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State News: August 2009

 

 

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Stimulus Aims to Keep Education Safe
CSG’s Guide to the State Fiscal Stabilization Fund

By CSG Washington, D.C., office staff
In a world of budget cuts, not even cuts to education have been off the table as states struggle with mounting budget gaps. In the more than 1,000 page federal stimulus bill, education is just one area where states can get some much-needed funding. A new report by The Council of State Governments’ Washington, D.C., office, explains how the State Fiscal Stabilization Fund works. The majority of the $53.6 billion fund provides grants to governors for state fiscal relief to support ongoing costs of education as well as incentive funds to states and localities to encourage certain types of education reforms.

The Guide:

The State Fiscal Stabilization Fund, included in the American Economic Recovery and Reinvestment Act of 2009, provides grants to governors to support ongoing education costs as well as incentive funds to states and localities to encourage certain types of education reforms. The conference agreement provides $53.6 billion for the Stabilization Fund, distributed through the U.S. Department of Education, to states for much-needed measures such as preventing teacher layoffs and cutbacks in education and other key services.
Of the $53.6 billion, $39.5 billion is allocated to support elementary, secondary and postsecondary education; $5 billion is allocated to states as bonus grants for meeting key performance measures in education; and $8.8 billion is provided to states for high priority needs, such as public safety and other critical services.
Any funds not committed by the governor of a state within two years of receiving such funds, must be returned to the U.S. Department of Education. Remaining funds will then be reallocated to the remaining states.

How States Can Use the Funds

Part I – For each fiscal year, the governor must use 81.8 percent of the state’s share of the funds for supporting elementary, secondary and postsecondary education and, as applicable, early childhood education programs and services. The governor of each state must use these funds in the following manner:
  • Funds must be provided through the state’s primary elementary and secondary education funding formulae to:
  • Restore, in each of the 2009, 2010 and 2011 fiscal years, the funding level of state support provided through such formulae to the greater of the funding level in the 2008 or 2009 fiscal years;
  • To allow existing state formulae increases to support elementary and secondary education for the 2010 and 2011 fiscal years to be implemented and allow funding for phasing in state equity and adequacy adjustments, if such increases were enacted pursuant to state law before Oct. 1, 2008.
  • The governor must provide in each of the 2009, 2010 and 2011 fiscal years, the amount of funds to public institutions of higher education in the state that is needed to restore state support for such institutions to the greatest of the 2008 or 2009 fiscal year level.
If the governor determines the amount of funds available under this section is insufficient to support the levels required for the 2009, 2010 and 2011 fiscal years, the governor must allocate those funds between the (1) elementary and secondary education and (2) for higher education in proportion to the relative shortfall in state support.
All remaining funds under this section must be allocated to local education agencies, based on their relative shares of funding under Part A of Title I of the Elementary and Secondary Education Act for the most recent year for which data are available.
Part II – The remaining 18.2 percent of the state’s allocation must be used for public safety and other government services, which may include assistance for elementary and secondary education and public higher education institutions. These funds may also be used for modernization, renovation, or repair of public school facilities and higher education facilities, including modernization, renovation and repairs that are consistent with a recognized green building rating system.

Local Educational Agencies Could Get Funding

Local educational agencies receiving Stabilization Funds may only use the funds for any activity authorized under the Elementary and Secondary Education Act, Individuals with Disabilities Education Act, the Adult and Family Literacy Act or the Perkins Act. In addition, funds may be used for modernization, renovation or repair of public school facilities.
Prohibited Uses – Local education agencies cannot use funds for the following:
  • Payment of maintenance costs;
  • Stadiums or other related facilities;
  • Purchase or upgrade of vehicles; or
  • Improvement of stand-alone facilities whose purpose is not the education of children.

Funds May Prevent Some College Tuition Hikes

Public higher education institutions receiving Stabilization Funds must use the funds for education and general expenditures, and in a way that mitigates the need to raise tuition and fees for in-state students. Funds may also be used for modernization, renovation or repair of facilities that are primarily used for instruction, research or student housing.
Prohibited Uses – Public higher education institutions cannot use these funds for the following:
  • To increase the institution’s endowment;
  • Maintenance of systems, equipment or facilities; and
  • Modernization, renovation or repair of:
  • Stadiums or other related facilities;
  • Facilities used for sectarian instruction or religious worship; and
  • Facilities in which a substantial portion of the functions are subsumed in a religious mission.

Governors Must Submit Applications

The governor of each state must submit an application that includes the assurances described in section 14005, subsection (d) of this title that provides baseline data demonstrating the state’s current status in each of the areas described in such assurances. The application must also describe how the state intends to use its allocation (which includes what amounts will be used to meet maintenance of effort requirements under the Elementary and Secondary Education Act and the Individuals with Disabilities Education Act.
Section 14005, subsection (d) provides that the following assurances must be included in the application:
  • Maintenance of Effort – The state must, in each of the 2009, 2010 and 2011 fiscal years, maintain support for elementary and secondary education and public higher education institutions (not including support for capital projects or for research and development or tuition and fees paid by students) at least at the level of state support from the 2006 fiscal year;
  • Achieve equity in teacher distribution – The state must improve teacher effectiveness and compliance with the Elementary and Secondary Education Act in order to address inequities in the distribution of highly qualified teachers between high- and low-poverty schools, and to ensure that low-income and minority children are not taught at higher rates than other children by inexperienced, unqualified teachers;
  • Improve collection and use of data – The state must establish a data system that includes elements described in section 6401(e)(2)(D) of the America COMPETES Act;
  • Standards and Assessments – The state must enhance the quality of academic assessments, including children with disabilities and limited English proficient students in assessments, and take steps to improve state academic content standards and student academic achievement standards; and
  • Support Struggling Schools – The state must ensure compliance with corrective actions required for low-performing schools.
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