindergarten programs that are research-based and 
that will be effective in achieving the goals that you just 
stated this morning. That's concern number one.
    Concern number two, Mr. Secretary, is with regard to the 
State stabilization funds, the matter that you are familiar 
with that I wrote to you about a couple of weeks ago. I saw the 
goal of the 81.8 percent of State stabilization funds that are 
defined in the Economic Recovery Act as the education fund to 
be to assure to our local school districts that they were 
getting more resources to provide quality public education, and 
my concern is that in a State like Texas or in a State like 
South Carolina that there is great doubt whether that will 
happen.
    I come from a State where the Governor has made a career 
out of condemning the economic recovery legislation at the same 
time he stretches out his hand to get just as much of that 
money as he can; in the case of the education fund, to siphon 
off much that would have gone directly to the local school 
districts. I did some inquiry before I voted for the Economic 
Recovery Act and found that in Texas, from '06, '07 to '08, 
'09, we had increased public education funding by 33 percent, 
and that the State budget board had recommended another 
increase since we are one of the rare States not actually in 
recession today, for the next couple of years.
    My concern is that now the State of Texas wants to siphon 
off as much of that money that would otherwise go to the local 
districts according to Title I formulas as it possibly can, and 
it has all kinds of schemes and devices to do that. Let me just 
emphasize what the practical effect of that is for some of the 
small school districts in my district.
    In Bastrop, they will get $6 million if that fund is 
distributed to them, and they need that money. If the State is 
able to take the State stabilization fund, they will see a cut 
of almost $4 million in that $6 million. Hayes Consolidated 
will see about half of the money it would receive from the 
economic recovery fund.
    And you can say, well, State, Federal, local, what 
difference does it make? It means that the State will be 
substituting the Federal dollars for what it had planned to do 
and that the dollars we wanted to flow to help assure quality 
public education at the local level will not be any greater 
than if we had never passed this law in the first place.
    I am very concerned about the guidance you are giving about 
devices, on textbooks, on increased enrollment and the like to 
assure that objective that I know we share really gets 
achieved, and that it will not be achieved in a State like 
Texas without some forceful leadership from your office.
    Secretary Duncan. Two really profound questions. I will be 
brief in my answers, and I will give you a written response on 
both. And on the second one there is already a written response 
on the way.
    I worry a lot about the children in Texas, and I worry a 
lot about the children in South Carolina. We had a great 
meeting this morning with Congressman Spratt and his colleague; 
and I think we came up with some pretty creative answers there, 
that we will be able, we think, to do the right thing by 
children. And we want to do it there and in Texas as well.
    Local school districts control how the money is spent, not 
the Governors. The Governor has no authority to dictate use but 
is accountable that the money be used according to law.
    But we will sit with you. I know our staffs have talked.
    Mr. Doggett. Well, our concern is that the money will never 
flow because they divert it for State programs. So it never 
goes directly to the district. They just use the State funds, 
Federal funds to replace the State funds. That is where your 
guidance comes into play.
    Secretary Duncan. I understand. I will be happy to sit with 
you. I think we came up with some good ideas for South Carolina 
this morning, and I look forward to doing the same thing with 
you. On your first question, again we will respond in writing. 
There is a dramatic increase in Title I money. We hope lots of 
that money goes to increase early childhood access and equality 
and there are some other ways to do it.
    Mr. Doggett. A very small portion of it does under current 
law, and there is no guidance or designation to the districts 
to do that, unfortunately.
    Mr. Skelly. In our guidance on the Recovery Act, we did 
indicate the conference report talked about using 50 percent of 
the Title 1 funds for early childhood, and we said we would do 
that and put out additional guidance on how they could do that.
    Mr. Skelly. We were actually very explicit.
    Mr. Doggett. Thank you.
    Chairman Spratt. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman.
    Secretary, thank you for being here. Thank you both for 
being here. Mr. Skelly, I thank you.
    One thing that I wanted to just get you to maybe talk a 
little bit about was--of course the President has talked about 
rewarding effective teachers, and that has been something that 
he has discussed openly and that he has talked with various 
groups about. Just give us a little overview. And I know that 
this is a subject you probably spent a whole hearing on, but 
just a little overview of how you think that such a system, a 
merit-based pay system, would work and just your overall 
thoughts on that?
    Secretary Duncan. Let me give a little broader context and 
then get to your specific questions. I stated at the beginning 
of my earlier testimony that there is nothing more important we 
can do than to get a great teacher into every classroom, a 
great principal into every school. And you can have all the 
resources, you can have a great building, you can have great 
technology, but if you don't have great teachers and great 
principals, you are still really putting a limit on what those 
students can learn. And I think we have to become much more 
creative in how we think about rewarding, incentivizing, 
developing, helping our teachers to be successful. Let them 
even start before they become teachers.
    We have a fascinating window of opportunity here. We have a 
baby-boomer generation that is moving towards retirement. We 
are going to lose a large percentage of our teachers to 
retirement over the next 3, 4, 5, 6 years. If we bring in the 
best and the brightest from around the country to go into 
teaching now and do a better job of keeping those great 
teachers, we can transform the workforce of public education in 
our country for the next 25 or 30 years. It is absolutely a 
generational shift.
    So while this issue is of critical importance at any time, 
it is of more importance than any time in recent history right 
now.
    So it presents some challenges. I would argue it presents 
some huge opportunities. One of the only benefits of having 
such a tough economy is teaching is a much more desirable 
profession now. We have many more folks looking at teaching. 
And part of how I want to spend my time--and the President and 
the First Lady and the Vice President and his wife, who still 
continues to teach today, which I think is remarkable--we want 
to go out and travel the country and encourage the best and 
brightest to come into teaching. You heard the President talk 
about this in his speech the other day, that talent matters 
tremendously.
    So we need to get the best and brightest and we need to 
create better mentoring and support induction programs so our 
best teachers don't get burned out and leave after a couple of 
years because they are not supported and they are not listened 
to and they don't have classroom management skills.
    And then we need to identify the best and brightest. And, 
yes, we need to reward them. And I want to do a couple of 
things differently. I want to reward teachers based upon them 
continuing to grow. We have put out financial incentives in our 
package at home for teachers who became nationally board 
certified, who really reached a high bar. I want to reward 
teachers who are making a demonstrable difference in student 
achievement, who are dramatically improving what students are 
learning each year.
    I am a big believer at looking at not just absolute test 
scores, but gains, growth, how much the students gain each 
year. I think we need to think about how we incentivize the 
best and brightest teachers and principals to take on the 
toughest assignments, whether that is rural or inner-city 
urban. They are communities where far too often great talent 
has fled. We have to reverse that trend and create incentives 
for great talent to go into those communities.
    Finally, we have areas of critical shortage for the 
country: math and science, other areas as well. I think we need 
to think differently about how we reward and compensate that. 
So I see this along a continuum. We need to have a world-class 
effort to recruit the best and brightest into teaching. We need 
to find ways to better support and mentor those teachers. We 
need to find ways to reward excellence. And we need to find 
ways to reward folks to take on tough assignments in 
communities that have been underserved. And we need to find 
ways to eliminate our math and science shortages.
    And along this continuum of activity, I think we can 
dramatically improve student achievement, because nothing is 
more important. So it is not just one piece of this is 
important. We have to look at all these things, starting with 
how we start to engage 18-year-olds thinking about education 
and how we reward 28-year-olds, 38-year-olds, 48-year-olds, 58-
year-olds who are doing a phenomenal job in the classroom.
    The flip side of that is where, at the end of the day, 
after great support, great mentoring, great induction, if 
teachers aren't making it, I think they need to find something 
else to do. The average child, you know, three good teachers in 
a row, they are going to be a year and a half or 2 years ahead. 
Three bad teachers in a row, and that child is going to be so 
far behind it is going to be hard to catch up. We have to look 
at all ends of this continuum and just be very honest about how 
critically important it is to get the best and brightest where 
we need them the most.
    Mr. Aderholt. And you alluded to it at the end there, the 
way that you remove ineffective teachers from the classroom is 
of course a very difficult challenge. And what are some of the 
ideas that--possibilities of how that might occur?
    Secretary Duncan. How to remove teachers that are 
ineffective?
    Mr. Aderholt. Yeah. Just how they could be removed from the 
classroom. Is there a way to----
    Secretary Duncan. You remove them.
    Mr. Aderholt. I know that the President has been criticized 
by some groups for that, but he feels very strongly that that 
is----
    Secretary Duncan. Let me be really clear. The overwhelming 
majority of teachers do an extraordinary job. And I would argue 
they are unsung heroes. I would argue that we have not begun to 
do enough to recognize, reward, incentivize, shine a spotlight 
on teachers that in the toughest of circumstances--underfunded 
schools, crumbling buildings--have done an extraordinary job of 
making a difference in students' lives. And I don't think we 
have done a good job of recognizing that great talent. I don't 
think we have done enough to support those teachers in the 
middle that need more help. And I don't think we have been open 
and honest enough about those teachers that simply aren't cut 
out for teaching and moving them out.
    So, again, every part along that continuum, I think we need 
to push for a pretty significant change.
    Mr. Aderholt. Okay. Thank you, Mr. Chairman.
    Chairman Spratt. Mr. Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman. Mr. Secretary, 
thank you for joining us. I must say I have been encouraged by 
the President's commitment and his leadership and certainly 
appreciate your vision and your past accomplishments on the 
ground and what you bring to the party here.
    One brief observation. What I think you said in response to 
my friend from Alabama is that if there is a teacher who is not 
performing, you remove them. And, in fact, this is something 
that can, in fact, be done and is done around the country.
    Secretary Duncan. It is done in some places, some places 
not.
    Mr. Blumenauer. Your colloquy earlier with the Chairman 
about the Sputnik era, which some of our members read about--I 
am one of those who actually was in grade school and benefited 
from a substantial commitment from the Federal Government to 
all of a sudden decide that our fragmented, decentralized 
system around the country couldn't be relied on. It was against 
the national interest. And they moved forward with math, 
science, foreign language, helped develop curriculum, had 
national defense, and student loans. And this came on the heels 
of the GI Bill, which moved a whole generation to college.
    I am wondering--you don't have time to do it now, but I 
wonder if your Department could help us categorize the increase 
in productivity nationally that was a result of these massive 
infusions of Federal dollars and whether or not they actually 
paid for themselves over the course of the period of time with 
increased productivity in the workforce. If you would be 
willing to work with us to quantify that.
    Secretary Duncan. It is a huge, important point. And again, 
I just fundamentally believe we have to educate our way to a 
better economy. I think as a country, honestly we have lost our 
way on this. We used to lead the world in college graduates. It 
is not so much that we have dropped; we have stagnated. And 
guess what? A whole host of folks have passed us by. And we 
can't be proud.
    I have met with every single Governor, I have met with 
every single State school chief. I have asked each of them, 
which one of you has an acceptable graduation rate, which one 
of you has an acceptable dropout rate?
    Mr. Blumenauer. We are in agreement on that. What I would 
like is your help in quantifying what happened with those 
investments in the past, because I think it speaks to my friend 
from Wisconsin and my friend from Texas wondering about 
deficits as far as the eye can see in terms of increased 
economic productivity from the past investments.
    Secretary Duncan. We would be happy to look at that and 
learn the lessons, good and bad. I want to be very clear. I 
think the significant investment in early childhood, K to 12, 
and higher, is absolutely the right thing. And I want to be 
accountable for every single penny. Money alone is not going to 
be the answer. We have to push a very strong reform agenda.
    Mr. Blumenauer. I just want your help with the economics.
    Secretary Duncan. Got it.
    Mr. Blumenauer. I would like to change direction slightly, 
as one of those Sputnik grade-school refugees growing up in an 
era in the 1960s, early 1970s, where the majority of American 
children actually walked or biked to school, when there was a 
connection to the physical environment.
    One thing that is not mentioned in your presentation that I 
would hope that you could elaborate on for a moment here and 
then think about how we can work on this; about when we are 
worried about morbidly obese fourth graders; when we don't have 
a health component in No Child Left Behind; when we have 
schools that have rush hours in the morning while parents are 
having to juggle getting kids there; when we don't connect 
local schools with surrounding farmers for more nutritious 
food; and when many schools are energy sieves.
    We have had some initiatives in the last Congress--green 
schools, sustainable universities--where there would be money 
