Published Online: March 1, 2011
Published in Print: March 2, 2011, as States Slow in Tapping Aid From Education Jobs Fund

States Slow to Tap 'Edujobs' Funding

As states and school districts approach a multi-billion-dollar funding cliff later this year when most of the money runs out under the federal economic-stimulus program, they are slowly tapping the separate $10 billion Education Jobs Fund to help them ride out a rocky recovery from a deep recession.

With the school year half over, 20 states and the District of Columbia have spent less than 5 percent of their allotments under that one-time measure designed to save educator jobs this year and next, according to an Education Week analysis of U.S. Department of Education data. Only four states—Kansas, South Dakota, California, and Georgia—have spent more than 80 percent of their shares. And Texas and South Carolina, which have their own unique budget dynamics that have affected their applications, may never see a dime.

Overall, states have spent $2.5 billion of the $10 billion pot of money Congress created in August to help shore up states’ K-12 budgets, just as much of the nearly $100 billion in education aid from the American Recovery and Reinvestment Act dries up. All told, states report that translates into 62,487 jobs either created or saved through Dec. 31.

The Education Jobs Fund, also known as "edujobs" money, is designed to pay the salaries and benefits of teachers and other school personnel this school year, although districts can hold their money over into the 2011-12 school year. The money was put on the fast-track, with states submitting a simple, streamlined application and the Education Department making awards within two weeks of receiving the paperwork last year. The last state to receive its award was Wyoming, in October.

Nationwide Look: School Positions Saved

Congress’ $10 billion Education Jobs Fund has saved or created 62,400 jobs through Dec. 31, states report. Because states are spending their money at vastly different rates, the number of jobs per state also varies greatly.

The slow drawdowns can be attributed to a variety of reasons, and the Education Department isn't worried, said spokeswoman Sandra Abrevaya. First, states draw down the money only when they need it and do not get the funds in a lump sum upfront. In turn, some states are following the same process with their districts—reimbursing districts for expenses, such as teacher salaries, rather than sending the cash along from the beginning. And in other states, legislative action is required before the funding can be spent.

What's more, many states are likely holding off on releasing the funds to their districts until the 2011-12 school year, giving states and school districts the summer to plan how they will spend the money, said John Musso, the executive director of the Association of School Business Officials, in Reston, Va.

"They are doing this because of the huge uncertainty in state budgets," Mr. Musso said. "Most think it will get worse before it gets better, and are saving those funds in case" fiscal conditions don't dramatically improve.

Money—With Strings

The jobs funding is based on the K-12 population in each state and is distributed to school districts, in most cases, based on the state’s school funding formula. To get the funding, states have to maintain their own education funding at certain levels, such as by providing as much aid for K-12 and higher education as they did in 2009. (There are other, more complex ways to meet this "maintenance of effort" requirement, too.)

The money is supposed to help states and school districts recover from the loss of aid from the ARRA, particularly the nearly $50 billion states got over the last two years in State Fiscal Stabilization Fund grants to prop up their budgets.

Employment-Pot Spending

States are slowly working through the $10 billion Congress approved last year to help save education-related jobs this school year and next. As of Feb. 11, only $2.5 billion had been spent. How quickly each state is spending its share varies widely, with 20 states and the District of Columbia having spent less than 5 percent of their money.

The aid comes at a critical time for state budgets, which are still feeling the squeeze from a lengthy and deep recession. In fiscal 2012, 23 states are reporting a combined $40.5 billion in budget gaps, and 17 states are projecting a combined $40.9 billion in shortfalls for fiscal 2013, according to a fall 2010 reportRequires Adobe Acrobat Reader by the two associations representing the nation’s governors and their budget officers.

It's that funding cliff, and persisting budget woes, that are prompting many states to spend their edujobs money cautiously.

Maryland had drawn down less than 3 percent of its $179 million, purposefully slow because state funding, coupled with economic-stimulus money, has gotten the state through the 2010 and 2011 fiscal years, said Bill Reinhard, a spokesman with the state Department of Education.

"The edujobs money doesn't dry up until [next year], so anecdotally we know that most systems are [counting on] at least some of the money to assist with the funding cliff," he said.

Two states are at risk of losing their money altogether.

South Carolina is forgoing its $140 million allotment because of large cuts the state made to higher education last year, which means it cannot meet the maintenance-of-effort requirements in the law that apply to both K-12 and higher education spending. The lost federal aid would fund the equivalent of 2,600 teacher jobs, according to federal estimates.

Last year, under then-Superintendent of Education Jim Rex, a Democrat, state education officials worked with the South Carolina congressional delegation to try to get a fix through Congress allowing the state to access the money. But under new schools' chief Mick Zais, a Republican, the state has dropped any such attempts. "It's a dead issue to us," said J.W. Ragley, the deputy superintendent for legislative affairs for the South Carolina education department.

Texas Lawsuit

Texas, meanwhile, is embroiled in a lawsuit with the federal Education Department over special rules Congress created just for the Lone Star State and its $830 million share. These rules, inserted by U.S. Rep. Lloyd Doggett, an Austin Democrat, require the state to promise to maintain current levels of K-12 spending through fiscal 2013. Texas officials would not make those promises, and so the Education Department did not approve the application.

Texas is suing in federal court, arguing that Gov. Rick Perry, a Republican, went as far as he could in promising to maintain education funding levels—and that the state legislature holds the power to make good on those promises.

In a legal brief filed by the U.S. Department of Justice last month, lawyers argued the courts shouldn't be involved because the Education Department didn't reject the application, but instead couldn't approve it and offered to work with the state to fix the problems.

Meanwhile, state officials are working with their congressional delegation to get the stricter rules removed. The House version of a federal budget bill approved last month contains an amendment that would bar the department from enforcing those special rules. An infusion of $830 million is the equivalent, according to federal estimates, of 14,500 jobs.

This comes at a time when Texas is facing a two-year shortfall of up to $27 billion, which could mean deep cuts in K-12 spending. ("Texas Schools Fear Deep Cuts in State Budget," Feb. 9, 2011.)

"We would like to see the money come here and come to our schools," said Suzanne Marchman, a spokeswoman for the Texas Education Agency. "But we're in a holding pattern right now."

Texas has until Sept. 30 to sort things out. At that time, any unused money, from South Carolina or Texas returns to the U.S. Treasury.

Vol. 30, Issue 22, Pages 18,20

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