Published Online: April 20, 2009

Stimulus Dollars Cleared for California

Education Secretary Arne Duncan on Friday released nearly $4 billion to California, the first state to benefit from a special fund for states that was created by the economic stimulus law.

Duncan said the money will "save jobs and lay the groundwork for a generation of education reform."

The fund will replenish state budgets that have been cut or threatened because of the recession. Most of the money is intended for schools, since education accounts for a big share of state spending. President Barack Obama promises it will rescue hundreds of thousands of teaching jobs.

Yet some governors insist they need to hold onto the money or use it to free state education dollars for other priorities. And loopholes created by Congress could allow that to happen.

More states are expected to receive money from the fund in the coming days.

In California, state officials had initially said they could use the money to fill budget holes. But the state's congressional delegation, led by House Education and Labor Committee Chairman George Miller, pressed Gov. Arnold Schwarzenegger to distribute the money directly to school districts.

Last month, California Education Secretary Glen Thomas wrote the lawmakers that the money would, indeed, be spent on local school needs such as saving teachers' jobs.

Miller said Friday that "help is on the way." Nearly 30,000 teachers in California received layoff notices last month.

And Schwarzenegger said he will send the dollars out quickly.

"We're the first to pass these dollars immediately to local school districts, and we're the first to protect teachers' jobs with Recovery Act dollars," Schwarzenegger said in a statement.

The largest teachers' unions, the American Federation of Teachers and National Education Association, are urging governors across the country to distribute the stimulus money to schools.

States would "do a terrible disservice to students" by diverting precious dollars away from schools, AFT president Randi Weingarten and NEA president Dennis van Roekel said in a letter to governors.

An estimated 9 percent of teachers, about 294,000, may face layoffs because of budget cuts, according to a University of Washington study.

Duncan has warned he will come down "like a ton of bricks" and withhold the next round of funds from any state or school district that defies Obama's wishes.

He has already distributed billions of dollars to states, sending money through federal funding formulas for poor children and children with disabilities.

To get money from the special state aid fund, California and other states had to submit applications that assure they will make progress in several areas, including teacher quality, turning failing schools around, allowing more charter schools to open and reporting whether state academic standards are rigorous enough. States also must set up sophisticated data systems to track student performance.

States must show progress on those fronts to get the next round of stimulus dollars to be distributed in the fall.

Obama's economic stimulus bill provides an unprecedented amount of money for schools — double the education budget under President George W. Bush — over the next two years.

One governor, South Carolina's Mark Sanford, has refused money from the stimulus. A high school student there filed a lawsuit Thursday over Sanford's refusal.

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