Stimulus update

Friday, February 13th, 2009 at 3:36 pm by

We cannot yet add much to what we have already reported on how the federal stimulus package expected to pass Congress today may benefit individual New York school districts.

The House has already passed the bill.

The State Education Department will work hard to get information out as promptly as possible — as will we.

As we have explained, the state stabilization fund is intended expressly to help states avert reductions in aid to schools and colleges– first, cuts from either 2008 or 2009 levels (whichever is greater) and then from levels promised under state aid formulas enacted by state law prior to October 1, 2008 (for example, new York’s Foundation formula).  Subject to this direction in the federal law, these funds are to be allocated by each state’s governor.  This will require some time to sort out.

Most other new aid — for Title I and IDEA (special education) will be allocated by existing federal formulas.

The federal stimulus legislation gives the State Legislature little or no role in directing where new education funds should go.  But a State Court of Appeals decision requires that federal grants to New York State be appropriated by the State Legislature.

In other words, the Legislature may not have authority to direct the funds, but must take the step of appropriating them before they can be legally spent.

Most probably, appropriations of federal stimulus funds would be made as part of the state budget due for the fiscal year starting April 1.

We would expect that allocations of the the Title I and IDEA funds to be available to districts soon — no state government action is needed to determine the allocations, only to appropriate the funds.

Again, allocation of the stabilization funds does require state action and presumably some approval by federal authority, so that will take longer.

It can be expected that the Legislature would want to factor the allocation of federal support — including stabilization funds — into its decisions on any further restorations of state education funding.

Governor Paterson has sent conflicting signals in his reactions to the stimulus plan.

The New York Daily News reported, “Gov. Paterson said the stimulus bill all but required him to restore a proposed $700 million cut in state aid to [New York] City schools – a whack that Schools Chancellor Joel Klein had warned could cost thousands of teachers their jobs. “We have no choice [but to restore the funds], and we are glad we have no choice,’ Paterson told reporters during a late-day conference call with [U.S. Senator Chuck] Schumer.”

As reported by the Buffalo News, Senator Schumer said that “This [the stimulus funds] should cover most, if not all, of the state funding gap this year.”

On the other hand,the Governor has said that the state needs to follow through with some budget cuts:  “We’re not going to reduce our requests for [spending] reductions. To just start opening up the door for us to go back to our addictive conduct, I’m not going to let that happen.”

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