Good news, for a change — federal help on the way for Medicaid and schools

Thursday, August 5th, 2010 at 10:16 am by

Earlier in the week I reported that the Assembly and Senate had both approved Governor Paterson’s proposal to authorize equal, across the board reductions in most areas of state spending, including School Aid, in order to accommodate a feared loss of $1.085 billion in anticipated additional federal help in paying for Medicaid.

Yesterday, however, there was a breakthrough in the U.S. Senate, which approved an amendment continue some of this additional federal aid.  The same legislation also authorizes an “Education Jobs Fund,” to help school systems create or maintain positions in the current school year.

The U.S. House of Representatives is expected to pass corresponding legislation early next week.  The House has previously approved similar initiatives, so passage is deemed certain.

I estimated that the state’s contingency plan for handling the federal Medicaid shortfall could have translated into a $300 to $400 million current-year reduction in School Aid, based on its share of total state spending subject to the reductions.

The timing and amounts of additional Medicaid help are not completely clear, but it appears the state can count on at least $800 million in its current fiscal year.  This would reduce the need for across the board reductions by more than 70 percent.

As noted, the legislation also includes funding for a long-discussed “Education Jobs Fund.”  It is estimated that New York would receive over $600 million from this initiative for use in the current school year.

School districts would be required to use the funds

…only for compensation and benefits and other expenses, such as support services, necessary to retain existing employees, to recall or rehire former employees, and to hire new employees, in order to provide early childhood, elementary, or secondary educational and related services.

Schools would be prohibited from using the aid for, “…general administrative expenses or for other support services expenditures as those terms were defined by the National Center for Education Statistics…”

The funding is to be allocated among districts according to the “…primary elementary and secondary funding formulae or based on local educational agencies’ relative shares of funds under part A of title I of the Elementary and Secondary Education Act of 1965…”

I am reputed to be one of the handful of people in our state who understand New York’s School Aid formulas.  I am at a loss to identify what are now “the state’s primary elementary and secondary funding formulae.”

The legislation includes some complicated requirements for states related to maintaining their effort in funding education and higher education, and meeting various assurances concerning education reform efforts.  It also prohibits states from placing the aid into “rainy day funds” or using it to reduce state debt.

The state is required to submit an application for the funding within 30 days after it is enacted into law.

At this moment my assumption is that the Legislature will need to reconvene to approve an appropriation and an allocation method.

Here is a report from the Associated Press on the legislation.

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