to green the facilities and to help with some of these efforts 
with physical fitness and the environment. The last 
conversation I had with a member of a school board in Portland, 
Oregon, my largest school district, mentioned for $5 million--
for plumbing investments--they would be able to save over two-
thirds of a million dollars in perpetuity, plus having a 
cleaner environment.
    Do you have some thoughts now, or could you help us with 
how we make the school into a building block in a sustainable 
community?
    Secretary Duncan. Two great questions. Let me try to answer 
the first one first.
    On nutrition, obviously, as you know, that falls under the 
Department of Agriculture, Secretary Vilsack, someone we want 
to work very closely with, just like HHS and other sister 
agencies. We need to think about how we create more nutritious 
meals for students. We have to think about how we could do more 
to get them exercising: walking, running, jumping rope, 
skipping, hopping, whatever it might be. We have to think about 
parental education around nutrition at the home as well. So 
there is a whole series of things I worry about.
    And, yes, I worry a lot about children who are very heavy 
at first and second grade, third grade. You see them walking to 
school in the morning with a bag of chips and a soda pop. And 
it is a tough way to start the school day. Tough on the kid, 
tough on the teacher.
    So I think that we need to be creative and be thoughtful, 
and Secretary Vilsack, I think, is going to be a phenomenal 
part. And he and I have had some preliminary conversations.
    On the second one, there is significant money in the 
stabilization package for school modernization. We put in 
specific language and guidance around schools becoming more 
energy efficient. And many of our schools are energy hawks. And 
over the long haul, I would much rather have money going into 
teachers and classrooms and longer school days than going to 
pay the utility bill. It doesn't make sense. Some schools have 
led on this in school districts. Others have a long way to go.
    We, again, were very, very clear in our guidance that this 
is something we want schools and school districts spending 
money on--use our investment now. It is a perfect use of a one-
time fund to make your school energy efficient, that will save 
you money for the next decade or two. And you can plow those 
scarce resources back into students and teachers.
    Mr. Blumenauer. Super. Thank you very much, sir.
    Chairman Spratt. Mrs. Lummis.
    Mrs. Lummis. Thank you, Mr. Chairman. I can sense your 
commitment to education and your enthusiasm for your job. So 
thank you for being here today and joining us.
    I have two questions. The first one is about Impact Aid. I 
know you come from a State with very little nonprivate land. I 
come from a State where about half of the land is public land 
and half of the land is private. So we cannot collect taxes off 
that public land that can be used to educate, for example, 
students who live on tribal lands or students who live on 
military bases.
    And so I want to ask a question about what funding level 
for Impact Aid can Congress expect in the Administration's 
comprehensive budget proposal?
    Secretary Duncan. This is money that is going out the door 
very quickly, which I think you will be pleased to know. Tom, 
will you walk through the numbers?
    Mr. Skelly. One, the details to the April budget are just 
not public yet. But Impact Aid did get $100 million in 
additional funds for construction in the Recovery and 
Reinvestment Act. So that will be coming to many of the Impact 
Aid districts to help them with modernizing their schools.
    Mrs. Lummis. Thank you.
    And, Mr. Chairman, my next question is about the student 
loan program. I note that the President's budget proposes to 
eliminate the Federal Family Education Loan program and shift 
Federal student lending to the Direct Loan program, which, as I 
understand, now handles about 20 percent of current Federal 
student lending. My question: Can the Department handle the 
other 80 percent?
    Secretary Duncan. The Department can absolutely handle it. 
And what is really important is that the private sector 
companies will continue to be major participants in this 
program. So we are already partnering with them. And we will 
use competition to ensure excellent service for borrowers at 
reasonable expenses, reasonable costs to taxpayers. We feel 
confident in our ability, not to do it by ourselves, but with 
the participation and collaboration of the private sector.
    Mrs. Lummis. And have you had a chance, Mr. Secretary, to 
visit with any of the private student loan corporations to 
figure out which of those are providing exemplary service and 
which of them may be falling short, so there is an opportunity 
for a fair competition between the federally provided program 
and the private sector programs?
    Secretary Duncan. Our staff has been working very closely 
with them. We have already issued an RFP. We have had six 
respondents. And we look to have a set of those players 
continue to work with the borrowers to provide great service on 
the private side.
    Mrs. Lummis. Mr. Chairman, thank you again. I am pleased to 
have you here today. And your excitement is something that we 
can all feel. So thank you for joining us.
    Secretary Duncan. Thank you so much.
    Chairman Spratt. Thank you, ma'am. Mr. Becerra.
    Mr. Becerra. Mr. Chairman, thank you very much. Mr. 
Secretary, congratulations to you. We are very much looking 
forward to working with you into the future. I think you have 
the type of resume that gives us a great deal of confidence 
that you really do want to have 21st century learning in our 
schools. So we thank you for being here today.
    A couple of questions. I know you had a chance to meet 
recently--I think yesterday, in fact--with folks from my city 
of Los Angeles and with the school leadership from Los Angeles. 
We have the second largest school district in the Nation in Los 
Angeles. And you may be aware that this week the L.A. Unified 
School District sent out close to 9,000 pink slips to its 
teachers because it has to prepare for the eventuality of 
laying off up to 8- to 9,000 teachers if the money is not there 
from the State and the Federal Government to help them hire and 
retain those teachers.
    You did a tremendous job in working with the President and 
helping Congress pass this economic recovery package. I believe 
over $100 billion is out there, available now for the States to 
use for education purposes.
    I am wondering if you can tell us how quickly you expect 
that money to start flowing into the schools.
    Secretary Duncan. A couple of thoughts, just to back up. We 
anticipate--I don't have an exact number for L.A., but I will 
tell you for New York, we anticipate the State's stabilization 
funds saving 14,000 teaching jobs in New York City alone. They 
are slightly larger than L.A., but I am very hopeful that the 
money we are bringing to California, to the L.A. district 
itself, L.A. Unified, will save literally thousands of jobs.
    So I don't know if it will save every single job there, but 
we are trying to stave off an educational catastrophe. And we 
have a real opportunity do that. We are getting the first set 
of money out the door over the next 30 to 45 days. I hope that 
flows through very quickly. And obviously from my old hat, now 
is the time. March and April is when you are planning your 
budget for the fall. So folks need to know.
    So our staff has been working--and I want to single out 
career staff. Our career staff has been there nights, weekends, 
holidays. And we put guidance up on the Web and got it out to 
districts last Friday. And we are very, very clear about 
getting this out quickly so that States and districts know 
exactly what they have to work with.
    Just to let you know I was really encouraged to see a real 
sense of commitment from your mayor, from your new 
superintendent whom I have tremendous respect for. I think that 
was a remarkable pick, the union's participation. I think the 
L.A. children deserve better, quite honestly, than what they 
have had historically. And I think there is a real sense of 
urgency there that is critical. I am going to do whatever I can 
to increase the rate of achievement there.
    And due to adult dysfunction, children have not been as 
well served there as they should have been. The board president 
was there, the business community. I think there is a growing 
sense of urgency there and a growing sense that everyone needs 
to behave differently. I was very encouraged to see that.
    Mr. Becerra. I think if you bring that attitude when you go 
visit places like Los Angeles, it will be very helpful. Because 
if we see a quick distribution of the dollars into these 
schools, we will see immediate results. I know some of the 
teachers that are receiving these pink slips. I have been to 
some of these classrooms where some of that construction money 
will be very helpful in getting them renovated. So I hope we 
are able to work with you.
    And let us know how we can be helpful to you in trying to 
make sure that that money hits the ground and we do the 
oversight, of course, necessary to make sure it gets spent in 
those schools.
    Secretary Duncan. We want to get it out and we want to get 
it out quickly. And I want to be clear. Just maintaining or 
stabilizing the status quo is not good enough around the 
country and it really isn't good enough in a place like L.A. So 
we want to push a very strong reform agenda. And just to 
continue to invest in the status quo isn't going to get us 
where we need to be. So we are committed to getting the money 
out. We are committed to being accountable and holding the 
districts and States accountable as well. We want to really 
think about how we use this money to leverage dramatic change.
    Mr. Becerra. Amen. I hope you continue to preach that 
gospel.
    I would love to ask you a little bit now, and I don't have 
much time, so I am just going to real quickly ask your 
thoughts, and if you could tell us what the budget does, in 
your opinion, with regard to English learners. We have a lot of 
kids throughout the country, and certainly in places like Los 
Angeles where you have kids that are eager to learn, but they 
are having to learn the English language as well as they also 
try to learn math and science and geography.
    Can you tell us what this budget does and what you are 
going to do as Secretary to try to make sure all these children 
have a chance to become successful leaders in America and the 
future?
    Secretary Duncan. L.A. obviously has a tremendous diversity 
of students. I had a tremendous diversity in Chicago. So this 
is an initiative that is very, very close to my heart. And I 
think we have to do everything we can to support those 
children, to help teach them English as quickly as possible. I 
worry about our ability to assess early on whether students are 
learning.
    I worry as we go into No Child Left Behind authorization, 
that is an area I want to look at very closely. There aren't 
easy answers there. But whatever we can do to help these 
children learn English and get the additional support they 
need, we need to do that. And we are going to hire someone 
phenomenal to lead that effort for us here and try and set the 
tone around the country.
    And as you know, the minority population is quickly 
becoming the majority population. In this country, we had 
schools at home where you had literally 30 different languages 
spoken in one school. Amazing. That is not unique to L.A. and 
other places. You see remarkable work going on when you have 
adults there that really care and really understand. And what 
is so encouraging to me is so many of these families are here 
really chasing the American dream, and often very uneducated 
parents sometimes escaping from horrific situations in their 
home country. But they are here because they want their 
children to get a better education. And in many of those 
communities, you saw moms who didn't know any English, who 
probably had very little formal education. They were in the 
schools volunteering every single day because they wanted 
better for their children.
    So there is a real spirit of commitment to education, a 
desire for children to do better. And we need to more than meet 
those children and families halfway.
    Mr. Becerra. Mr. Secretary, thank you very much for your 
enthusiasm. And we are thrilled to have you leading this effort 
at the national level.
    Mr. Chairman, I thank you for the time and I yield back.
    Chairman Spratt. Mr. McGovern.
    Mr. McGovern. Thank you, Mr. Chairman. Congratulations, Mr. 
Secretary. And thank you for your testimony. And I appreciate 
your passion on the issue of education. I am excited about your 
agenda and I look forward to working with you to make sure it 
gets implemented.
    Mr. Secretary, one of my passions is ending hunger and this 
kind of follows up on what Mr. Blumenauer has already talked 
about. But some of the most important programs in combating 
hunger and in nutritiously feeding our Nation's children are 
the school meal programs that are part of the child nutrition 
programs.
    One of my colleagues you don't know, Senator Richard 
Russell, was the author of the school lunch program because he 
was worried about the number of undernourished kids in our 
country and was worried we wouldn't have the manpower to go 
into the military during World War II.
    But today there is a different problem: both hunger and 
obesity rates among children are rising. And the truth is that 
hunger and obesity are tied together. Families struggling to 
put food on the table will buy cheaper food, those with empty 
calories instead of the more expensive and nutritious food. And 
simply put, it is cheaper to buy something off the dollar menu 
at McDonald's than it is to buy fresh fruit or fresh vegetables 
or lean meat or a balanced meal.
    The sad fact is that many of our kids rely solely on 
schools for their basic nutrition. And I know, as you 
mentioned, a lot of these programs are funded through USDA. And 
I am encouraged that you are meeting with Secretary Vilsack on 
this issue.
    But the issue of nutrition and learning are tied together. 
Hungry kids don't learn. Unhealthy kids don't learn. And I 
think there really needs to be a renewed kind of coordinated 
effort on that front. And so, again, I am pleased that you are 
already reaching out to Secretary Vilsack.
    President Obama has said that he wants to end childhood 
hunger by the year 2015. That is not going to happen without 
your help and without the direct involvement of your 
Department.
    But I want to raise a concern here. We all know that our 
schools are facing severe budget shortfalls. But one of the 
ways some schools are trying to plug the holes in their budget 
is by increasing the so-called indirect costs to school meal 
programs. In short, money that we appropriate for school meals 
can pay for energy or telephones or it can even be used for 
personnel costs in the principal's office. In some situations, 
funds designated for school meals can be used for direct 
classroom instruction by being labeled as an indirect expense.
    Now, neither the statute nor the regulations put any cap on 
indirect costs. And according to the School Nutrition 
Association, some districts pay as much as 15 to 18 percent of 
their budgets in indirect costs. The children who rely on 
school meals are the ones that suffer when schools are forced 
to use school meal money to make up for these budget 
shortfalls. And President Obama's proposed increases in 
