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States Get $2.7 Billion in Early Stimulus Aid

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Consider this a Happy New Fiscal Year gift from the U.S. Department of Education.

Education Secretary Arne Duncan and crew announced today that $2.7 billion in government services funding from the State Fiscal Stabilization Fund is going out early. (Vice President Joe Biden let the cat out of the bag around noon, during an update on the recovery act.) This government services money is the smaller, $8.8 billion portion of the larger $48.6 billion stabilization fund that's discretionary—funds governors can choose to use for things such as K-12 education, public safety, or any other pressing budget needs.

Federal officials were holding back $2.7 billion in government services funding, and one-third of the rest of the stabilization fund money, to make sure states spent the first round wisely. Though the government services money is going out a couple of months early, the rest of the stabilization money will still be kept for safe-keeping, until being released in the fall.

For the majority of states that have approved stabilization fund applications, they'll get their money, about $2.4 billion, today—the start of new fiscal years in most states. For those states with pending applications, they'll get their money as soon as the applications are approved.

And, by the way, every state made the department's July 1 4:30 p.m. EDT deadline for submitting their application. Texas was the last one in the door, at 4:12 p.m.

The department decided to accelerate the money after hearing that states are facing increasing budgetary pressure, even though two-thirds of the stabilization fund money has already gone out.

In a statement, Duncan said: “To date, the Department has done everything possible to get stimulus funds out the door quickly and effectively, including approving Phase I applications within 10 days. This money, which represents the final third of the government services fund, provides maximum flexibility for states to save jobs and drive reform.”

Important to remember is that just because the education department releases the money doesn't mean states immediately start spending it. The latest spending report from the department as of June 26 shows that of the $45.5 billion in overall stimulus money that's been obligated to states, only $8.7 billion of it has been drawn down by states.

1 Comment

It is disheartening to realize that a double-dialogue is taking place:

On one level, the administration telling the public that this and that money is being allocated to help boost opportunities to access education in the states; and the public is relying on the information given to them by the broad media sources. On the other level, the "stimulus" funds are not really being allocated to benefit the quality of public school education (which is soaring for changes and improvements), but this fund only secures the high salaries of best paid jobs in the upper scale of prominent state jobs.

The consumer is not being told,

Where to find answers that are not being given to their well-deserved expectations for change and betterment.

How can the elective process be made transparent enough, as to educate the public of the fiscal incoherences and lack of integrity in the allocation process of these long announced stimulus funds.

I see two priorities in place:

a. Make reliable information available to the public (which the AEI is doing very finely in this case) and

b. offer a quality control process that may allow consumers to regulate the malfeasance if it is being done with tax and federal money that ought to better education and not high-ranking salaries.

I apologize for my simplistic writing style.

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