Published Online: April 6, 2009
Published in Print: April 8, 2009, as S.C. State Officials At Odds Over Aid

Policy Brief

S.C. State Officials At Odds Over Aid

Gov. Mark Sanford set off a political firestorm in cash-strapped South Carolina over his intention to forgo some $700 million in federal education aid under the $787 billion economic-stimulus law unless he could use it to pay down state debt.

Mr. Sanford, a Republican thought to be mulling a White House run in 2012, has been a leading critic of the stimulus. He argues that it would drive up the debt and burden future generations stuck paying the bill.

"We simply cannot afford to base 10 percent of our state budget on money that will disappear in two years’ time," he said in a recent press release.

At issue is the state’s share of the $48.6 billion in the State Fiscal Stabilization Fund, a part of the American Recovery and Reinvestment Act mostly aimed at education. Governors had until April 3 to indicate their intent to seek the funds.

Gov. Sanford first said he wasn’t sure he'd take the stimulus money. Then he said he would—but only to pay down state debt. The Obama administration said that’s not a permissible use. At press time late last week, the governor indicated he would take steps to assure the state would remain eligible for the money, while seeking to leave his options open.


South Carolina legislators were hoping to get around the governor by requesting the money themselves. A provision in the stimulus law says state legislatures may do this.

But last week, White House budget chief Peter R. Orszag ruled that the provision, as written, was not sufficient. The $700 million in stabilization funds could only be released if the governor requested it. Similar restrictions do not apply to Title I and special education aid under the stimulus package.

Mr. Orszag did say in a letter to U.S. Sen. Lindsey O. Graham, R-S.C., that the administration would be receptive if Congress wanted to clarify the law. And U.S. Secretary of Education Arne Duncan has signaled that he would seek a way to get stimulus money to states in which the governors do not want it. ("White House rules: Governors Control Stimulus Cash," April 1, 2009.)

Gov. Sanford's actions have drawn protests in his state, which faces likely cuts to education and other programs without the aid. The Democratic National Committee has even paid for a television ad accusing the governor of "putting politics ahead of health care, jobs, and schools."

Vol. 28, Issue 28, Page 15

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