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Stimulus Funding Cliff Is a Reality

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A new report out by the Nelson A. Rockefeller Institute of Government makes it clear that states are still in big fiscal trouble, having experienced a record drop in sales tax for the second quarter in a row.

While the recession may be slowing, and the nation may even be recovering, clearly states are in this economic slowdown for the long haul. My co-blogger Alyson is working on a story about this for our next issue, and I'll link to it as soon as it's finished.

For education, this persistent bad economic news at the state level means that the stimulus-generated funding cliff that states and school districts have been warned about is not just a threat, but a reality.

States have had a tough time making do even with some $40 billion in state stabilization stimulus funds, as many states have used this money to backfill cuts and free up money to balance other parts of their budgets. In 2011, that money officially runs out, which will make balancing budgets--and maintaining K-12 funding levels -- extremely difficult.

This has implications for the competitive grant programs, such as Race to the Top, as well. Pushing through education reforms can take a lot of political will at the state level. But so does balancing budgets. Will there be enough political will to go around?

What's more, award money from Race to the Top may seem mighty tempting for a cash-strapped state. The $4 billion competitive fund isn't nearly as large as the state stabilization fund, and would likely amount to a few hundred millions of dollars for each winning state, but it's still valuable money for a financially strapped state. While states certainly will have to agree to make good on their Race to the Top promises, policymakers in states that win an award might be inclined to reduce education funding elsewhere in light of the extra money coming in from the U.S. Department of Education. After all, we're seeing a similar phenomenon now, with criticisms of how states are using state stabilization funds.

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The other question is: Will there be a funding cliff for early education?

It may be tempting for states but when governors want to use education money to help with debt, it says volumes about the governor's commitment to education. Living in Arkansas, I see a governor who has committed himself to public education for years and who has already shifted stimulus money to school districts. Working as a consultant in Mississippi, I see school districts who have already seen 15% cuts in regular school funding and little or no release of stimulus money. The same scenarios seem to play out across the nation. The schools in Mississippi and elsewhere who have had their fund siphoned off deserve better. After all, no one has lowered the expectations for these schools.

As an Australian reader living & teaching in Sydney, I can assure you all that it is not only in the US that education has been used as a buffer to allow flexibility in both State & Federal budgets.

This is not surprising as education is one of the largest budgettry commitments that any juristictoion has. The one advantage/disadvantage that we have over you is that education is centrally funded within each state in Australia. School districts do not control funds - or staffing, or curriculum, or major works, or etc. In New South Wales, our most populous state, with approximately half our nations population, the 'Department of Education and Training' is the direct employer of all 60-70 thousand teachers in both primary & secondary state schools and the state's curriculum is mandated to all schools - state, church & independent - through a separate 'Board of Studies'.

Thus the government's budgettry decisions flow directly and relatively 'equitably' [sic.] to us all. (Our governor is 'titular' not 'legislative' nor, in practice, executive - all decisions made by your Governor are made, here, by our government's cabinet.)

The recession 'that we had to have!' has hit all and sometimes legislators forget that it is only through a vibrant, healthy and adequately resourced and supported primary and secondary education that any future can be assured.

I'll go away now.

noel

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