Funding for New Orleans Public Schools:
Legislation, Allocation, Expenditure and Recommendations
Prepared by Crystal Bish with assistance from Shannon Garth-Rhodes for
Scott S. Cowen Institute for Public Education Initiatives at
Tulane University
June 1, 2007
Funding for New Orleans Public Schools:
Legislation, Allocation, Expenditure and Recommendations
Written and Researched by Crystal Bish with assistance from Shannon Garth-Rhodes*
I.
Overview……………………………………………………………………………..2
II.
Evidence of Need…………………………………………………………………….2
III.
Funds Allocated to New Orleans’ Local Education Agencies and Louisiana’s State
Educational Agency (LDE)…………………………………………………………..3
IV.
Uses of Funds as Mandated by Relevant Legislation………………………………..5
V.
Allocations and Expenditures………………………………………………………...7
VI.
Looking Ahead……………………………………………………………………….7
VII.
Stakeholders………………………………………………………………………….8
VIII.
Goals of the Following Recommendations…………………………………………..8
IX.
Recommendations…………………………………………………………………....8
a. Financial Accountability per R.S. 17:88*
b. Fourth Allocation of Federal Restart Funds
c. Pursuit of Additional Funds for Use toward Repair/Replacement of Damaged
Buildings
d. Potential Uses for $30 million Iraq Accountability Act Education Recruitment
Funds
*
X.
Future Considerations………………………………………………………………12
XI.
Appendices
Table 1: Federal, State, Private and Other Monies Allocations*
a. Appendix A: Allowable Uses of Federal Restart Funds
b. Appendix B: Public Records Requests Contact Information
c. Appendix C: Alternative Non-Charter Public Schools
d. Appendix D: Eric Hirsch’s Teacher Recruitment Report
Also contributed to the conceptualization of recommendation B, paragraph 3.
1
I. Overview
Since the unprecedented devastation caused by August 2005’s historic Hurricane Katrina,
significant sums of money have been poured into New Orleans school system. This money has
been pledged to help the Crescent City replace what was formerly identified as one of the lowest
performing urban school districts in the United States—54 of its 122 schools were labeled failing
(pre-Katrina)1—with a world-class system committed to educating all students to high levels.
The purpose of this report is primarily:

To trace the sources of this post-Katrina money and to analyze how it has been allocated
and spent.