childhood nutrition programs will go much further, I believe, 
if we properly address the issue of indirect costs.
    I have raised this issue with Secretary Vilsack and he is 
going to look into it. But I think this is also your problem 
too. And we want to make sure we are not robbing Peter to pay 
Paul. We want to make sure that our kids are getting what we 
want them to get: healthy nutritious meals in schools. And I 
would appreciate any comments you might have.
    Secretary Duncan. I appreciate your sense of urgency on it. 
Again, Secretary Vilsack has been just a joy to work with so 
far. And we have talked through a number of these issues 
already. We don't have all the answers yet. But he is 
absolutely committed, and we will come back to you with clear 
ideas about what we can do.
    Let me just sort of step back and tell you a little bit why 
I agree with you so much and why this is so important 
philosophically to me. We fed tens of thousands of children in 
Chicago three meals a day, breakfast, lunch and dinner, because 
I worried a lot about them not eating at home. We fed over 60 
million meals annually, a staggering number. We had a couple of 
thousand children in over 20 schools that were in particularly 
tough communities who we sent bags of food home on Friday 
afternoons because I worried about those kids not eating over 
the weekend.
    As you said, if our kids are hungry, if their stomach is 
growling, it is hard to talk about AP chemistry or physics. 
They are just trying to survive. And to me it goes beyond that. 
You focused on hunger. If our kids can't see the blackboard, 
they can't learn. So we need about tens of thousands of 
eyeglasses. If they don't feel safe, they are not going to 
learn.
    So there is a series of foundational things, social and 
emotional, health and safety and well-being, physical health, 
being able to see, not being hungry. There is a series of 
things we have to do to create an environment in which we can 
start to talk about teaching and learning. And we have to be 
committed to doing that.
    One thing we haven't talked about today--and I don't want 
to belabor the point--is our schools have to be open longer 
hours and there have to be open community centers. And we had a 
couple of dozen schools where we actually had health-care 
clinics attached to the schools. So we have to think very, very 
differently about what our children need to break cycles of 
social failure and poverty, and think about how we serve not 
just that child in a holistic manner, but the entire family. 
And you are talking about an integral piece of that equation.
    Mr. McGovern. Well, I appreciate your response. And I also 
appreciate the fact you are already having these discussions 
with Secretary Vilsack. I think one of the concerns that many 
of us have is that in the past everybody has been so turf 
conscious that they are not willing to work together in a 
coordinated effort. And if we are going to meet President 
Obama's goal of ending childhood hunger by 2015, we are going 
to need to work in a coordinated way.
    And that also, I think, includes addressing this issue of 
indirect cause, which the more I learn about it, the more I am 
kind of stunned that these funds are so fungible and have been 
used for things that have nothing to do with making sure kids 
get the nutrition and the things that you and I both care 
about.
    Secretary Duncan. Maybe we are on our honeymoon or on our 
best behavior. But just let me tell you, the group of 
Secretaries are the most sort of humble, low key, down to 
earth, non-ego-driven smart people I have ever seen. And just 
across the board people just want to get things done. So it is 
easy to talk about when you sort of put that into practice and 
build a different culture. But uniformly in every single 
situation, folks just want to make things better for this 
country. And I feel a real unique opportunity to do that in a 
collaborative manner.
    Mr. McGovern. Just one final thing, Mr. Chairman. One of my 
colleagues, who is no longer here, kind of took a slam at the 
D.C. Public School System. My two kids are here in Washington 
with me and they both go to the D.C. public schools. And I want 
to assure you that there are some incredible teachers here and 
some incredible learning going on. There is a lot of 
innovation. So I always try to encourage my colleagues to go 
and visit these schools that they talk about all the time.
    But there is a lot to be proud of here. There is a lot that 
needs to be done, but there are some really good things 
happening here.
    Secretary Duncan. I absolutely appreciate that. I think 
there has been tremendous progress here, with a long way to go. 
But I think there is a great leadership in place: a mayor, 
chancellor, a set of folks that want to see the kind of 
dramatic changes needed. And this is why I would argue 
ultimately, not to go back to another point, but you can't 
voucher out all these kids. It doesn't make sense. You can't 
save 1 or 2 percent and let the other 98 percent sink. We have 
to fix the system. And you have a set of folks in place who are 
absolutely committed to doing that. And we have seen some very 
significant progress recently.
    Mr. McGovern. Thank you very much.
    Chairman Spratt. Mr. Jordan.
    Mr. Jordan. Thank you, Mr. Chairman. Mr. Secretary, I 
appreciate you being here too. I appreciate your commitment to 
students over the years and what you have done in your career.
    My wife is a public school teacher. We are kind of unique. 
We home-schooled our children. I use the term ``we'' lightly. 
She did the work. We home-schooled them until about the fourth 
or fifth or sixth grade. And then they all went into the public 
schools, the same public school we went to. She now teaches 
there at the public school. So we appreciate, again, your 
commitment to education.
    I want to talk a little bit about the choice component. Let 
me just ask you kind of a basic sort of fundamental question. 
Who do you believe is best equipped to determine the best 
educational setting for a student? In the vast majority of 
cases, who do you think is best able to make that decision?
    Secretary Duncan. Their parents.
    Mr. Jordan. Okay. It has been my experience in Ohio--and 
before coming here to Congress, I was in the State house and 
the State senate. Every time a choice element was introduced 
into the system, it was opposed. We started with vocational and 
career tech training. It was opposed by people who just were 
against it. Open enrollment was opposed. Postsecondary option 
was initially opposed. Home schooling was vigorously opposed 
when it first began. Digital and distance learning many times 
were initially opposed. Charter schools were opposed. And now, 
of course, the ultimate school choice.
    We did in our State, the Cleveland Scholarship Program, 
which was challenged at every single level, went all the way to 
the Supreme Court where it was challenged on the establishment 
clause. Because the way it worked was in our State, 612 school 
districts, Cleveland had about the worst, the second-worst 
graduation rate in the State. We did a program to allow K 
through third graders to get a scholarship and attend the 
school of their parents' choice. The challenge was found 
unconstitutional.
    But every single step, there was opposition. And yet what 
we found is that--we had the career tech schools in this week 
talking about the good things they are doing for students.
    So again, I would like to get your general thoughts on sort 
of that timeline and those choice elements that have been 
introduced into education that parents have found to be very 
good for many of their kids. And then your thoughts on the D.C. 
program as well, and just overall your thoughts on school 
choice.
    Secretary Duncan. And obviously it is a big country, so 
this is the local context that is so critical here. I am 
getting to know Alaska a little bit better. And choice is a 
little bit hard there when there are not schools for thousands 
of miles from where you live. So it is all a little bit local.
    But fundamentally within the public school system, I am a 
big believer in choice and competition. And we opened, during 
my time in Chicago, almost 100 new schools. We closed about 60 
schools. And I worry a lot about communities where I would 
argue for decades children and families have been poorly 
served. And I think when we fail to educate, we perpetuate 
poverty and we perpetuate social failure, particularly at the 
high school level. Again, this more where you have 
concentrations of population obviously, so this is maybe a 
little more urban than rural.
    But the more we create a set of great options and let 
children and parents figure out what is the best learning 
environment for them. So I will walk you through some of the 
things we did. We had great math and science academies. We had 
schools that focused on fine performing arts. We had schools 
that focused on the international baccalaureate curriculum. We 
did a lot around vocational education. I think we need to do 
more of that. We have single-sex schools, which is a little 
controversial. We have more military academies than anywhere 
else in the country. That was a little controversial. And what 
was important in all of these is that the children and families 
decided where they wanted to go to school. What was 
fascinating, is just in this past year----
    Mr. Jordan. I introduced a bill back at the State house we 
called Child Centered Funding. The dollars are put on the back 
of that student and they follow that student to wherever his or 
her parents think they are going to get the best education, in 
public, private, home, whatever. Are you opposed to that 
concept?
    Secretary Duncan. I am much more focused on strengthening 
the public school system.
    Mr. Jordan. Let me ask this, because I only have a minute 
here left. In the last question, your response was you can't 
voucher out all the kids, you can't let a few people get out, 
you need to fix the whole system. We all want every school to 
work and every school to give kids a quality education. But 
what we found in Cleveland was--and I used to debate this all 
the time--how bad does it have to get before you let some 
escape and get a quality education?
    In Cleveland we had a 38 percent graduation rate. Does it 
have to be--is that too high? Does it have to be 32, does it 
have to be 20? How bad does it have to get before you give some 
kids a chance at a better chance at the American dream?
    Secretary Duncan. It is a great question. I would argue 
there needs to be massive innovation and massive change well 
before you get to that 38 percent. So I would argue you are 
already too late in that--I don't know--I know some of the 
local context there. But whether it is due to a lack of 
political courage or lack of government structure, whatever it 
might be, that well before your graduation dipped south of 50 
percent, people should have been saying, this is a disaster for 
our children, it is a disaster for our city, we need to do 
something dramatically better. I would argue at that point you 
are already too late to be having that debate.
    Mr. Jordan. My time has expired. Thank you, Mr. Chairman.
    Chairman Spratt. Ms. Tsongas.
    Ms. Tsongas. Thank you, Mr. Chairman. And thank you so much 
for your testimony. I have truly enjoyed it. Before assuming 
this position, I was a dean in a community college. So it is 
great to hear your experience, knowledge and passion for 
education.
    And also I want to thank you for the funding and the 
recovery package. Glad to hear it will be coming out within 30 
to 45 days. Both the urban centers that I represent and the 
suburban communities have really been reeling at the thought of 
the kinds of cuts they were going to have to endure without it. 
So it is wonderful that we are not compromising education as we 
address the challenges we face.
    Secretary Duncan. Let me just be really clear on that 
point. The first set of money will go out in 30 to 45 days. 
More to follow.
    Ms. Tsongas. Right. That is what I meant. And also I 
appreciate the commitment to education in the proposed budget. 
My view of the role of the Federal Government is that it has to 
be a strategic and leveraging partner. It really has to keep 
the pipeline firm by funding at the earliest level through No 
Child Left Behind and at the highest level through the Pell 
Grant and other mechanisms.
    And as a community college dean, I saw that one of the 
major roles we played was remedial for young people coming out 
of our local high schools. We did it with great hesitation, but 
we understood that it was an obligation we had in order to 
prepare our students to be successful not only at the community 
college level, but so that they could go on to a 4-year 
institution and hopefully beyond that.
    So my question: Two of the main critiques of the No Child 
Left Behind authorization of ESEA are that it has placed a 
rigid emphasis on testing and that schools have never received 
sufficient funds to meet its mandates.
    In your testimony you mentioned, quote, improving 
assessments, including assessments for students with 
disabilities, and English language learners to accurately 
measure a student's knowledge and skills as one of your goals. 
I am curious if the complete budget request to be issued in 
April will further illustrate your thoughts on testing and the 
kind of fiscal support you will have so that schools can do 
that without a great disservice to all the other things that 
they are trying to do at the same time.
    Secretary Duncan. Yes. This is another obviously large 
topic that we could spend a couple of hours on. So I will try 
to answer briefly.
    Let me be clear. I think we often over-test. I think we 
need to have a very high bar. I think we should test annually, 
not 15 times a year. I think we need to have great assessments, 
helping students and teachers understand those child's 
strengths and weaknesses along the way. So what you get on a 
test in May or June should be no surprise, that you have had 
real clear benchmarks and real clear information so that 
teachers and parents and students can understand these are my 
strengths and these are my weaknesses and this is what I need 
to do to improve.
    So it is not about testing. It is about having really high 
standards, a clear bar and great data, and great evaluation 
along the way so that we can help those students continue to 
improve.
    As we go into NCLB reauthorization, I think we should not 
just look at testing. I think we have to look at outcomes, 
graduation rates. And I have argued that if your State or your 
district has the best third grade test scores in the world, and 
50 percent of your students are dropping out, or, in 
Cleveland's situation, two-thirds of your students are dropping 
out, those third grade test scores--you are not changing 
students' lives. So we have to really look at how we continue 
to increase high school graduation rates and also college 
graduation rates.
    I think ultimately, in an ideal world--and it will take us 
some time to get there--in an ideal world, the community 
colleges and the universities would get out of the remediation 
business. The students graduating from high school would have 
the skills to just step in and be successful.
    Now, it is going to take us some time to get there. I want 
to measure our ability to make progress towards that point. And 
I also think there is a huge differentiation in the quality of 
the remediation. And for those students that do need additional 
help, how do we do that in a more thoughtful and targeted 
