Schwarzenegger Administration: Federal Money Enough to Offset Public School Budget Cuts

Sacramento — In good news for public schools, federal recovery money for education should be enough to offset $2.4 billion in budget cuts, state Department of Finance officials said March 24.

The budget signed last month reduces state support for public schools by $2.4 billion in the fiscal year that begins July 1. Until March 24, there had been no acknowledgement by the Schwarzenegger administration, which receives the federal money, whether the stimulus dollars would total enough to avoid those cuts.

Lawmakers, the governor and state and local educators have been grappling over how best to spend the nearly $8 billion in federal recovery money for public education California is scheduled to receive over the next nine months.

Some legislators and their chief budget advisers want to hold back as much as $2.3 billion that would otherwise flow to schools to soften future state fiscal calamities that are expected to result from a steady drop in tax revenues and an increase in unemployment.

Echoing the sentiments of local school districts, State Superintendent of Public Instruction Jack O’Connell wants as much money as possible sent as quickly as possible to public schools.

“My chief goal is to ensure that California gets the full share of the federal recovery funds we are entitled to and that we get this money to schools as quickly as possible,” O’Connell said.

“My staff is working closely with the governor’s office to work out the fine points on how these monies will be delivered to our local education agencies.”

O’Connell favors giving schools $3 billion they can spend largely as they please and more than $2.3 billion earmarked for low-income and special needs students.

The $3 billion would more than offset the $2.4 billion in funding reductions schools face in the fiscal year beginning July 1 as a result of the state budget signed in February.

Districts have issued between 27,0000 and 29,000 pink slips to teachers in anticipation of next year’s cuts.

Department of Finance officials did not give a specific dollar amount public schools would receive in federal funds, only that it would cover the $2.4 billion in budget cuts.  

Gov. Arnold Schwarzenegger does not favor reserving money due schools to combat future state budget problems – a move opposed by California House members who supported the America Recovery and Reinvestment Act.

“We’re not going to let a lot of grass grow under our application when we receive it,” said H.D. Palmer, a spokesman for the finance department.

There are three main pots of federal money.

The biggest is the State Fiscal Stabilization Fund, which contains $4.87 billion to be shared between public schools, state universities, community colleges and the University of California.

Another pot sets aside just over $1.5 billion for low-income students, $383 million of which for grants to low-performing schools. The remainder of what’s called Title 1 money would be divvied up based on the number of low-income pupils in each district.

Urban districts would tend to benefit more from this pot. Fresno Unified, for example would receive $37.5 million. Los Angeles Unified, the second largest school district in the country with more than 700,00 pupils, would get $400 million. Oakland Unified $17 million.

Another $1.3 million is targeted for special education students.

Because of the size of their enrollment, urban districts would also get a larger chunk of these dollars. Oakland Unified would receive $13 million. San Diego City Unified would get $29 million. Los Angeles $168 million.

While how much each district receives in low income and special needs student money is easy to calculate based on enrollment, that’s not the case with the stabilization funds which are shared with higher education.

Schwarzenegger vetoed $500 million in spending for the University of California and California State University in the budget he signed in February. The GOP governor pledged the cuts would be restored using federal recovery money.

Local educators have contended that even with the governor’s $500 million in higher education vetoes there is at least $2.4 billion in stabilization funds available to erase the public school reductions imposed by the state budget. – a view echoed March 24 by the Schwarzenegger administration.

At a March 18 hearing to discuss the options presented by the federal education money, the Legislative Analyst’s Office, which offers lawmakers budget advice, recommended holding back the Title 1 and special needs student money for use later in lieu of state dollars to help balance the budget.

Some lawmakers support that idea but its unclear how much influence the Legislature will have on the dispersal of the federal dollars. The money comes directly to the governor’s office, which, in turn, sends it to the state Department of Education for distribution to individual districts. 

Rep. George Miller, chair of the House Education and Labor Committee, wrote Schwarzenegger and O’Connell on March 17, telling them the state should keep its hands off stabilization funds.

