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Education Funding

States Get $2.7 Billion in Early Stimulus Aid

By Michele McNeil — July 01, 2009 1 min read

Consider this a Happy New Fiscal Year gift from the U.S. Department of Education.

Education Secretary Arne Duncan and crew announced today that $2.7 billion in government services funding from the State Fiscal Stabilization Fund is going out early. (Vice President Joe Biden let the cat out of the bag around noon, during an update on the recovery act.) This government services money is the smaller, $8.8 billion portion of the larger $48.6 billion stabilization fund that’s discretionary—funds governors can choose to use for things such as K-12 education, public safety, or any other pressing budget needs.

Federal officials were holding back $2.7 billion in government services funding, and one-third of the rest of the stabilization fund money, to make sure states spent the first round wisely. Though the government services money is going out a couple of months early, the rest of the stabilization money will still be kept for safe-keeping, until being released in the fall.

For the majority of states that have approved stabilization fund applications, they’ll get their money, about $2.4 billion, today—the start of new fiscal years in most states. For those states with pending applications, they’ll get their money as soon as the applications are approved.

And, by the way, every state made the department’s July 1 4:30 p.m. EDT deadline for submitting their application. Texas was the last one in the door, at 4:12 p.m.

The department decided to accelerate the money after hearing that states are facing increasing budgetary pressure, even though two-thirds of the stabilization fund money has already gone out.

In a statement, Duncan said: “To date, the Department has done everything possible to get stimulus funds out the door quickly and effectively, including approving Phase I applications within 10 days. This money, which represents the final third of the government services fund, provides maximum flexibility for states to save jobs and drive reform.”

Important to remember is that just because the education department releases the money doesn’t mean states immediately start spending it. The latest spending report from the department as of June 26 shows that of the $45.5 billion in overall stimulus money that’s been obligated to states, only $8.7 billion of it has been drawn down by states.

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