manner? So there are some things we need to do in the short 
term, but the endgame should be to get out of the remediation 
business.
    Ms. Tsongas. Another quick question. I am running out of 
time. But science, technology, engineering and math are fields 
that women are not really entering into at the same level as 
young men. And I hope you are giving some thought to how to 
encourage young women to enter these fields so that they can be 
successful, given that that is where much of our economy is 
going to be heading.
    Secretary Duncan. That is a great question. If we can get 
more of our female teachers to go into math and science and 
create some incentives, the more our young girls have mentors 
and role models they can look up to in class and see in these 
fields, I think that will start to encourage them.
    Ms. Tsongas. Thank you.
    Chairman Spratt. Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair. And thank you so much 
for being here. This has been just fascinating for me. And I am 
very, very excited about the way we are moving forward.
    President Obama in his budget, he stated clearly that 
students--and I quote him--must achieve high standards in order 
to be successful in this global economy. And you stated March 
10th in excerpts from a speech that I read--to quote you--it is 
time to prepare every child everywhere in America to outcompete 
any worker anywhere in the world. And so focusing on our 
economy and our ability to succeed in the world and for 
children to have a bright economic future is important too. And 
then you go on to say in your remarks on March 10th that 
America's entire education system must once more be the envy of 
the world. And we were and we aren't anymore.
    So I am here to talk with you about how we can do that 
together. So my basic question is, how do we get there? I 
supported the goals of No Child Left Behind. I voted against 
it. In fact, I was one of only a few members in the policy 
committee who voted against it; and the Minnesota delegation, 
which I represented, after I spoke to them we voted against it, 
except for one member. So it wasn't that we didn't want 
children to move forward. We had done some reform in Minnesota. 
We knew it was expensive. We knew that you had to have 
measurable outcomes. We were interested in helping the child 
and not helping testing companies.
    So what we have now with No Child Left Behind are standards 
that are not comparable. They include high-stakes tests that 
punish school districts and schools, States and schools that 
have high standards. In fact, we will have all of our schools 
in Minnesota at some point not making adequate yearly progress 
because of the high-stakes testing.
    And to quote from you again from March 10th, you say let us 
challenge our States to adopt the world-class standards that 
will bring our curriculums into the 21st century. Today's 
systems of 50 different sets of benchmarks for academic success 
means fourth graders in Mississippi are scoring nearly 70 
points lower than students in Wyoming and they are getting the 
same grade. Eight of our States are setting their standards so 
low that their students may end up on par with roughly the 
bottom 40 percent of the world.
    So, Mr. Secretary, as you pointed out, we are one of the 
few countries in the developed world that doesn't have national 
standards. And so we are finding ourselves being consistently 
outperformed by countries that do have national standards and 
assessments. And I agree with you: Local control on how to 
reach those standards and how to reach those assessments is the 
right way to go.
    So I want to hear from you what we need to do to partner 
with you to make sure that every child moves ahead. But I would 
like to also ask you to think about our Native American 
children. I know it was without any deliberate intent or any 
thought of malice at all when you were speaking about minority 
children who are left behind. Native American children weren't 
mentioned. So I want to give you a chance to address that. It 
was brought up a little bit with Impact Aid.
    But the schools that I have attended around this country 
that are supported by the Bureau of Indian Affairs--I am 
embarrassed as an American to be in there. And I want to work 
with you so that those children know that they are respected, 
honored and cherished. With that, I am ready to listen.
    Secretary Duncan. I am going to turn to the second half 
first and then come back on the larger point. Part of what I 
want to do and which I have never done--and so it will be a 
real learning experience for me--is to visit some of the 
schools on tribal lands. And I am actually working with my 
staff now to develop a list. And that is very important to me. 
And we obviously had a small Indian population at home in 
Chicago, and I was fortunate enough to work very closely with 
them.
    But I think I have a big learning curve in that area. So I 
look forward to visiting with you and others. I am pretty clear 
in my head that we need to do a lot better than what we are 
doing, but I need to better understand what those challenges 
are and how we help to give every child a real opportunity. So 
that is a commitment I will make to you. And we are actually 
starting to schedule some of those visits as we speak. So that 
is a starting point.
    On No Child Left Behind, one other thing we haven't talked 
about as we go through reauthorization and I am very interested 
is in looking at growth and gains, not just absolute test 
scores. And I worried a lot about schools that were actually 
improving and they were being labeled as failures. And what I 
always said is that if a school goes from 20 percent of kids 
reading at grade level to 50 percent in a year, they are 
probably cheating. It is very hard to do that. But if a school 
goes from 20 to 24 to 28 to 31 to 36, particularly in tough 
communities, that is a Herculean achievement. That is the 
hardest work in education today, is how you make steady 
progress over time in tough communities.
    So we need to find a way when schools truly are failing and 
when dropout rates are 75 percent or whatever they might be, we 
need to draw a line in the sand and say that is unacceptable 
and dramatically challenge the status quo and do something 
very, very different.
    The flip side is where schools are getting better and 
making progress, and making real progress and not phony 
progress. We have to do everything we can to incentivize, to 
encourage, and to learn from what they are doing.
    And I think what No Child Left Behind was what I call a 
``blunt instrument.'' It had these broad categories and there 
was tremendous variation within those categories. Some of those 
stories were actually very positive. Some of those stories were 
negative. But they were sort of all lumped together. And the 
reality was much more complex.
    So this is very hard, given 100,000 schools in a big 
country. But how we create something that more finely 
understands, instead of metrics, that really focuses on--if you 
put schools in three categories--where you have extraordinary 
success, I think we need to be replicating those schools and 
doing more of them. If you have a set of schools in the middle, 
we need to help drive progress and help them continue to grow. 
If you have a small set of schools at the bottom that are not 
only low-performing but getting worse, where things are going 
south, I think we need to come in and do something dramatically 
different.
    As we go into NCLB reauthorization--and I think we need to 
come up with another name for it. I think the NCLB brand is 
toxic. I think I will try to find some great fifth graders or 
sixth graders to help me come up with a name that is much more 
aspirational and inspirational than the current name. We are 
going to come back with something that is a better and more 
honest and more comprehensive evaluative tool, and then our 
responses should be to do more of it, to support it or to do 
something dramatically different.
    Ms. McCollum. Thank you.
    Chairman Spratt. Mr. Andrews.
    Mr. Andrews. Thank you, Mr. Chairman. Mr. Secretary, it is 
great to see you. Welcome to the Committee. And, Mr. Skelly, 
thank you for your years of expertise in education finance. It 
is great to see you here as well.
    Secretary Duncan. We have got a great team that have done a 
phenomenal job. We are lucky to have him.
    Mr. Andrews. You do. Among the many refreshing changes this 
President has brought to the capital is the change where he has 
not only announced lofty ideals, but he has talked about ways 
to pay for those ideals and goals without borrowing money. And 
in energy, he has made proposals that are quite controversial 
about energy taxes and cap and trade. In health care, he has 
made very specific proposals about how to pay for his health 
care funds. And here in education, in higher education, he has 
announced the very lofty goals for higher education, but made 
the refreshing step of talking about how to pay for it. And I 
know that step is controversial in the switch to Direct Loans 
from the bank-based loans.
    The argument that I know you will hear from people who 
support the bank-based loans is that the bank-based loans are a 
way of attracting private capital to fund the education of 
students. But it is my understanding that in part because of 
the present financial crisis, that that is not the way the 
system is working now at all. As I understand it, about 60 
percent of the so-called private capital that is going through 
the bank-based system is directly from various facilities of 
the Treasury Department and/or the Federal Reserve, and the 
other 40 percent is subject to a guarantee that the government 
will buy those loans in a secondary market. This means we are 
not only removing the default risk to the tune of 94 percent, 
because of the default guarantee, but we are also removing the 
liquidity risk by offering to buy the loans altogether.
    So to what extent would you characterize these bank-based 
loans as truly risking private capital? And to what extent 
would you characterize them as saying that we are simply 
rewarding private institutions to risk our capital?
    Secretary Duncan. The program was actually on life support. 
So it is not that we are doing away with this thing. It just 
wasn't working in the current market. And you are exactly 
right; we were basically subsidizing banks. And I would rather 
take those billions of dollars and give significantly more 
money to more children who desperately need to go to college 
and whose families have never been under more financial duress. 
I would rather plow those billions of dollars into our young 
people and give them a shot at college.
    Mr. Andrews. And it is my understanding, Mr. Secretary, 
that there still would be a quite robust role for private 
enterprises on a competitive basis to engage in what they do 
best, which is the servicing of these loans; is that right?
    Secretary Duncan. Yes. And that is not a business we want 
to be in or are any good at. There are great providers out 
there. And as I said earlier, we have a current RFP out on the 
street. We had six great respondents. We want to have great 
competition to make sure that those borrowers are getting great 
service. And the private sector is much better equipped to do 
that than we are and we want to see that continue to grow 
further.
    Mr. Andrews. So to those who would argue that this program 
would result in the loss of a lot of jobs, I would assume that 
the rejoinder would be that, no, those who are providing jobs 
in the servicing sector will actually have more opportunities 
to do so on a competitive basis.
    Secretary Duncan. That is exactly correct. And over time, 
you want to give more business to those who are doing a great 
job and really have a series of metrics to measure customer 
service, and, through a competitive marketplace, use the 
private providers to do the right thing.
    Mr. Andrews. And I also understand that the fruits of this 
effort will be a guaranteed Pell Grant rather than one subject 
to the whims of the political marketplace, and also a very 
robust expansion of the Perkins loan, the campus-based loan, as 
well as an incentive program to encourage States to figure out 
ways to keep people in college who start.
    Secretary Duncan. That is exactly right. And again the 
chance to put billions of dollars out to children and families 
who desperately need it, serve millions of more children and 
families we think is extraordinarily important. And we want to 
become much more creative again not just in sending students to 
college, but having States think about how we drive up 
completion----
    Mr. Andrews. Again, what I appreciate is that unlike so 
many others who come here before, this Administration not only 
has really good ideas, but it offers to pay for them without 
borrowing money from the future. That is a controversial thing 
to do, as you are about to experience in this loan debate. But 
what a change. I mean, we have been living on borrowed money 
here for a very long time. The President has proposed health-
care reform and paid for it. He has proposed a reduction in our 
carbon footprint and a move to alternative energy, and paid for 
it. And he has proposed this sweeping initiative for higher 
education and paid for it. I commend you for that.
    I know the Committee looks forward to working with you on 
implementing it.
    Secretary Duncan. The President and his budget team I think 
have done a remarkable job on this, and our internal team in 
the Department has worked very, very hard to do the right thing 
by our Nation's families.
    Mr. Andrews. I would just recommend that if you are going 
to rename No Child Left Behind, don't ask school 
superintendents and teachers, because it would come up with a 
name not suitable for family consumption. So I would not ask 
them.
    Secretary Duncan. I will stick with our children.
    Mr. Andrews. Thank you.
    Chairman Spratt. Mr. Bishop.
    Mr. Bishop. Thank you, Mr. Chairman. And, Mr. Secretary, 
thank you for your testimony and your efforts thus far. Let me 
start by commending both you and the President for the budget 
proposals that you have made to us. I think one of the most 
powerful messages contained in the budget is that even in tough 
times, we need to invest in education. And, in fact, if we do 
invest, that investment will lead us out of tough times and 
into better times. Particularly with reference to what we have 
experienced in the recent past, that is a most welcome 
commitment on your part, and I thank you for that.
    The budget includes four, I think for the most part, 
positive proposals with respect to higher education. I want to 
focus on two of them in the time that I have.
    The first is the Perkins loan suggestions. And I am not 
sure whether this is going to be for you, Secretary Duncan, or 
for Mr. Skelly. But, Mr. Skelly, if I heard you correctly when 
Mr. Spratt asked you about how the Perkins loan program was 
going to work, I believe you indicated that the loans would be 
originated by the Federal Government.
    And what I want to clarify, because of both what I have 
read and of conversations I have had with your colleagues in 
the Department, it is my understanding that the program will 
remain a campus-based program. The funding mechanism will be 
different, but the judgments with respect to who receives the 
loans and in what amounts will be made by the financial aid 
officers of the participating colleges. Is my understanding 
correct?
    Mr. Skelly. That is right, Mr. Bishop.
    Mr. Bishop. So the funding mechanism is the principal 