To provide recommendations on how the remainder should be equitably distributed and
efficiently spent.
II. Evidence of Need (Rationale)
Pre-Katrina, ‘fraud, corruption and flat-out theft’2 were the norm in a school system
where $71million in federal funds were mismanaged or lost3, nearly bankrupting the district. A
2005 audit by nationally known organizational “turnaround” firm Alvarez and Marsal uncovered
gross misuses of school district funds: an individual who had enjoyed paid leave for nearly four
consecutive decades, district employees routinely paid 50 hours of overtime per week throughout
the school year and exorbitant amounts used for employee “stipends” above and beyond the base
paycheck (to the tune of $22 million in 2004 alone).4 Such mismanagement contributed to the
reinforcement of what was widely regarded as a “two-tier system of haves and have-nots,”5
where a fortunate subset of the school-aged population attended the city’s best schools, such as
the highly selective Benjamin Franklin and Eleanor McMain high schools, leaving the vast
majority to attend sub-par institutions.
Hard hit by the storm, New Orleans’ troubled public school system was subdivided into 3
school “systems”, each under the authority of a different governing body. The Recovery School
District (RSD) is governed by BESE, Louisiana’s Board of Elementary and Secondary
Council for a Better Louisiana, “How Do We Measure Up? How Far Do We Have to Go?” Louisiana Fact Book for the 2007 Election.
Orleans Parish school board member Jimmy Fahrenholtz quoted in transcript, “New Orleans Schools Before and After Katrina,” Online
NewsHour with Jim Lehrer, November 1, 2005 < http://www.pbs.org/newshour/bb/education/july-dec05/neworleans_11-01.html >
3
“Plan Shifts Power to New Orleans Schools,” New York Times, January 18, 2006 and Transcript, “New Orleans Schools Before and After
Katrina,” Online NewsHour with Jim Lehrer, November 1, 2005
4
Transcript, “New Orleans Schools Before and After Katrina,” Online NewsHour with Jim Lehrer, November 1, 2005
5
Boston Consulting Group report, “The State of Public Education in New Orleans,” May 17, 2007.
1
2
2
Education, and is comprised of 22 traditional public schools and 17 charter schools. New Orleans
Public Schools (NOPS) is run by the Orleans Parish School Board (OPSB) and consists of 5
traditional public schools and 12 charter schools. The third system is a cluster of state-run charter
schools.6 With hundreds of millions of dollars pouring into this system of schools, it is important
that the financial missteps that characterized the pre-Katrina system are avoided at all costs. To
this end, the sources, mandated uses, allocations and expenditures of funds to-date must be fully
understood and documented, allowing future monies to be efficiently allocated and judiciously
spent.
III. Funds Allocated to New Orleans’ Local Education Agencies and Louisiana’s State
Educational Agency (LDE)
Funds allocated to the state of Louisiana in general and New Orleans in particular were
categorized by granting body and organized into four types: state, federal, private and other
funds. This section enumerates these aggregate amounts of money as earmarked for the postKatrina education effort.
State
Funds provided to New Orleans’ three public school districts flow from the Minimum
Foundation Program in the form of a block grant. Districts may spend these funds “as they
determine to be in the best interest of the district”7 as long as program mandates are satisfied.
The MFP’s three levels of funding provide for “basic instructional and operational costs,
…incentives to districts for contributing additional local tax revenue, [and] funding for specific
purposes such as teacher pay raises.”8 BESE is responsible for the development and approval of
the Minimum Funding formula each year while the state legislature is responsible for funding it.
Federal
Federal funds provided to RSD, OPSB and the state-run charters primarily include
Impact Aid, Restart Funds, Aid for Homeless Youth, Charter School Funds, FEMA disaster loan
funds and funds allocated in the recent Iraq Accountability Act.9
6
http://www.louisianaschools.net/lde/uploads/9461.pdf
http://www.louisianaschools.net/lde/finance/673.html
8
Louisiana Department of Education. “MFP 101: Seven Steps to Understanding Louisiana’s Minimum Foundation Program.” Brochure, Fall
2005.
9
Please see Table 1 for descriptions of each funding stream and Appendix A for specific “uses of funds” guidelines.
7
3
 The total Impact Aid disbursement, solely for use during SY 05-06, was $880 million10
and the funds were distributed amongst 49 states and the District of Columbia.11 New
Orleans’ total share of this disbursement (and several that follow) is currently
unconfirmed; however, public records requests have been submitted to the chairman and
vice-chairman of the Louisiana State Senate Education Committee, the Finance
Committee of the RSD and the budget director of the OPSB.12 The correct figures will be
added to a revised version of this report as they are obtained.
 Restart Funds totaled $750 million13 for the Gulf Coast region affected by Hurricane
Katrina. Of that allocation, $445 million were set aside for New Orleans.14
 Aid for Homeless Youth peaked at a total of $5 million; the amount allocated to New
Orleans is currently unconfirmed.
 In September 2005,15 charter school funds in the form of a $20.9 million No Child Left
Behind grant were awarded to the state of Louisiana via the US Department of
Education’s Charter Schools Program for the building or repair of charter schools in
“geographic areas of highest need”; an additional $24 million, in the form of a 3-year
charter school design and creation grant, was announced in June 2006.16
 FEMA disaster loan funds were disbursed to the OPSB ($30 million17 by February 2006);
RSD was awarded $10 million18 in May 2007. Most recently, the Recovery School
District was awarded $63 million to use toward the construction and preparation of
modular Temporary Education Centers (at a cost of $7 million each).19
 The Iraq Accountability Act, signed into law by President Bush in late-May 2007,
provides $30 million for “educational recruitment assistance.”20 How this money will be
divided amongst the hurricane-ravaged areas is yet to be determined.
10
Early USDOE documents place this figure at $645 million (http://www.ed.gov/policy/elsec/guid/secletter/051230.html and
http://www.ed.gov/news/pressreleases/2006/03/03022006.html ). However, USDOE factsheet dated April 2007 places this figure at $880 million:
http://hurricanehelpforschools.gov/030206-factsheet.html . Department of Homeland Security provides a slightly lower figure:
http://www.dhs.gov/xprevprot/programs/gc_1173201764934.shtm#5 .
11
12
See Appendix B for names and contact information.
http://www.ed.gov/policy/elsec/guid/secletter/051230.html
Boston Consulting Group, The State of Public Education in New Orleans report, May 17, 2007.
15
http://www.ed.gov/news/pressreleases/2005/09/09302005.html
16
http://www.ed.gov/news/pressreleases/2006/06/06122006a.html
17
http://www.neworleanscitybusiness.com/viewStory.cfm?recID=14843
18
http://www.fema.gov/news/newsrelease.fema?id=36295
19
Pastorek, Paul. New Orleans East community meeting, May 30, 2007.
20
http://www.neworleanscitybusiness.com/uptotheminute.cfm?recid=10702 and
13
14
4
Private
Many large private donations have been given to the public schools of New Orleans.
Though not an exhaustive enumeration of these funds, such donations include:

