Monday, May 18, 2009

Why is fiscal stabilization funding taking so long?

EdWeek's Politics K-12 blog is puzzling over states that haven't yet submitted their official application for the fiscal stablization dollars that will go mostly to education. Here's the question posed there:

Put another way, of the 52 applications that need to be submitted, 29 remain outstanding.

Note that the states in arguably the most dire fiscal straits—California, Florida, and Nevada—are among those that have received their funds. The stragglers include some states in comparatively good financial shape, such as Texas and Wyoming.

So is lack of need the main reason some states are taking their time? That's possible, but hard to imagine in most cases.

Any ideas?
Here's my answer (almost identical to a comment I shared over there).

The fiscal stabilization rules require states to:
  • maintain at least FY 2006 state funding for FY 2010 and FY 2011, for K-12 and postsecondary.
  • use the federal dollars first to put funding back to the FY 2008 level, again for K-12 and post-secondary.
  • hand out what's left to K-12 only, using Title 1 formulas.
In Kentucky, our FY 2010 budget for K-12 is well above the FY 2006 requirement, but we've got new revenue trouble that may require us to revise that. For Governor Beshear, the steps have to go like this:
  1. get revenue estimates from our forecasting group.
  2. decide how much, if anything, must be cut from the FY 2010 state education budget, whether we can continue doing better than FY 2006, and if so, by how much.
  3. plan how to hand out the stabilization dollars, based on first getting back to FY 2008 and then adding to K-12 district resources.
  4. apply to USED for the money.
Step 1 is where we are. The forecasters meet today and will report by the end of May--and then the other steps can follow. That's why it makes sense to me that Kentucky has not yet filed.

Looking at the states that have filed, their deeper revenue problems mean they already know they can't provide a penny more than FY 2006. That made their math both sadder than ours and a lot simpler to complete.

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