Author: Sam Fish | Posted: 5. April 2009 11:26
The American Recovery and Reinvestment Act of 2009 (ARRA) appropriated an unprecedented $115 billion in federal funds for education programs. ARRA allocated $53.6 billion to the State Fiscal Stabilization Fund (SFSF) for one-time appropriations to state governors to help stabilize state and local budgets that have been negatively impacted by the current economic recession.
On April 1, 2009 USDE published its “Guidance on the State Fiscal Stabilization Fund Program” describing how states can apply for SFSF program funds and how the funds must be used. $48.6 billion will be disbursed through two components of the SFSF program:
- The Education Stabilization fund, 81.8% of a state’s total SFSF program allocation, is to be used to fully restore FY 2009 state support for education and early childhood programs and services to the greater of the levels of support for FY 2008 or FY 2009. Any funding amounts that remain after full restoration for FY 2009 will be used to provide full restoration for 2010 and, after that, for 2011.
- The Government Services fund, 18.2% of a state’s total SFSF program allocation, is to be used for public safety and other government services which may include assistance for LEAs and institutions of higher education and the modernization, renovation and repair of education facilities.
USDE will disburse funds to state governors in two phases based on an application process that began on April 1, 2009. Governors’ applications for each phase will be reviewed by USDE as they are received. Within two weeks after submission of an approvable application for funding for the first phase, USDE will award the state 67% of the state’s total SFSF allocation. Up to 90% of the total allocation will be awarded if a state demonstrates that 67% will be insufficient to prevent immediate layoff of personnel.
For the second phase, governors must submit an application to USDE that provides a comprehensive plan for making progress in the four areas of education reform listed below. Upon approval of the application, USDE will award the state the remaining 33% (or 10% if 90% was awarded during the first phase) of the state’s total SFSF allocation.
To receive a disbursement of SFSF funds awarded to its state governor, an LEA must submit an application to the governor in accordance with the Education Department General Administrative Regulations (EDGAR). The Governor may require additional information in the application such as how the LEA will use the funds, the LEA’s ability to comply with ARRA reporting requirements, and how the LEA will assist the state in advancing the four areas of education reform listed below.
Funds may be disbursed to LEA's by the governor in phases, but disbursements must be prompt. Governors cannot retain any portion of the Education Stabilization fund for state use. Funds may be awarded to LEA's (including charter school LEA's) through the state’s primary funding formulae only if the LEA also receives state funds through the state’s primary funding formula. If there are funds remaining after full restoration, LEA's that receive Title I funds will share in the remaining funds based on each LEA's Title I, Part A, share.
In exchange for the SFSF funds, the states and LEA's must, among other things, commit to advancing four areas of education reform:
- Improvement in teacher effectiveness and equitable distribution of highly qualified teachers, particularly for students who are in the most need;
- Establish pre-K-to-college-and career data systems to track progress and foster continued improvement;
- Make progress toward rigorous college-ready and career-ready standards and high-quality assessments that are valid and reliable for all students including limited English proficient and special education students; and
- Provide targeted, intensive support and effective interventions for the lowest performing schools identified for corrective action and restructuring.
LEAs may use Education Stabilization funds for any activity authorized by ESEA, IDEA, the Adult Education and Family Literacy Act (AEFLA), and the Perkins Act. LEA's may use SFSF funds for activities such as:
- paying staff salaries;
- purchasing textbooks, computers and other equipment;
- purchasing programs designed to address the educational needs of children at risk of academic failure, students with limited English proficiency, and special education and gifted students;
- modernization, renovation and repair of public school facilities; and
- new school construction.
LEAs may not use Education Stabilization funds for:
- maintenance costs;
- stadiums or other athletic fields;
- vehicle purchase or upgrades;
- improvement of stand-alone non-educational buildings;
- modernizations, renovations or repairs of school buildings that are inconsistent with state law; or
- restoring or supplementing a “rainy day” fund.
All funds disbursed to LEAs will be subject to stringent reporting requirements, the details of which USDE intends to publish within the next weeks. An LEA must obligate all of its appropriated Education Stabilization funds by September 30, 2011. Funds are considered “obligated” when the LEA commits the funds to specific purposes as determined by EDGAR at 34 CFR 76.707. Under EDGAR an obligation is made for the personal services of a non-employee contractor or for performance of work other than personal services on the date on which the LEA makes a binding written commitment to obtain the services or work. Such written commitments must be made by the LEA by September 30, 2011 to avoid forfeiture of SFSF program funds.
In 2010, USDE plans to award an additional $4.35 billion in SFSF program funds to states through a national competition under the “Race-to-the-Top” initiative. Details are forthcoming.
Further details about application for SFSF funds are available at USDE’s website http://www.ed.gov/programs/statestabilization/applicant.html.
Patsy Crawford,
Director of Legal Services
Education Services Practice Area
Phone: (312) 425-0550
Email: pcrawford@pcgus.com
* Note: This document is not intended as legal advice and is for informational purposes only.