Baptist Community Ministries’ Charter School Support initiative21: $4.2 million over 3year period

Broad Foundation and US Fund for UNICEF: $2.45 million to finance KIPP schools in
New Orleans22
Other
Funds that do not fit neatly into any of the above three categories have also flowed into
New Orleans. These funds include a portion of the $30 million in foreign aid awarded to the
region, the bulk of which has been set aside for the rebuilding and renovation of physical plant
such as “libraries, science labs and other physical assets.”23 In addition, the Furniture for Schools
Project has distributed nearly $6 million dollars of in-kind donations to Katrina-affected K-12
institutions.
IV. Uses of Funds as Mandated by Relevant Legislation
Four legislative acts govern how this money can and should be spent. These acts are the
federal Hurricane Education Recovery Act and Louisiana’s Recovery Act No. 35, Charter
Schools Demonstration Program Law and Senate Concurrent Resolution 139:

Title IV—Hurricane Education Recovery Act (H.R. 2863-113):
o Emergency Impact Aid for Displaced Students; authorized under Section 107
o Assistance for Homeless Youths (Homeless Aid) Program; authorized under
Section 106
o Immediate Aid to Restart School Operations Program; authorized under Section
102
 Uses of funds:24 “recovery of student and personnel data, and other
electronic information; replacement of school district hardware and
21
http://www.bcm.org/pdf/Charter%20News%20Release.pdf
http://www.kipp.org/docs/press/KIPP_2006-08-28_KIPP_Broad_UNICEF_press_release.pdf
23
http://hurricanehelpforschools.gov/030206-factsheet.html
24
See Appendix A (http://www.doe.state.la.us/lde/uploads/8485.pdf) for more specific examples of “allowable costs”
22
5
software; financial operations; reasonable transportation costs; rental of
mobile educational units and leasing of neutral sites or spaces; initial
replacement of instructional materials and equipment, including textbooks;
redeveloping instructional plans, including curriculum development;
initiating and maintaining education and support services; and such other
activities related to the purpose of this section that are approved by the
Secretary. Funds can also be used to cover the administrative cost of
efficiently implementing the Restart Program.25

These funds may be used “in coordination with other Federal, State, or
local funds available for the activities” described above.