difference between the Perkins loan program as we know it now 
and the loan program as it will exist.
    Mr. Skelly. That is right. There is a slight difference for 
the students. It is still 5 percent loans, but they would not 
be subsidized while the students are in school.
    Mr. Bishop. Understood.
    The second piece of it is, I am assuming that with a growth 
in loan volume on an annual basis from about a billion dollars 
a year to about $6 billion a year, as I understand it, there 
should be no losers here. In other words, that the level of 
lending for schools that have been in the Perkins loan program 
for a long, long time should remain at least at that level, if 
not be higher. Is that a reasonable assumption?
    Secretary Duncan. That is absolutely correct. And again, 
the big goal is to add over 2 million more students and to go 
from 1,800 universities to 4,400 universities. But those 
universities currently in the program will not be losing 
resources. This is not a zero-sum game. This is increasing the 
pie, which is so critically important today.
    Mr. Bishop. And this is perhaps a very technical point. But 
my further understanding is that in reclaiming the loan funds 
to fund the $6.5 billion that will be recovered over 10 years, 
schools that have a deficit in their cancellation funds will 
have that deficit covered by virtue of a credit against what is 
reclaimed; is that correct?
    Mr. Skelly. That was the proposal we started with, yes.
    Mr. Bishop. All right. Thank you for that.
    And then I guess the last question on Perkins is how do you 
foresee the formula working going forward? I mean, how will it 
be determined what the level of lending will be for both the 
schools that currently participate and the 2,500 or so new 
schools that we hope to bring into the program?
    Mr. Skelly. That is something that the Administration has 
to work out with you in Congress.
    Mr. Bishop. Okay. Thank you. I am glad that Congress will 
have a role in that.
    One suggestion that I would make, by the way, is that we 
not lose sight of the institutional match that currently exists 
in the program. It is a way of leveraging additional Federal 
resources with institutional resources. And you may want to 
think about tying the match to the institutional student aid 
discount rate. The higher the discount rate, the lower the 
match. So I would urge you to think about that.
    The second issue is the retention fund, which again I think 
is a great idea. How do you see that going forward? What I have 
read is a partnership between the State and the Federal 
Government. Do you also see money flowing to individual 
colleges?
    Secretary Duncan. It has to, yes. The money has to flow 
from the States to the colleges. So absolutely. To me it is 
similar to what we are trying to do in the K to 12 and the 
early childhood world, which is let's scale up what works. Some 
universities are doing a great job of this and some aren't. I 
think people haven't talked about this enough. You see 
tremendous disparity in outcomes among universities where 
students are entering with very similar academic backgrounds. 
Some places are doing a phenomenal job of this; some places 
aren't.
    So how do we again encourage and do more of what is 
working, and how do we challenge some universities to think 
very differently about outcomes?
    Mr. Bishop. I thank you for that. I think it is an absolute 
move in the right direction. I thank you for that. Thank you 
both. My time has expired.
    Chairman Spratt. Thank you, Mr. Bishop. Mr. Schrader.
    Mr. Schrader. Thank you, Mr. Chairman. I have several 
questions, I guess. Maybe this was asked while I stepped out of 
the room for a few minutes. But the ramp-up in the special 
education money and the Head Start money that ostensibly goes 
away in a couple of years, has the Administration thought about 
how to deal with that?
    Secretary Duncan. Yes, I have thought a lot about it. A 
couple of things: at the end of this, we can't have tails, so 
this is one-time spending; and there will be some belt-
tightening at the back end.
    Part of my thinking on the special education money is that 
there is a huge opportunity to really help train regular 
education teachers how to better work with special education 
children, and that today almost every teacher needs to be a 
teacher of special education. So I think there is a huge 
opportunity to help train thousands of teachers how to better 
work with students with disabilities, which will have dividends 
for years once the dollar amount is not there.
    Mr. Schrader. I just would hope the school districts 
wouldn't be penalized if they have that level of investment, 
courtesy of the Federal Government, and then the Federal 
Government withdraws those funds and they are supposed to 
maintain that level of investment. That might be difficult.
    Secretary Duncan. Again, this is really one-time spending 
to make dramatic long-term changes.
    Mr. Schrader. We will see if we can have a different 
opportunity to help you with that. I really like what you are 
talking about with your commitment to early childhood and 
integrating the system. And we have tried to do that in my home 
State of Oregon with varying degrees of success, given the turf 
issues that invariably rise.
    I liked your comments about working with HHS and would urge 
you as part of your incentive program to incentivize 
opportunities for sharing services, so these children aren't 
visited by three or four people where you can have cross-
training across human services and educational areas. And I 
really urge you to be extremely creative because this is a huge 
opportunity to save a lot of money and, again, get more kids 
served with the savings that result.
    Secretary Duncan. I appreciate that. And again 
philosophically, it is just so critically important that at a 
time of scarce resources, we have to do the right thing by 
children. So whether it is at the Federal level or the State 
level or local level, how do we work differently and better? 
And if we are duplicating services and wasting resources at a 
time when no one has enough money, that is crazy and it poorly 
serves children. So we all have to challenge each other to work 
in very different ways together.
    Mr. Schrader. Also you mentioned incentivizing completion 
rates in college. I think that is absolutely critical. And I 
really commend the Administration for coming up with that. In 
most States, you get paid for students to walk in the door, not 
to go out the door, unlike England and some more other creative 
jurisdictions. And this to me is absolutely essential. After 6 
years, most colleges graduate maybe 50, 60 percent on a good 
day. And that is an abysmal rate of graduation. I would like to 
see----
    Mr. Skelly. Only 25 percent.
    Mr. Schrader. 25. Oh, well, I am feeling good then back in 
Oregon. But we have got to do better. We have got to do much, 
much better. I would urge you to put at least this much, maybe 
more in to encourage good behavior, if you will, on the part of 
our institutions.
    And I will just make one quick comment. It has been my 
observation that most colleges are still operating in the 1960s 
mentality where the middle class goes to college, hopefully 
they pick up the pearls of wisdom that drip from the 
professors' mouths and hopefully they graduate. That is the 
students' responsibility. And I like some personal 
responsibility in there.
    But with the advent of the new culture where we are trying 
to get low-income students to go to college--everyone should be 
able to go to college--I think we have to change the culture of 
these institutions. Perhaps it is with monetary incentives to 
make sure that everyone, everyone in this country has a chance 
to succeed and graduate.
    Secretary Duncan. Again, if you go back to the President's 
challenge to all of us to dramatically increase college 
graduation rates, we have to think differently. And again, I go 
back to my previous experience in Chicago. We had a lot of 
universities there. You saw some that did a remarkable job of 
working with students who are the first generation going to 
college and graduating from high school, and we saw others who 
didn't. And we became pretty skilled at steering kids towards 
those schools that we were confident they were going to 
graduate and, frankly, steering them away from universities 
where we didn't see that same commitment.
    And I think we have to be much more transparent on the data 
and really, again, encourage best practices in folks that 
haven't done enough in this area, really encourage them to 
start to think about that.
    Mr. Schrader. I hope to re-up this 5-year program 5 years 
from now.
    Last comment if I may, Mr. Chair. That is it. I also want 
to put on record, I really approve of the mandatory aspect of 
the Pell Grant program. In my State, we sort of stepped up 
after being a horrible State in terms of helping students with 
student aid. And basically partnering with the Pell Grant 
levels, guaranteed students that work at a minimum-wage job, 
part-time during the school year and maybe more full-time 
during the summer, that they will get a college education and 
they will graduate with almost no debt. So I really commend 
your efforts and appreciate your hard work there. And keep it 
up.
    Mr. Skelly. Mr. Schrader, it is 50 percent of the folks 
that graduate after 6 years on average. It is only 25 percent 
of the low-income folks that finish in 6 years.
    Mr. Schrader. Then we are average. Thank you.
    Chairman Spratt. At long last, the gentlelady from 
Connecticut, Ms. DeLauro.
    Ms. DeLauro. Thank you very, very much, Mr. Chairman. And 
thank you very much, Mr. Secretary. I am delighted to be here 
with you. I had a daughter who at one point in her career was 
deputy at the Chicago Housing Authority, and so I spent a lot 
of years going back and forth there. And you have got an 
incredible reputation for the work that you have done in 
Chicago--not an easy task, did but you did it and you did it 
well. And we are delighted to have you. And I am proud to work 
with you.
    I guess what comes with being the person with the last set 
of questions and that, of course, is due to my time of arrival 
in this madhouse. As I said, I was listening to my colleague, 
Mr. Bishop, on Perkins loans, so the explanation is there; Mr. 
Doggett on early childhood, which is an area that I care deeply 
about and where I want to pick up, because I chair the 
Appropriations Subcommittee on Agriculture and the Food and 
Drug Administration; as well as sit on Labor, Health Human 
Services and Education Subcommittee, so we have a lot of tie-
ins here.
    And this afternoon, very shortly, I have a hearing on 
nutrition, talking about the child nutrition programs, school 
lunch, school breakfasts, et cetera, that we foster at the 
Federal level. And so what I am going to do is to ask a couple 
of questions in that vein, if you don't mind, Mr. Chairman, 
because I know a lot of the education questions have been 
answered.
    I want to work closely with you and Secretary Vilsack on a 
nutrition policy. This is about, I think, as serious an issue 
as we face. And it is just not the Department of Agriculture; 
it is the Department of Education as well. We spend about $780 
million on nutrition education today, and about 95 percent of 
that is going to State agencies; it mostly goes for the Food 
Stamp and the WIC program. About $19 million goes to schools. I 
don't know if you know that. I am not going to put you on the 
spot and ask you about that, but I want you to take a look at 
the nutrition education in your school systems and to get a 
sense of what that is about. And $19 million doesn't sound like 
a lot of money to me in terms of that expanse.
    What is going to happen in schools on what they call the 
competitive foods? That is outside of school lunch, school 
breakfast. Kids are in school, you know, after-school programs 
during the day; what are they picking up in terms of foods and 
beverages that contribute to calories?
    And in reading up on this for this hearing, you have got a 
Washington Post article, last May, which says 3 decades ago the 
Agriculture Department tried to ban chips, cookies and soft 
drinks from schools. Anyway, that was thwarted by the courts 
and by food companies. And so, again, it is a question I am 
going to raise today with the folks at FNS. Are we willing to 
look at mandatory standards with regard to food and nutrition 
in our schools?
    Secretary Duncan. We banned the junk food and the soft 
drinks in Chicago and took some heat for it.
    Ms. DeLauro. Yeah, exactly. And you are taking heat from 
parents, from, you know, outside organizations, et cetera. But 
I would love to see the statistics from your school on what has 
happened with that.
    Secretary Duncan. We took heat not just from the vendors, 
but actually it is a little bit hard on the schools themselves, 
because they got some of the profits back and our schools are 
really hurting for money, so I was taking money away from my 
own schools. That was a hard thing do.
    Ms. DeLauro. Well, but that is something to be calculated 
as to what we are doing in terms of the funding, because the 
trade-off, quite frankly, is devastating. And I don't have to 
tell you that in terms of what is happening with health. You 
mentioned obesity, but you are talking about diabetes, you are 
talking about cancer, you are talking about heart difficulties.
    So there are a couple of questions about reauthorizing the 
child nutrition program. And if you can't do it today, I would 
like to get the benefit of your views as to what we ought to do 
on the reauthorization of that program as it pertains to our 
schools. The question that I think that we have to come to 
grips with here is, are our policies contributing to poor 
nutrition and obesity? What should we be doing to change it? 
What about marketing and advertising? Can we exercise control 
and influence on marketing to our children--you know, we did 
that with cigarettes--and what are the areas? And I think that 
the Department of Education has as much of an interest in all 
of this, and quite frankly ought to be very, very much involved 
in it, as well as the Department of Agriculture.
    Secretary Duncan. I appreciate your thoughtfulness and 
commitment on this. This is an area, like many others, where I 
think we can get a lot better.
    Chairman Spratt. Mr. Secretary, I told you on the telephone 
your reputation preceded you. It really didn't do you justice. 
You made a very impressive showing today not only as to the 
details of these programs, but as to your fervent passion for 
seeing that they work better.
    And to have Mr. Skelly sitting beside you there is a good 
combination of a fresh new approach and an old hand with 
institutional memory and corporate knowledge. It is a great 
team, and we want to help you succeed at what you have 
undertaken to do. We believe very much that it is absolutely 
essential to the future of this country.
    So thank you. Thank you for your commitment and your 
excellent presentation today.
    Secretary Duncan. Thank you so much for the opportunity.
    I would like to thank my staff behind me, as well as back 
in the office working hard. We have got an extraordinary team 
that really wants to make a difference. And working with you, I 
think we can do something special in the years ahead.
    Chairman Spratt. Thank you. You are absolutely right.
    I ask unanimous consent that members who did not have the 
opportunity to ask questions today have 7 days to submit 
questions for the record. Without objection, so ordered.
    [The information follows:]

