Report: SCHOOL STIMULUS FUNDS NOT USED AS INTENDED

 

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Read The Report: Education Department IG On States And Stimulus Funds

by Claudio Sanchez | National Public Radio | Weekend Edition Sunday

October 11, 2009 -- The Department of Education's inspector general reports that some states are using stimulus dollars to replace money they've cut from their education budget — despite instructions to the contrary.

When the Department of Education began releasing stimulus funds last April, it told states the money was to be used to boost funding for schools and colleges and protect key programs and jobs.

And from the get-go, the Obama administration's message to states was that stimulus funds earmarked for education are to "supplement, not supplant" state funding for schools and colleges.

"We're really focused on making sure states are using the stimulus money well," said Education Secretary Arne Duncan."But what we want to do is make sure people aren't playing games."

Shuffling Funds

Nonetheless, it wasn't long before the Education Department started hearing about states playing what it called "shell games" with stimulus funds. In at least one case, department officials blocked a state from drawing stimulus money because it was cutting school funding so deeply.

This growing dispute with states has become so politically charged that the department declined to comment for this story.

The department's inspector general, on the other hand, isn't shy at all.

In its report about how states were spending stimulus funds, the inspector general's office found that over a dozen states are inappropriately using stimulus dollars to replace the money they're cutting from education. It specifically cited Massachusetts, Pennsylvania and Connecticut.

"We're really perplexed at this report and need to sort it out," says Thomas Murphy, spokesman for Connecticut's department of education. He says his state got high marks this summer, when federal education officials looked at its proposal for spending stimulus funds.

"These funds came with the greatest flexibility to help states stabilize their education programs, and that's how Connecticut used those funds," Murphy says.

Murphy says Connecticut is in compliance as long as it doesn't cut education spending below 2006 levels. But it's clear that lots of states won't be able to maintain that level of funding, let alone boost spending on education, as the Obama administration would like.

Not Enough To Cover Shortfalls

According to Jon Shure of the Center for Budget and Policy Priorities, 25 states have cut funding for K-12 education, and 34 have cut higher-education funding. Shure says that the stimulus has covered no more than 30 percent of states' budget shortfalls.

"States are facing such a severe crisis that a lot of the federal money is just helping states stay even and avoid further budget cuts," Shure says.

Minnesota, for example, is balancing its budget by delaying almost $2 billion in payments to schools. Michigan plans to cut per-student funding by $218. Missouri has indefinitely frozen funding for its public colleges.

"We have to make do with the money we have, and given that our revenues are doing much worse than anticipated, we will have to make additional reductions in the budget to keep it in line with available revenue," says Linda Luebbering, Missouri's budget director.

Education, says Luebbering, will be the last thing Missouri cuts.

Duncan warns that if states cut education below 2006 levels and use stimulus funds to plug holes in their education budgets, he may exclude them from billions of dollars that the administration is offering states for reforming their schools.

• The OIG Hotline is a toll-free telephone number (1-800-MISUSED) and email box (oig.hotline@ed.gov) where individuals can report potential instances of fraud, waste, or abuse relating to Department programs.
• The percentage of the State’s total revenues expended on education must be greater than or equal to the percentage expended in the fiscal year preceding the year for which the waiver is being requested.