“It has been suggested that the state has some ability to intercept Stabilization Fund dollars. It does not and we would like to clarify that,” Miller wrote in a letter signed by 25 other Democratic members of California’s Congressional Delegation.

It is the intent of Congress (Miller’s emphasis) that local educational agencies may determine how to use Stabilization Funds and that resources are allocated from the state to school districts and institutions of higher education as soon as possible.”

The federal largesse does come with some strings.

Districts are encouraged to use the low-income and special needs pupils money on one-time expenses such as increased teacher professional development, reading and math coaches, transition coordinators to help find jobs for disabled youths and improved data collection.

Money from the stabilization account, however, can be more broadly applied.

“Those would be the funds that could be used to pay salaries and avoid laying off teachers and other school personnel,” sand Andrea Ball, deputy superintendent for government affairs at the state Department of Education.

Both local districts and the state must report to the federal government on how the money was used and the results.

The state must submit quarterly reports on how stabilization funds were used. The reports must contain “financial information and information on the program.”

And there is an annual report on stabilization funds that must show how the funds were used, the estimated number of jobs created or saved, the estimated tax increases that were avoided and the state’s progress in meeting the promises it made when applying for the money.

Among the areas in which progress must be shown is, quoting largely from the Recovery Act:

Reducing inequities in the distribution of highly qualified teachers;

Implementing a state longitudinal data system;

Developing and implementing valid and reliable assessments for limited English proficient students;

Improving or enhancing the state academic content standards; and Ensuring support for the lowest performing schools.

The federal government has said applications for the education money should be available by March 31. Schwarzenegger has said he seeks receipt of the funds as quickly as possible.

But it could take up to one month for the Department of Education to sort out how much each district gets and report that to the state Controller who then would cut the checks.




Filed under: Budget and Economy


  1. As the parent of a special needs child, THANK YOU for everyone involved in helping support my and other children. We are tired of our child being considered a drain on public school funds.

    Comment by Mark — 3.24.2009 @ 8:42 pm

  2. Greg, nice story. Would you let me know then the first Obama dollar hits California so we can be involved?

    Comment by Morry Madoff — 3.24.2009 @ 9:44 pm

  3. It is nice houwever these funds are one time in nature or over the course of two years and will not be calculated into the P98 guarentee. When the federal funds go away . .we’re right back where we started.

    Comment by crc — 3.25.2009 @ 9:04 am

  4. While I support funding our education system and think these dollars are really going to help get us through a tough time I often wonder how much would be enough for public education. With the Prop 98 guarantee at 40% of all money coming into the state I struggle to find the appropriate amount needed. The current budget deal reduces the amount of automatic increases to the education budget at a time when enrollment is decreasing and yet the education community is saying that this decrease is catastrophic in nature. Help can someone explain a reduction in students costing more?

    Comment by Management Slug — 3.25.2009 @ 10:43 am

  5. Greg – your story does a great job of explaining the need for these federal funds to be released immediately to school districts to mitigate the 30,000 teacher and administrator pink slips that have been sent out and the nearly 10,000 school employees who have already been laid off. Glad to hear that the Governor’s office is also recognizing the importance of ensuring that every dollar of federal stimulus funds marked for schools gets distributed in full and immediately to the school districts that so badly need them.

    I only hope that your headline doesn’t lead readers to believe that the federal stimulus funds will take care of the entire problem. The fact is, before the mid-year cuts of $3 billion, and before the $11.6 billion in cuts included in this year’s budget, California ranked a dubious 47th in the nation in per-pupil spending. (Source – national non-partisan publication: Education Week) There is little doubt that we are now dead last in the nation in per-pupil spending.

    Fixing California’s problem of chronically underfunding our public schools will take a multi-pronged approach, starting with immediate distribution of the federal stimulus funds, passage of Prop 1B to restore $9 billion of the funds that have been cut, and then long-term, stable revenue solutions to ensure that we never again rank dead last in how much we invest in our students.

    For information on how these cuts impact our schools every day (skyrocketing class sizes, elimination of arts, music, after-school, vocational education programs and more), please visit: http://www.protectourstudents.org

    Comment by Robin Swanson — 3.25.2009 @ 12:59 pm

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