Study: schools face shortfall after stimulus ends

ALBANY, N.Y. (AP) — Using federal stimulus money to avoid layoffs at schools is going to create a shortfall even more difficult for states and schools to contend with when that money runs out, according to a first-of-its-kind study released Monday.
New York alone will see a $2 billion shortfall after stimulus money ends in 2011-12, and that could drive up some of the nation’s highest local property taxes another 8 percent, according to the analysis by state Comptroller Thomas DiNapoli.
“This isn’t just a New York problem,” DiNapoli said in an early and detailed analysis of school aid after federal stimulus funds run out in 2011-12. “Other states across the country will face a similar dilemma if they used stimulus money to plug budget holes instead of paying for one-time expenses.
“Stimulus funding is not a recurring revenue; it shouldn’t be used for recurring expenses.”
A Government Accountability Office report released a week ago found 63 percent of states in a representative sample planned to use 50 percent of their school stimulus money to retain jobs. Other uses were nonrecurring items including equipment.
In July, the GAO cautioned that many states facing deep deficits were using stimulus dollars to fill budget holes and avoid layoffs, rather than reforms that could mean longer-term savings or programs such as building new schools.
The U.S. Education Department encouraged schools to diversify the use of stimulus money to ward off huge budget gaps when it runs out, said spokeswoman Sandra Abrevaya.
“When one saves a job, it doesn’t mean one saves it indefinitely,” she said.
In California, the stimulus was credited with saving or creating 62,000 jobs in public schools and state universities. Utah reported saving about 2,600 teaching jobs. In both states, education jobs represented about two-thirds of the total number of jobs said to be created or saved by the stimulus. Missouri reported more than 8,500 school jobs, Minnesota more than 5,900. In Michigan, where officials said 19,500 jobs have been saved or created, three out of four were in education.
The Congressional Budget Office has noted the difficulty of measuring the number of jobs saved by the stimulus. “It is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package,” a CBO report said last month.
The early public warning mirrors internal worries among state budget officers nationwide.
“They have to manage through the decline and end of the Recovery Act funds, but they know it’s unlikely that improved revenues — if they improve — can cover the recovery fund amounts,” said Scott Pattison, executive director of the National Association of Business Officers.
The post-stimulus era is often called “the cliff.”
In Pennsylvania, Department of Education spokesman Michael Race says the cliff was considered in budget negotiations as a consequence of using the federal money. He says it’s difficult right now to give a specific answer about a funding drop-off since many variables have yet to play out, such as how much the governor will propose to increase school funding, and whether state revenues recover.
Though Washington is talking about another federal stimulus package, states and schools aren’t expected to get another infusion of cash. But school advocates in New York have already starting to prepare a case that schools will need more federal money.
School districts faced with raising taxes to make up for stimulus money “are going to have to put together some contingency plans,” said B. Jason Brooks, director of research and communications for the Foundation for Education Reform & Accountability, a think tank.
“There may be massive teacher layoffs,” he added.
And the future may be even darker. Depressed housing values — which lag about three years behind a recession — will hurt the ability of schools and local governments to raise tax revenue, said Michael Petrilli of the Thomas B. Fordham Institute, an education think tank in Washington.
“The question is, is this the new normal?” he asked. “Schools need to get used to the idea that lean times are here and they are here to stay.”
© 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Federal money coming earlier than expected

U.S. Education Secretary Arne Duncan recently announced that $2.7 million of the federal stimulus dollars for education will be released earlier than originally scheduled. Pennsylvania received $114,451,594 early.
Think any of that will make it's way to southwestern Pennsylvania?

U.S. Education Secretary: States could lose out on stimulus cash

WASHINGTON (AP) — The Obama administration warned states Thursday it may withhold millions of dollars if they use stimulus money to plug budget holes instead of boosting aid for schools.
Education Secretary Arne Duncan made the threat in a letter to Pennsylvania Gov. Ed Rendell, but his words could have implications for Texas, Arizona and other states.
And they raise the stakes for the White House, which will come under intense pressure from Congress if Duncan does hold back some money.
In the letter, Duncan wrote he is displeased at a plan by Pennsylvania’s Republican-led Senate to reduce the share of the state budget for education while leaving its rainy-day surplus untouched. To do so “is a disservice to our children,” Duncan wrote.
“Each state has an obligation to play its part in spurring today’s economy and protecting our children’s education,” he wrote.
Duncan said the plan may hurt Pennsylvania’s chance to compete for a $5 billion competitive grant fund created by the stimulus law to reward states and school districts that adopt innovations Obama supports.
Rendell, a fellow Democrat, asked Duncan to weigh in.
The education secretary applied similar pressure to Tennessee lawmakers last month after Democrats there blocked a bill to let more kids into charter schools, even though President Barack Obama supports charter schools.
Duncan warned the state could lose out on extra stimulus dollars, and it appears to have worked: This week, lawmakers revived the bill and put it on a fast track toward passage.
In Pennsylvania, the issue is over school spending, which takes up a huge share of state budgets.
State Senate Republicans argue the economy is forcing states across the country to make up for budget cuts with federal stimulus dollars.
“We can only spend what we have, and the state should not increase taxes when so many hardworking families are already struggling to make ends meet,” said Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi.
Rendell disagrees.
“The state must make sure we do not simply use stimulus funds to cut state funding for schools,” Rendell spokesman Chuck Ardo said.
In Texas, Arizona and many other states, state lawmakers are still arguing over school spending cuts and the use of stimulus dollars.
Obama did not intend for state lawmakers to simply cut state education spending and replace it with stimulus dollars.
Congress made that tough to enforce; the stimulus law generally does not prohibit states from using some of the money to replace precious state aid for schools. The result is that school districts could wind up with no additional state aid even as local tax revenues plummet.
But Duncan does have leverage; he alone has control over the $5 billion incentive fund. And in some cases, he may be able to withhold some stimulus dollars that have been allocated for a particular state.
© 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

So ... is that stimulus coming?

Some districts say they don't think they will get their piece of the federal pie because of a letter sent by several state Senate leaders. Those leaders are asking districts to be cautious with their budgets because until the state budget is approved, there is no promised dollar amounts for school districts.
Should districts be getting some of the stimulus or is it OK to move money around the the budget to fill holes and not give schools a windfall?