These funds MAY NOT be used for “construction or major renovation of
schools” and must be used on “secular, neutral, and nonideological
services or assistance.”

Recovery Act No. 35 (H.B. 121)—Specific to schools within the state-created Recovery
School District; governs monies allocated to RSD via Louisiana’s Minimum Foundation
Program; sales, use, and ad valorem taxes (“less any tax collection fee paid by the school
system”); and “earnings from sixteenth section lands owned by the school system”;
authorized under Section 1990(C)(2)
o Uses of funds: “The expenditure of funds shall be subject to the requirements of
the approved Minimum Foundation Program formula that apply to a city, parish,
or other local public school system and shall be subject to audit in the same
manner.”26

Chapter 42 Charter School Demonstration Programs Law (the “Charter School Act”)
o Uses of funds: “Per-Pupil allocated” state funds can be used according to MFP
regulations; “federal, restricted state and unrestricted state” funds must be used
according to the rules and regulations of the granting body.
25
26
http://www.doe.state.la.us/lde/uploads/8487.pdf
R.S. 17:1990(B)(1)(b), http://law.justia.com/louisiana/codes/143/211794.html
6
o In addition to federal and state funds, charter schools can “solicit, accept and
administer…money, grants, property, loans, or personal services for educational
purposes from any public or private person, corporation, or agency” as long as
they remain in compliance with all federal rules and regulations (or the rules and
regulations of the person or agency making the contribution, given these rules and
regulations do not violate the Louisiana constitution or any other law).

