Preliminary details on the stimulus plan agreement in Washington

Thursday, February 12th, 2009 at 3:03 pm by

Yesterday, U.S. Senate and House leaders announced agreement on the outlines of a final federal stimulus package.  The agreement came quickly, just one day after the Senate had passed its version of the legislation.  The House expects to pass the bill tomorrow (Friday).

Details have been slow to emerge.  So far, however, the reported funding levels for education programs appear encouraging, even though the overall price tag for the plan is lower than for either of the plans passed by the houses.

The state stabilization fund would be funded at $53.6 billion over two years, part-way between the House ($79 billion) and Senate proposals ($39 billion).  Specific funding for school construction is omitted from the final package, but the agreement reportedly would allow states to use some of the stabilization funds for construction.

A fact sheet from House Speaker Nancy Pelosi explains that the stabilization fund would include $40.6 billion to be allocated by states to local school districts using existing state funding formulas.  Another $5 billion would be provided to states as incentive grants for meeting key performance measures, and $8 billion would be available to states to for other high priority needs, which may include education.

Although the stabilization fund would get less than in the original House plan, and would be expected to cover some school construction projects, the amount directed to schools could be comparable, depending on bill language – which is not yet available.  Bills passed by each house would have allowed states to use more of the stabilization funds for non-education priorities.

Preliminary estimates suggest that New York State could receive $2.5 billion over two years from the stabilization fund.  From the preliminary summaries it is not clear whether some of this funding would used to maintain higher education support, as well as school funding.  Prior bills did so.

Without bill language, we cannot advise how the stabilization funds might be allocated within New York State.  The bills which previously passed the houses would have provided that the funds are to be allocated by the governor of each state, first to provide the amount of funds through the state’s principal school aid formula needed to maintain state support at 2008 levels.  The Senate bill went on to add a provision to use funds to support previously enacted state formula increases – such as New York’s Foundation formula.

Increases for Title I and IDEA (special education) are modestly reduced from the levels in the previously passed bills – basic IDEA grants would be $11.7 billion (nationwide), down from $13 billion; and Title I grants would be $10 billion, down from $11 billion.  Previously released district-by-district estimates would presumably be proportionately higher than what would be forthcoming from the enacted plan.

The agreement also preserves an $87 billion increase in the federal share of Medicaid costs.  States may use this funding as general budget relief.  Senator Chuck Schumer estimates that this will provide $8.4 billion over two years for new York State, plus $3.6 billion to counties and New York City.

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