      Responses to Questions for the Record From Secretary Duncan

             questions submitted by congressman allen boyd
Supplemental educational services
    Mr. Boyd: Mr. Secretary, how does Title I's Supplemental 
Educational Services (SES) program fit into the Administration's plan 
to support ``innovative and effective strategies to improve 
achievement?''

    Secretary Duncan: I believe that extended learning time--longer 
school days, longer school years, or increased tutoring opportunities--
can make a big difference in improving student achievement. In my time 
with Chicago Public Schools, I saw how providing high-quality, expanded 
learning opportunities, such as effective tutoring, can support this 
goal. This is one reason I worked with the Department of Education, 
when I was Superintendent in Chicago, to win the flexibility to allow 
Chicago Public Schools to continue serving as an SES provider even 
after the district was identified for improvement. We were able to 
offer services to more students at lower cost than other providers, and 
these services helped improve the achievement of our students. I want 
to give other school districts identified for improvement this same 
opportunity, which is why I am proposing to repeal the regulatory 
prohibition on identified districts and schools serving as SES 
providers. States still would have the authority to make determinations 
about SES providers based on their approval criteria, including an 
examination of a provider's demonstrated record of effectiveness. But I 
don't want to rule out any potential providers of high-quality SES 
because this kind of extended learning can really help students and 
schools.
Administrative capacity to expand direct loans
    Mr. Boyd: Mr. Secretary, is the Department of Education ready to 
scale up the Direct Loan program to cover all students, since it 
currently covers only about 35 percent of loan volume?

    Secretary Duncan: Yes; the most important and labor-intensive part 
of student loans is loan collection, or ``servicing.'' The President's 
proposal taps the private sector--the current participants in FFEL--to 
expand our administrative capacity for both an expanded Direct Loan 
program and FFEL loans sold to the Department under programs authorized 
under the Ensuring Continued Access to Student Loans Act. We will use 
competition to ensure excellent service at a fair price to taxpayers. 
The Department has already issued a request for proposals to expand our 
loan servicing capacity by bringing on the best private-sector student 
loan servicers. Direct Loans will continue to be delivered through 
schools in the same way Pell Grants are delivered--through an 
electronic process run by another private sector company.
            questions submitted by congressman jim mcgovern
Public television stations' role in education
    Mr. McGovern: Secretary Duncan, I was pleased to hear that 
integrating technology into classroom instruction is an important part 
of the Administration's agenda because I do believe that it can have a 
profound impact on student achievement. As you may know, our public 
television station in Massachusetts, WGBH, has been a leader in this 
field. It has leveraged the station's high-quality educational content 
by creating ``Teachers' Domain,'' an on-line service where standards-
aligned video and audio clips are offered to teachers to incorporate 
into lesson plans, free of charge. To me, this seems like exactly the 
sort of resource your Department may be seeking. I would appreciate 
knowing how non-commercial, educational stations like WGBH and others 
will fit in with your agenda, especially given their long track record 
of partnering with local school districts. Can you please describe for 
me how these programs can strengthen your education agenda and how you 
intend to incorporate them?

    Secretary Duncan: President Obama and I share your enthusiasm for 
leveraging innovative new technologies to improve student achievement, 
enhance teacher professional development opportunities, and improve 
teacher classroom practice. The Administration also encourages local 
schools to foster partnerships with community-level institutions, 
including non-profit public television stations like WGBH, which will 
enable them to take full advantage of the rich array of learning 
opportunities that are available in most communities.
Ed program competitions to which non-profit public telecommunications 
        entities may apply
    The Department administers a number of programs that support 
competitions for which non-profit public telecommunication's entities, 
such as WGBH, may apply, and that support the on-going efforts of such 
entities to develop educational resources that may enhance educational 
outcomes for children. These include:
     The Ready to Learn Television program supports the 
development and distribution of educational television programming 
content and related materials for preschool children, elementary school 
children, and their parents that are intended to improve school 
readiness and academic achievement.
     The IDEA Part D Technology and Media Services program 
supports competitive awards for research, development, and other 
activities that promote the use of technologies in providing special 
education and early intervention services. Funds also are used for 
media-related activities, such as providing video description and 
captioning of films and television appropriate for use in classrooms 
for individuals with visual and hearing impairments and improving 
accessibility to textbooks for individuals with visual impairments.
    I strongly encourage public television stations to apply for 
competitive grants funds as new Department of Education grant 
competitions are announced in the Federal Register.
Federal funding of IDEA and Recovery Act funds
    Mr. McGovern: When I meet with my superintendents, principals, 
school board committees and mayors, they all want to know when the 
Federal Government is going to pay the full Federal share of the 
Individuals with Disabilities Education Act--or IDEA. We are a long way 
from providing the 40 percent Federal share. The Recovery Act provided 
a big boost of $12.2 billion in additional IDEA funding, but what 
happens to schools and students in 2010 when that money goes away. What 
is your goal for Federal funding for IDEA?

