Complete Coverage

'Funding Cliff' Looms Large for States

Eventual End of Stimulus Aid Could Leave Big Budget Holes

Amid a still-shaky economy, a troubling reality is starting to set in for states and school districts: The budget situation may get a lot worse when the federal economic-stimulus spigot runs dry.

The hope of the Obama administration and Democrats in Congress has been that the $787 billion in the American Recovery and Reinvestment Act—including some $100 billion for education—would soften the pain of the recession and help drive a recovery.

But as helpful as many state and local officials have found the one-time stimulus aid in coping with current and anticipated revenue shortfalls, it creates some awfully big holes to fill when the money begins to run out late next year in what’s widely known...