Just like last year, it seems that the federal Highway Trust Fund is going broke:

The federal Highway Trust Fund will run out of cash this summer, marking the second year in a row that gasoline tax revenues have failed to meet prior projections and federal spending commitments. Congress will need to add between $5 billion and $7 billion to keep the trust fund solvent for now, Sen. Barbara Boxer , D-Calif., announced Tuesday.

As Reuters noted, “rising gasoline prices, along with more Americans driving fuel-efficient cars, have pushed down gas purchases, and with them, gas tax collections.” And since the Highway Trust Fund is funded by gas tax collections, it’s now in a state of perpetual shortfalls.

This then, would seem like an opportune time to examine what purpose the fund is going to serve going forward and where its money is going to come from, particularly because its spending guidelines need to be reauthorized by this fall.

Currently, 81 percent of the fund’s money is dedicated to highways, while 19 goes toward mass transit. Sens. John Rockefeller (D-WV) and Frank Lautenberg (D-NJ) have submitted legislation stipulating that the next incarnation of the spending plan aim to “reduce per capita motor vehicle miles traveled on an annual basis, reduce national surface transportation-generated carbon dioxide levels by 40 percent by 2030, and increase the proportion of national freight provided by means other than trucks by 10 percent by 2020,” which would likely mean shuffling this ratio, with more emphasis on transit.

This has been met with stiff opposition from lobbyists (Congressional Quarterly calls them “highway groups“), who say that they won’t support any effort to raise the gas tax to cover the fund’s deficit unless the spending ratios stay as they are. But just like during the stimulus debate, if we’re trying to move toward a green economy, giving highways a much higher priority than mass transit seems misguided.

In any case, in light of new CAFE standards and a growing emphasis on fuel efficient vehicles, raising the gas tax is not a permanent fix for the fund’s woes. Two congressionally mandated commissions have recommended that “Congress find a new revenue source to pay for highway and transit programs,” and “their top recommendation was to tax motorists based on how many miles they drive.”

The New York Times has a good piece today on the challenges facing Education Secretary Arne Duncan as he goes about trying to reform our busted education system. As Chicago schools chief, Duncan’s claim to fame was closing down ineffective schools and reconstituting them as smaller institutions under new management. Duncan is evidently set to “persuade scores of local districts” around the country to do the same.

Of course, this approach causes some problems, namely with the teachers that are dismissed when a school shuts down. One of the goals of a school closure is to provide an opportunity to rehire effective teachers while letting the ineffective ones go, but this is much easier said than done. For instance:

The Chicago contract gives tenured teachers in schools shut down for low performance 10 months to be rehired by their reconstituted school’s new leader or by another Chicago principal, after which they lose their job. About 8 in 10 find jobs at other Chicago schools…Contracts in many other cities give teachers who lose positions more extensive rights, which could make school makeovers harder, experts said.

And it’s not only difficult to get rid of ineffective teachers, but as new report from The New Teacher Project shows, its difficult to even come to a determination regarding which teachers are effective, because of shoddy evaluation systems in most schools:

In districts that use binary evaluation ratings (generally “satisfactory” or “unsatisfactory”), more than 99 percent of teachers receive the satisfactory rating. Districts that use a broader range of rating options do little better; in these districts, 94 percent of teachers receive one of the top two ratings and less than 1 percent are rated unsatisfactory.

As Andrew Rotherham at Eduwonk put it, “despite all the rhetoric about how important teachers are and despite the importance of people in a labor-intensive field like education, the lack of systematic attention to teacher effectiveness in education is shocking.” Indeed, there is a great deal of evidence that, of all the factors in the education system, “teachers have the greatest impact on student achievement.” Yet, when it comes to evaluation, most school systems just say that everyone is fine, which means that great teachers aren’t identified and emulated, while bad teachers aren’t forced to change their ways.

In a report examining policies to ensure that all students have access to effective teachers, CAP’s Robin Chait pointed to the Teacher Advancement Program — under which trained evaluators visit a teacher’s classroom four to six times a year — as a good model to use, adding that “evaluation information should then be used to inform a variety of policies related to teachers, such as compensation, retention and tenure.” In any case, Duncan’s plans won’t do much good if schools are closed and reopened without any way of knowing that the teachers are better.

Yesterday, the Federal Reserve issued the criteria that it will use to determine if the nation’s 19 largest banks — which were the ones subjected to stress tests last month — are healthy enough to repay their TARP funds.

As expected, the Fed announced that if banks want to free themselves of TARP, then they need to cut all of their other government lifelines, particularly proving that “they can raise money without relying on guarantees against losses provided by the Federal Deposit Insurance Corp.”

The Fed and Treasury plan to allow some banks out of TARP as early as next week. In an interview today with CNBC, Treasury Secretary Tim Geithner said that “I think I expect you’re going to see substantial repayments from some institutions relatively quickly.”

But Geithner also went a little further, and seemed to imply that TARP repayment means that the plan for removing toxic assets from the banks (the Public-Private Investment Program or PPIP) will fizzle:

“As confidence has improved a little bit, we may see less interest — both on the selling side and the buying side,” Geithner said. “It’s hard to tell, though, how much interest you’re going to see. There’s still some concerns, too, about the rules of the game.”

First things first, if there are concerns about the rules of the game, isn’t it Geithner’s job to clear them up? But more importantly, does this confirm that the PPIP is, as Yves Smith wrote, “dead on arrival.”

This has been a concern about the PPIP for a while, especially after the banks told Geithner in April that he deserved an A for effort, but they weren’t going to participate in the program. The banks have realized that the PPIP gives them no inventive to sell toxic assets at anything other than an inflated price. And since the stress tests showed that Treasury was willing to extend the banks guarantee after guarantee, they’ve (rightly, from their business standpoint) decided that the status quo is just fine.

But the assets are still there, aren’t they? Even if a firm like JP Morgan can live with them for the moment, what about Citigroup, where 44 percent of the assets are toxic? If PPIP is not the answer, then Treasury needs to find another one, lest Citi and others like it remain stuck as zombie institutions.