    Secretary Duncan: The Administration is committed to helping States 
and local school districts appropriately meet the needs of children 
with disabilities.
    We do not regard the IDEA American Recovery and Reinvestment Act, 
or Recovery Act, funds as an initial step to full funding of the IDEA. 
We regard the $11.7 billion available under the Recovery Act for IDEA, 
Part B programs--Grants to States and Preschool Grants, as a one-time 
increase to address the significant problems the States and districts 
are having because of the economy. We hope the IDEA Recovery funds will 
be used to prevent lay-offs of teachers and to maintain high quality 
services for children with disabilities, and that they will not be used 
in ways that result in unsustainable continuing commitments after the 
funding expires.
    We also hope that the IDEA Recovery funds will be used, where 
feasible, for short-term investments that have long-lasting benefits to 
children with disabilities such as intensive professional development 
for teachers that focuses on putting into place evidence-based 
strategies for improving instruction in reading or providing for 
positive behavioral supports, or developing the capacity to use data to 
improve teaching and learning.
    We have already distributed 50 percent of the IDEA Recovery Act 
funds to States, but do not plan to distribute the remaining funds 
until the fall. Moreover, the IDEA Recovery funds are available for 
obligation by the States and districts through September 30, 2011. 
Because of the availability of other IDEA funds during the same period 
and the size of the supplement provided under the Recovery Act, we 
expect that the Recovery funds will be there to help meet the needs of 
districts over the next 2 school years, that is, through school year 
2010-2011. We expect States and districts to have billions of Recovery 
Act IDEA funds at their disposal, in addition to the IDEA funds 
appropriated in FY 2010, for use in the 2010-2011 school year.
    While I cannot speak to future budget policy for special education, 
my goal is to help ensure that all Federal education funds, including 
those provided under IDEA, are used as effectively as possible to 
improve educational results for children.
            questions submitted by congressman bob etheridge
Professional development for teachers and principals
    Mr. Etheridge: Thank you Mr. Chairman, and thank you Secretary 
Duncan for joining us. As the former Superintendent of Schools in North 
Carolina, I have long held the belief that education is the key to 
success. I believe that the single most important investment we can 
make in our country is in the future of our young people, and I am 
excited about many of the investments that this budget makes in 
education.
    Quality teachers are very important to the quality of education in 
our school systems. I believe that improving the quality of our 
principals is also crucial. In traveling around the State as 
superintendent, I often noticed that the best schools had the best 
principals. In North Carolina we now have an Academy that serves to 
increase the training and expertise of our school principals throughout 
the State. Are there provisions in the budget that provide for 
upgrading the quality of our principals; and how does the Education 
Department plan to implement new proposals?

    Secretary Duncan: President Obama and I share your enthusiasm for 
improving principal quality, and the Administration's budget reflects 
this priority. While I cannot share details on the President's fiscal 
year 2010 request until they are released on May 7, the Department 
administers a number of programs that support State and local efforts 
to recruit, train, and retain high-quality school leaders. These 
include:
     Improving Teacher Quality State Grants helps States and 
school districts strengthen the skills and knowledge of teachers and 
principals. This program supports recruitment, professional 
development, and induction programs and other strategies to ensure that 
our Nation's high-poverty schools are staffed with fully qualified 
teachers and principals who are prepared to help all children succeed 
academically.
     The Teacher Incentive Fund provides States and LEAs with 
support to develop and implement systems to attract and retain highly 
qualified individuals in school principal positions, to align principal 
pay with performance, and to allow principals to share in bonuses that 
go to other staff in high-performing schools. Each TIF project must 
include a focus on principal incentives.
     School Leadership provides grants to recruit, train, and 
support principals and assistant principals in high-need school 
districts.
     For some years the Indian Education Professional 
Development program has funded the Administrative Corps Initiative to 
train qualified Indian individuals to become school leaders.
     Teacher Quality Partnerships, as recently reauthorized by 
the Higher Education Opportunity Act, includes as one component grants 
to develop and implement effective school leadership development 
programs. These programs will provide potential school leaders with 
skills in using data, creating a school climate conducive to 
professional development, understanding the teaching and assessment 
skills needed to support successful classroom instruction, managing 
resources and time to improve academic achievement, engaging and 
involving parents and other community stakeholders, and understanding 
how students develop in order to increase academic achievement. Grant 
funds must also be used to develop mentoring and induction programs for 
new school leaders, and programs to recruit qualified individuals to 
become school leaders.
    In developing the fiscal year 2010 request, the Administration 
looked closely at how these programs would help support attainment of 
our objectives.
Carl D. Perkins Career and Technical Education Act request
    Mr. Etheridge: I am proud that in addition to our university 
system, North Carolina has a strong community college and career and 
technical education system in place. Across the country, enrollment 
continues to increase in secondary and postsecondary education, and 
there is a direct link to these students and jobs in infrastructure, 
energy sustainability, health care, and other areas where we need to 
grow our economy. In this economic downturn, training and opportunities 
for retraining are more important than ever. How does the Carl D. 
Perkins Career and Technical Act fit into your prepared budget and will 
there be a recommendation to restore and increase funding since it is 
currently $42 million below the level appropriated in FY 2002?

    Secretary Duncan: While I can't discuss the details of our budget 
request until the President releases it on May 7, career and technical 
education (CTE) programs will be part of the Administration's strategy 
for improving the quality of high school education around the country 
and for preparing high school students to enter the workplace or pursue 
postsecondary education. CTE students need to acquire skills for both 
work and postsecondary education during their high school years, and 
secondary CTE coursework is not the end of formal career training for 
many students. Data from the National Center for Education Statistics 
(NCES) show that students who take CTE courses in high school are 
likely to pursue some postsecondary education in their lifetime.
    In addition, CTE programs are not the only source of funding for 
adult learners who are interested in acquiring or upgrading job-related 
literacy or career skills. The Administration's budget request will 
also include funding for Adult Education State grants.
College Foundation of North Carolina
    Mr. Etheridge: The President's education budget for FY 2010 ends 
the Federal Family Education Loan Program, instead moving all loans to 
the Federal Direct Loan Program. For the past 40 years, the College 
Foundation of North Carolina has assisted over 550,000 NC students and 
families with college loans, not just servicing these loans but 
providing support, advice, and access to college for those in need. In 
this economic downturn, these services are more important than ever, 
and in North Carolina the College Foundation provides hundreds of jobs 
as well.
    If the President's proposal is enacted, what steps would the 
Department of Education take to preserve the good things being done by 
organizations like the College Foundation of North Carolina?

    Secretary Duncan: With the credit crunch and the loss of 
outstanding loans being sold to the Department under the Ensuring 
Continued Access to Student Loans Act, many student loan agencies are 
struggling to make ends meet. This threatens their ability to continue 
to conduct outreach to students and families about college and 
financial aid. The Obama Administration's budget includes $2.5 billion 
over 5 years to allow States to continue the information and access 
efforts of their student loan agencies, as well as to fund innovative 
efforts to promote college completion. I look forward to working with 
Congress to ensure that we tap the expertise and experience of agencies 
like the College Foundation of North Carolina to ensure that students 
and families have the information and assistance they need to plan and 
prepare for college.
Fund for access and completion
    Mr. Etheridge: The President's budget also contains $500 million 
for State grants to increase access to college. Could this funding be 
used to ensure State Educational Assistance Agencies are able to 
continue helping students go to college?

    Secretary Duncan: Yes, States could use the proposed Fund for 
Access and Completion to continue to support outreach and access 
activities.
              questions submitted by congressman paul ryan
Proposed changes to student loan programs; student loan budget proposal
    Mr. Ryan: The President's budget for FY 2010 proposes to eliminate 
the Federal Family Education Loan program (FFELP) on July 1, 2010, for 
a savings of $47.5 billion over 10 years. However, few details are 
provided on how this is achieved. Would you please provide to the 
Budget Committee the following information, so that we may better 
assess this proposal? What are the subsidy estimates, by year, for 
direct lending and for FFELP?

    Secretary Duncan: The following table presents subsidy rates and 
subsidy budget authority for the FY 2010 President's Budget policy 
proposal. Subsidy rates reflect the net present value of all future 
cash flows associated with loans made in a given fiscal year, not 
including Federal administrative costs, expressed as a percentage of a 
dollar loaned. For example, a subsidy rate of 10.0 reflects a Federal 
subsidy cost of 10 cents for every dollar loaned. A negative subsidy 
rate indicates projected Federal revenues exceed projected costs for a 
given cohort of loans.

          SUBSIDY RATES AND SUBSIDY BUDGET AUTHORITY FOR THE FY 2010 PRESIDENT'S BUDGET POLICY PROPOSAL
----------------------------------------------------------------------------------------------------------------
                                                                  2010      2011      2012      2013      2014
----------------------------------------------------------------------------------------------------------------
Subsidy Rate (as a percent):
    Direct Loans..............................................    -16.99     -4.72     -2.86     -1.35     -1.30
    FFEL......................................................      1.34      0.00      0.00      0.00      0.00
Budget Authority (in billions of dollars):
    Direct Loans..............................................    -$13.8     -$6.5     -$4.2     -$2.1     -$2.2
    FFEL......................................................      $0.6       0.0       0.0       0.0       0.0
----------------------------------------------------------------------------------------------------------------

Ensuring continued access to Student Loans Act
    Mr. Ryan: What are the subsidy estimates for FY 2009 and FY 2010 
for the Ensuring Continued Access to Student Loans Act (ECASLA) 
programs (the participation interest program, the purchase program, and 
the conduit)? What are the assumptions for loan volume and composition 
that are used for these estimates?

    Secretary Duncan: The information requested is provided in the 
following table.

  ECASLA PROGRAMS--SUBSIDY RATE, LOAN VOLUME, BUDGET AUTHORITY AND LOAN
                           MODIFICATION COSTS
------------------------------------------------------------------------
                                                        2009      2010
------------------------------------------------------------------------
Loan Participation:
    Subsidy Rate (as a percent).....................     -7.47    -13.41
    Loan Volume (in billions of dollars)............     $41.8     $21.9
    Budget Authority (in billions of dollars).......     -$3.1     -$2.9
Loan Purchase:
    Subsidy Rate (as a percent).....................    -16.02    -16.24
    Loan Volume (in billions of dollars)............      $4.9      $2.6
    Budget Authority (in billions of dollars).......     -$0.8     -$0.4
Short-Term Loan Purchase:*
    Subsidy Rate (as a percent).....................    -14.12  ........
    Loan Volume (in billions of dollars)............      $1.3  ........
    Budget Authority (in billions of dollars).......     -$0.2  ........
    Modification (cost related to loans from prior       -$0.8  ........
     years).........................................
Conduit:*
    Subsidy Rate (as a percent).....................    -12.67  ........
    Loan Volume (in billions of dollars)............      $5.3  ........
    Budget Authority (in billions of dollars).......     -$0.7  ........
    Modification (cost related to loans from prior       -$0.8  ........
     years).........................................
------------------------------------------------------------------------
*These programs exist only in 2009.

Savings from Federal loan ownership
    Mr. Ryan: Are the savings associated with the Federal-ownership of 
the asset benefiting from the low cost of Federal funding?