Minimum Foundation Program (Senate Concurrent Resolution (SCR) 139) of 2001
V. Allocations and Expenditures (“How much was spent, by whom and on what?”)
A table indicating the details of school district expenditures will be provided upon receipt
of this information.
VI. Looking Ahead
When deciding how best to utilize remaining dollars earmarked for the repair and
renewal of New Orleans public school system, a number of questions MUST be considered.
These questions include:
 What role has the Cowen Institute (CI) and its partners decided to play in this allocation
process? Currently, it appears that CI has primarily aligned itself with New Orleans’
charter school community, as opposed to New Orleans traditional public schools (both
RSD and OPSB) at large. However, if the role is one of advocacy for all public school
children within New Orleans, how can Cowen Institute best position itself as a credible
voice for this constituency? Concomitantly, how can a national sense of urgency
regarding the state of New Orleans’ public schools be reestablished so as to maintain an
unblinking focus on the state of the public education system? Such a focus would
encourage healthy public oversight and cultivate continued buy-in to the school system’s
success, both of which would make the stabilization of the public schools’ funding
streams more likely and mismanagement less probable.
 Are schools, programs and other educational initiatives being funded where they are most
needed, as defined both by current population density and rate of community reoccupancy?
7
 How can the equitable (as opposed to equal) distribution of educational funds be ensured
so as to prevent the recreation of the two-tiered pre-Katrina educational structure?
VII. Stakeholders
It is important to remember that there are a number of stakeholder groups whose interests
have an integral role in shaping this process. Though the Recovery School District’s
Legislatively Required Plan of June 2006 lists these groups as “parents, teachers, students [and]
community members,” it is vital to remember that the most important of those are the students
served by the public schools of New Orleans. All decisions should be made with the needs and
best interests of these young people—regardless of socioeconomic, racial/ethnic or family
background—in mind.
Additionally, “community members” include a number of stakeholder subgroups—
including, but not limited to, the business community and residents without school-aged
children—who would add a valuable perspective to this dialogue.
VIII. Goals of the Following Recommendations:
1. Equity in the provision of a high-quality education to all public school students in New
Orleans.
2. Efficiency in the expenditure of education funds and the allocation of non-monetary
resources.
3. Accountability, both in the expenditure of funds and in relation to responsibility taken
for raising levels of student achievement in the city of New Orleans.
IX. Recommendations
A. Financial Accountability per R.S. 17:88
In concurrence with the recommendation of the Boston Consulting Group, “transparency
into funding amounts and timing should be provided.” The budget is the window into the
operations of a district. It explains how much is fed into the district (revenue) and what the
district spends it on (expenditures). The Recovery School District should be required to submit
its budget on September 30th as is required of other local school boards, or be given a
consequence for non-compliance. “R.S. 17:88 requires local school boards to itemize revenues
8
and expenditures in accordance with guidelines developed by the state department of
education.”27 Under this provision, the school boards are required to adopt a budget and submit it
no later than September 30th. The RSD was exempt during the 2005-2006 school year; however,
they kept monthly reports of revenues and expenditures that they reported to their board. This
exemption was a direct result of the importance of expediting the “reopening” of the school
system in order to accommodate the returning student body. One of the challenges for the RSD is
documenting all of the changes in monies allocated and spent, post-Katrina. A fund balance is
the school district’s “surplus”, but only in the sense that it is not yet committed to a specific
purpose. The fund balance at the end of the fiscal year and the fund balance at the beginning of
the following fiscal year should match, and any substantial changes should be articulated in the
footnotes of the budget. The monthly reports from the time the RSD re-opened for the 2006-2007
school year would be dramatically different from the budget reports from the 2004-2005 school
year, when the RSD was operating only a few schools.
Although the RSD is no longer exempt from submitting an Annual Financial Report
(AFR), the district has yet to create a draft for the school year budget 2006-2007. The RSD
should compile its monthly reports in a form that resembles the Comprehensive Annual
Financial Reports required of all other school boards and make it available on the LDE website.
The General Fund Budget form would maintain a consistent format for this information.
Additionally, the RSD is a state-run district (not a “local school board”) and R.S. 17:88 does not
directly apply to their budget requirements. 28 A complementary recommendation to ensure the
financial accountability of the school district, would be to outline a stipulation that enforces an
accessible CAFR, by the RSD; in which “the beginning fund balances should still reflect on the
prior year’s ending fund balance, and the adjustments should be reflected on the prior year’s
adjustment line of the fund balance section.”29 The RSD, and the invested community of
stakeholders and funders, would benefit from the transparency of the district’s budget. The
importance of financial accountability is to correct the historic mismanagement of finances in the
New Orleans public schools.
27
www.louisianaschools.net/lde/uploads/9498.doc (refers to 17:88)
Per conversation with Shannon Jones, May 31, 2007.
29
www.louisianaschools.net/lde/uploads/9498.doc (refers to 17:88)
28
9
B. Fourth Allocation of Federal Restart Funds
Sufficient funds should be dedicated to rebuilding schools in the most underserved areas
of highest repopulation density. New Orleans East, covering an area 60% of New Orleans entire
