ED Fast Tracks Stabilization Funds Amid Grim Budget News
|Date Posted: July 9, 2009|
Texas submitted its State Fiscal Stabilization Fund (SFSF) application yesterday at 4:12 p.m., coming in just under the wire for the July 1 deadline for the first phase of funding, said ED spokeswoman Sandra Abrevaya. With Texas on board, all states have finally submitted their requests. It takes about 10 days for federal officials to review and approve applications and then to obligate the monies, she said. Applications from about 10 states -- Vermont, Wyoming, and Pennsylvania among them -- are pending approval, according to ED.
The American Recovery and Reinvestment Act (ARRA) provided $48.8 billion to stabilize state budgets. The majority of the funding -- about $39.8 billion -- was designated for education, with the remaining $8.8 billion earmarked for "other government services" selected by the relevant governor. Eligible for funding with the $8.8 billion pot is public safety, health care or virtually any other service, including education.
In the first of two phases, ED planned to distribute two-thirds of the education SFSF and two-thirds of the "other government services" account, or about $36.7 billion. But ED Secretary Arne Duncan decided to also release the final third of government services money -- $2.7 billion -- early to those states that successfully complete phase-one applications, rather than waiting until the fall.
"To date, the Department has done everything possible to get stimulus funds out the door quickly and effectively, including approving Phase I applications within 10 days," Duncan said in a statement yesterday. "That is unprecedented speed for a federal department and today we want to take these efforts one step further by making more than $2.7 billion available immediately."
States will apply for the remaining amount of the education SFSF-- now totaling about $9 billion -- sometime in the fall.
In a statement, U.S. Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, applauded the early funding infusion. But, analysts say, state-level budget realities are increasingly grim.
The Center on Budget and Policy Priorities (CBPP), which tracks state budget conditions, said in late June that 48 states faced or still face 2010 budget shortfalls of at least $166 billion, with nearly 30 states anticipating additional shortfalls in FY 2011. This explains why many states are reportedly using a higher-than-expected proportion of the SFSF money earmarked for education to backfill budget cuts in FY 2008-09 and to cover projected shortfalls in FY 2009-10, leaving few stimulus dollars for FY 2010-11.
CBPP said that 24 states have made cutbacks in K-12 funding and 32 states have made reductions in higher education. But the organization said that ARRA assistance is working as intended by "lessening to a degree states’ need to cut spending even further." States, CBPP said, are using ARRA funds -- which provided a total of about $100 billion for education -- "to fill about 40 percent of the gap between available [state] funds and what they need to balance their budgets."
-- By Erika Fitzpatrick