    Secretary Duncan: The Government, due to its size and nature, can 
finance loans extremely effectively. This difference between the 
Government's financing cost and the statutory interest rate borrowers 
pay on student loans more than covers the cost of student interest 
benefits, defaults, and other program provisions. In addition, Direct 
Loans do not include the excessive subsidies inherent in the Federal 
Family Education Loan (FFEL) program.

    Mr. Ryan: Because the savings are generated from owning the asset, 
what are the interest rate assumptions used in the student loan 
estimates? Specifically, what are the rates used to discount the cash 
flows for the student loan programs and are the estimates unusually low 
this year because of the very low interest rate environment?

    Secretary Duncan: Borrower interest rates reflect those set in 
statute. Cash flows are discounted using government-wide single-
effective rates calculated by the Office of Management and Budget's 
Credit Subsidy Calculator. These rates are provided in the following 
table. (No discount rates were derived for FFEL after FY 2010, as, 
under the President's proposal, these were no cash flows to discount.)

                              OMB CREDIT SUBSIDY CALCULATOR BORROWER DISCOUNT RATES
----------------------------------------------------------------------------------------------------------------
                                                   2010    2011    2012    2013    2014    2015    2016    2017
----------------------------------------------------------------------------------------------------------------
Direct Loans....................................    2.78    4.42    4.91    5.27    5.27    5.27    5.27    5.27
FFEL............................................    2.32     n/a     n/a     n/a     n/a     n/a     n/a     n/a
----------------------------------------------------------------------------------------------------------------

Commercial paper and libor assumptions
    Mr. Ryan: What rates are assumed for the 90-day financial 
commercial paper (CP) rate? Does the Administration assume that the CP 
rate recovers to its normal relationship to 3-month London Inter-Bank 
Overnight Rate (LIBOR)?

    Secretary Duncan: Budget estimates reflect government-wide interest 
rate assumptions developed by the Office of Management and Budget.
    As shown in the following table, the assumptions assume a return to 
the traditional relationship between the 3-month commercial paper and 
3-month LIBOR rates.

                       PROJECTED 3-MONTH COMMERCIAL PAPER AND LIBOR INTEREST RATES TRENDS
----------------------------------------------------------------------------------------------------------------
                        Calendar Quarter                          3-Month Commercial Paper      3-Month LIBOR
----------------------------------------------------------------------------------------------------------------
2008:
  Quarter 1....................................................                       3.21                 3.26
  Quarter 2....................................................                       2.73                 2.75
  Quarter 3....................................................                       2.86                 2.91
  Quarter 4....................................................                       1.98                 2.72
2009:
  Quarter 1....................................................                       1.73                 1.40
  Quarter 2....................................................                       1.70                 1.38
  Quarter 3....................................................                       1.67                 1.36
  Quarter 4....................................................                       1.65                 1.35
2010:
  Quarter 1....................................................                       1.63                 1.49
  Quarter 2....................................................                       1.68                 1.62
  Quarter 3....................................................                       2.26                 2.20
  Quarter 4....................................................                       2.83                 2.79
2011:
  Quarter 1....................................................                       3.29                 3.28
  Quarter 2....................................................                       3.76                 3.77
  Quarter 3....................................................                       4.00                 4.04
  Quarter 4....................................................                       4.09                 4.14
2012:
  Quarter 1....................................................                       4.19                 4.25
  Quarter 2....................................................                       4.29                 4.36
  Quarter 3....................................................                       4.40                 4.48
  Quarter 4....................................................                       4.39                 4.47
2013:
  Quarter 1....................................................                       4.39                 4.47
  Quarter 2....................................................                       4.39                 4.47
  Quarter 3....................................................                       4.39                 4.47
  Quarter 4....................................................                       4.39                 4.47
----------------------------------------------------------------------------------------------------------------
Note: Rates straight-line after 2013.

Problems with 90-day commercial paper rate
    Mr. Ryan: What is the Administration proposing to address the 
current problems associated with the 90-day financial CP rate, which 
has been dislocated through Federal intervention in the credit markets?

    Secretary Duncan: The Administration is carefully monitoring the 
commercial paper and LIBOR markets as they affect not only student loan 
program participants but also the broader financial sector. At this 
time, the Administration is not proposing any long-term change to 
address what appears to be a temporary disruption in the financial 
markets. Adopting the President's proposal to move to 100 percent 
Direct Loans would insulate future student loans from these types of 
market disruptions.
Impact of budget proposal on Federal debt
    Mr. Ryan: What is the increase in Federal debt that results from 
the Budget's proposal to move entirely to direct lending compared to 
continuing the FFELP program?

    Secretary Duncan: While the Department will borrow from Treasury to 
originate Direct Loans, over time student loan borrower repayments with 
interest will more than offset these initial borrowings. While the debt 
may increase in the short-term, depending on Treasury's funding needs, 
the Congressional Budget Office estimates the Federal deficit will 
decrease by $94 billion over the next 10 years under the President's 
proposal.
Student loan administrative costs
    Mr. Ryan: What are the administrative costs associated with the 
President's budget proposal to eliminate FFELP? Please provide both the 
cash estimates over the next 10 years as well as the net present value 
estimate (in order to compare to FFELP). Is the Administration 
proposing that the increase in administrative costs be funded by 
discretionary spending or on the mandatory side of the budget?

    Secretary Duncan: The 2010 President's Budget includes the 
following estimates showing Federal administrative costs for the FFEL 
and Direct Loan programs on a net present value basis, expressed as 
subsidy rates. The significant administrative costs borne by lenders in 
the FFEL program are not reflected, as they are paid out of Government 
subsidies and borrower repayments.

ESTIMATED FEDERAL ADMINISTRATIVE COSTS FOR FFEL AND DIRECT LOAN PROGRAMS
------------------------------------------------------------------------
                                                      2008   2009   2010
------------------------------------------------------------------------
Direct Loans:
    Non-Consolidation Loans........................   2.70   2.80   1.75
    Consolidation Loans............................   0.51   0.40   0.38
FFEL:
    Non-Consolidation Loans........................   0.53   0.52   0.54
    Consolidation Loans............................   0.04   0.04   0.04
------------------------------------------------------------------------

    Federal Student Aid, the Department's operational unit managing the 
student loan programs, does not budget annual operations costs 
separately among Direct Loans and FFEL programs. Many functions, such 
as application processing, accounting, data management and default 
collections are performed by private contractors working in both 
programs along with Pell Grants and the campus-based programs. The 
Administration is proposing that administrative costs continue to be 
supported with discretionary funds.
Perkins loan volume
    Mr. Ryan: The budget blueprint also mentions modernizing the 
Perkins Loan program so that it will be ``more widely available.'' How 
much of a loan caseload increase are you anticipating with all of these 
changes to the Federal student loan programs?

    Secretary Duncan: Under the President's proposal, Perkins Loan 
volume is projected to increase from $1.1 billion in 2009 to nearly $6 
billion in 2010.
Accountability for ARRA funds
    Mr. Ryan: The American Recovery and Reinvestment Act (ARRA) of 2009 
contains nearly $100 billion in education funding that must be pushed 
out the door very rapidly. There is a great deal of concern about how 
the Department will ensure that the money is spent effectively and 
efficiently.
    How will the funding be allocated to the States and institutions of 
higher learning and what controls will be put in place to prevent 
waste, fraud, and abuse?

    Secretary Duncan: To respond to your first question, the Department 
will allocate funds to eligible entities in accordance with the 
statutory requirements for the programs receiving ARRA funds. For the 
State Fiscal Stabilization Fund, for example, the Department will 
allocate funds to States on the basis of their relative population of 
individuals aged 5 to 24, and on their relative shares of the total 
population.
    The Department has numerous efforts underway to prevent waste, 
fraud, and abuse. For example, the Department's Risk Management Service 
is developing a framework to inform the Department's technical 
assistance and monitoring efforts. In addition, the Department's Office 
of Inspector General has prepared fraud awareness presentations for 
internal use and for the public, and will begin visiting States and 
school districts in May to prevent abuses of public funds when possible 
and report any abuses they do find.

    Mr. Ryan: Even beyond attempting to control waste, fraud and abuse, 
how will the Department account to the American people for what their 
billions bought them once those dollars have been spent?

    Secretary Duncan: The Department has begun submitting weekly 
reports about Federal ARRA-related activity to Recovery.gov. In 
addition, as required by ARRA, all entities directly receiving ARRA 
funds from the Department will submit quarterly reports to Recovery.gov 
about the obligation and expenditure of funds. The first quarterly 
reports will be due October 10.
ARRA education funding intended purposes
    Mr. Ryan: Is the purpose of this program to ease pressure on State 
budgets by funding traditional State and local responsibilities with 
Federal funds or is it to expend funds on new programs and projects?

    Secretary Duncan: The President and I have been clear that American 
Recovery and Reinvestment Act (ARRA) funds will help stabilize State 
and local government budgets in order to minimize and avoid reductions 
in education and other essential public services while driving 
education reform. A portion of the new money will, as intended by 
Congress, support new State and local projects. For example, the 
Department will make new competitive awards under the Teacher Incentive 
Fund (to encourage the development and implementation of performance-
based teacher and principal compensation systems) and the Teacher 
Quality Partnership program (to strengthen programs that prepare new 
teachers to enter the classroom). A large portion of the money, 
however, will be available to prevent lay-offs and stabilize education 
budgets.
Coordination of Ed and HHS early childhood programs
    Mr. Ryan: In the budget blueprint, the Administration says it will 
expand access to high-quality early childhood education and promote a 
``seamless delivery'' of services. At the same time, the Federal 
Government provides more than $7 billion for Head Start and Early Head 
Start programs administered by the Department of Health and Human 
Services [HHS], which is tasked with expanding early childhood 
opportunities to low-income students.
    How is the Administration's proposal different from Head Start, and 
is there a danger of creating competing and duplicative programs at the 
Department of Education?

    Secretary Duncan: The new Early Learning Challenge Fund would 
complement, not duplicate, existing and proposed Federal investments in 
early childhood programs, including Head Start. The grants would 
support State efforts to raise their early childhood education 
standards, build systems that promote quality and ensure the 
effectiveness of their early learning programs, and monitor all 
publicly funded early childhood programs' performance against the State 
standards. In addition, we would coordinate closely with HHS in order 
to prevent any duplication of effort.
             questions submitted by congressman connie mack
Student aid simplification
    Mr. Mack: Mr. Secretary, President Obama has indicated he wants to 
streamline the Federal financial aid process by simplifying or 
eliminating the current Federal financial aid application or FAFSA. 
Please describe in greater detail the Administration's plans and 
timeline for FAFSA going forward.
Simplifying FAFSA and the student aid application process
    Secretary Duncan: We are moving forward on three tracks. First, I 
am working with the IRS Commissioner to see if we can give applicants 
the option of having their tax return information entered into the 
FAFSA. That would eliminate a number of steps for applicants. Second, 
we are analyzing each and every data element on the form to determine 
how necessary it is. To eliminate those, we may need to ask Congress 
for legislation. On both of those options, we will have decisions by 
the fall.
    Finally, we aren't waiting for our analysis of those two options 
before making improvements. We are making changes now to the FAFSA-on-
the-web to improve the skip-logic and to provide applicants with more 
complete information after they apply.

    Chairman Spratt. And the hearing is concluded. Thank you.
    [Whereupon, at 12:16 p.m., the committee was adjourned.]

                                  