landmass and responsible for 40% of New Orleans tax base, is one such area. Residents want
high-quality, magnet-grade public schools capable of preparing graduates to acquire a rigorous
post-secondary education, a prerequisite for positions at some of the area’s top employers such
as Lockheed Martin and the Department of Agriculture.30 Ways in which the RSD and OPSB can
diversify traditional public school options beyond the charter school model should be explored.31
Successful school models within New Orleans should be examined in order to evaluate the
feasibility of replication.
Additionally, modest estimates place the number of school-aged children currently
residing in New Orleans but not presently enrolled in school at 3000-5000 students. 32 This
situation, if allowed to fester, is an emergency waiting to happen. Steps should be taken to
address this burgeoning crisis; these steps could include developing an intake and registration
system for these students housed at the proposed Welcome Center meant to serve the continuous
waves of returning students. A system for combing New Orleans’ neighborhoods in search of
these overlooked students should also be considered. Similar to a truancy prevention initiative
but far more trauma-sensitive and holistic in nature and practice, such a program could connect
these students to necessary services and resources, like mental health counseling, housing and
healthcare, in addition to addressing their initial educational needs.
Once this process has been initiated and reasonable calculations of the cost of such
initiatives have been obtained, the balance of funds from the fourth Restart allocation should be
distributed both equitably and equally. Assessing the financial need of each school and
establishing a predetermined universal “percentage of need” that will be met by this portion of
federal funding can approximate this equal and equitable distribution. For example, state and
local officials could determine that 20% of the financial need of each school can be met given
each district’s current financial situation and the amount of money left after the above programs
are underway. In this way, fund distribution would be equal, in that each school is having the
30
Juvenile Court Chief Justice David Bell. New Orleans East Community meeting, May 30, 2007.
Please see Appendix C for contact information for successful non-charter public school models.
32
Initial Cowen Institute briefing (May 24, 2007) and interview of community residents (May 24-31, 2007).
31
10
same percentage of its financial needs met, while addressing the issue of equity. The actual
amount received by each school would be dependent upon the insufficiency of its resources,
enabling the more economically challenged institutions to more adequately address the
difficulties inherent in “restarting” education in the city.
C. Pursuit of Additional Funds for Use toward Repair/Replacement of Damaged Buildings
At present, the scarcity of suitable public school facilities constrains New Orleans’ ability
to adequately educate the city’s children—both those who have already returned and those
anticipated within the coming months. Additional funds must be secured to address this issue.
The demolition of unsalvageable buildings, renovation of those less damaged and construction of
new facilities must be expedited.
D. Potential Uses for $30 million Iraq Accountability Act Education Recruitment Funds33
The Recovery School District has already implemented an incentive program that offers a
bonus amounting to $17, 300 to out-of-state teachers who agree to teach in New Orleans for at
least two years.34 This federally funded initiative applies to those who begin teaching during the
2007-08 school year and contains no provision for those already teaching within the RSD. A
portion of the newly allocated IAA education recruitment funds could be used to rectify this
situation. Professional development tailored to meet the specific academic needs of children
within the RSD could be offered to current teachers. A modest housing subsidy could also be
offered to these current teachers to defray the expense associated with the exponential increase in
the post-Katrina cost of living in New Orleans.
If the RSD and OPSB currently have functional personnel data systems and access to
information about the performance of OPSB teachers before the storm, such information could
be used to reach out to and recruit former teachers of high quality who have a continued interest
in returning to and practicing in the city.
Please see Appendix D for the report by Eric Hirsch entitled, “Teacher Recruitment: Staffing Classrooms with Quality Teachers.” It includes an
overview of teacher recruitment legislation nationwide as well as suggestions regarding how to craft effective teacher recruitment policies.
34
Ritea, Steve. “New Orleans schools offer bonuses to lure out-of-state teachers,” New Orleans Times Picayune, April 19, 2007.
33
11
X. Future Considerations
Pending national legislation:35

Improving the Leadership and Effectiveness of Administrators for Districts (I LEAD)
ACT (S.837)—Introduced by Senator Hillary Rodham Clinton (D-NY), this act would
“establish a national principal recruitment program to assist high-need school districts in
recruiting and training principals. Grants would offer financial incentives for aspiring
principals…stipends for veteran principals who mentor new principals…[and] could also
be used to carry out professional development programs in instructional leadership.”

Investment in Quality School Leadership Act (H.R. 1156)—Introduced by Rep. Nita
Lowey (D-NY), this bill “would authorize $100 million for a grant program to provide
principals and superintendents with ongoing, intensive professional development
opportunities to increase their knowledge of effective instructional practices, state content
standards and their classroom implementation, comprehensive whole-school reform,
educational technology, recruitment and retention of teachers, management and
organizational skills, leadership skills, the effective use of data for decisionmaking, and
the implementation of school-based leadership teams.”
Principal’s Policy Blog of the National Association of Secondary School Principals, April 2007
<http://p8.hostingprod.com/@www.principalspolicyblog.org/blog/2007/04/ >
35
12