States eye education stimulus to fill budget gaps

“We’re putting out literally billions of dollars.

We’re also holding back billions of dollars.

If we see states doing things that don’t make sense

and aren’t in the spirit of what this [stimulus aid] is about,

they would put themselves in jeopardy

of receiving the second set of money.”

-- Education Secretary Arne Duncan

This from Michele McNeil At Ed Week by way of KSBA:

Local officials crying foul as governors grab for aid

Desperate for cash to fill growing budget deficits, state governments are starting to tangle with federal and local officials over a $39.8 billion pot of economic-stimulus money that was designed to prop up the budgets of local school districts, but is increasingly being eyed as a patch for states’ own financial woes.

Vague language and loopholes in the American Recovery and Reinvestment Act—the stimulus package signed into law in February by President Barack Obama—are sparking questions about how much discretion states have over education stimulus funding. Mayors and school boards in a number of states fear being shortchanged by revenue-hungry governors and legislatures.

U.S. Secretary of Education Arne Duncan is putting state-level officials on notice that spending the first chunk of stimulus money unwisely could jeopardize aid that his office will distribute later.

“If states are doing things that are not in the best interests of children, they are just very simply going to disqualify themselves and take themselves out of the running for billions of dollars,” Mr. Duncan said in an interview last week.

Examples of such power struggles are piling up across the country.

In Rhode Island, Gov. Donald L. Carcieri, a Republican, wants to cut state education funding in the next budget year by about $37 million, free up that money for other purposes, and use federal stimulus money to fill in the education gaps.

In Kansas, Gov. Kathleen Sebelius, a Democrat who has been tapped to become Mr. Obama’s secretary of health and human services, is objecting to the legislature’s pursuit of $26 million in K-12 cuts to help shore up the state’s $680 million budget deficit, even as Kansas is expecting about $387 million in federal education stimulus aid.

And in Ohio, under a new funding formula proposed by Democratic Gov. Ted Strickland, some districts would get little or no additional money over the next two fiscal years, even though they’re supposed to get a boost from the stimulus package through the federal Title I and special education programs...