John F. Hood, President
MCH, Inc.

The Department of Education, which controls the distribution of all the $48 billion in state stabilization funds, announced yesterday that they were releasing immediately the final third of the government services portion, $2.7 billion. The government services portion is $8 billion or 18.2 percent of the $48 billion, two-thirds of which has already been made available to states whose applications have been approved. As of today, over 40 states have been approved. 90% of the $2.7 billion or $2.4 billion has just been added to the pot.

The government services portion is distributed to state agencies at the discretion of the governor. The money is to be used for such things as education, school modernization, public safety, and other government services. Some guidance about where the money is going in each state is available on our spreadsheet. In many cases, however, states have put much of the money in an “undecided” classification so we can’t know.

Obviously, the Department of Education is trying to make available as much money as quickly as they can. It’s still up to the states to put it to use.

John F. Hood, President

MCH, Inc.

On March 7, 2009 U.S. Secretary of Education Arne Duncan announced that: “$44 billion in stimulus funding from the American Recovery and Reinvestment Act (ARRA) will be available to states in the next 30 to 45 days.” I might be crazy but that sounded to me like $44 billion would be at the states by April 21 at the latest. Well, guess what? It’s not.

I have advocated being in front of your customers so when the money hits you will be “top of mind”. As I have followed up with clients, none yet have been able to attribute sales to ARRA funding. Needless to say, this is very frustrating as all press releases speak with a sense of mission and urgency. In a March blog, I quoted from the press release above. I also noted that some exhibitors at NSSEA (education publishers and manufacturers at the National School Supply and Equipment Association conference which I had just attended) seemed skeptical about ARRA funding and the windfall headed their way. Guess who was right? The skeptics!

I have just reviewed a spreadsheet “Spending Reports by Program, April 24, 2009″.

This report shows that about $18 billion of ARRA money is available and obligated at the Department of Education. However, the amount distributed, the outlays, are about $350 million or 2%. To be technical, the press release said $44 billion “would be available to the states”. As of April 24th, $18 billion is available – available but not yet provided.

Of the $350 million that has moved beyond the Department of Education, 88% is for student assistance in the form of Pell grants. Below are outlays for the programs we have been watching:

• Title I (Aid for the Disadvantaged) $0.00
• IDEA (Special Ed) $1,400,000
• State Stabilization $0.00

In other words, virtually nothing!

On a more positive note, the Department of Education has released guidelines for the proper use of these funds. See Using ARRA Funds to Drive School Reform and Improvement. While there are program limitations with Title I and IDEA, the guidance document notes that the state stabilization funds (the largest of the funds) may be used for all the examples listed. Here is help on determining how well your products fit with the wishes of the Department of Education.

So when will the money hit the street? I don’t feel qualified to answer. However, the spreadsheet available at the link above is quite clear and will be updated periodically. We will keep an eye on it; you might want to also.

The Department of Education has released an official guidance document that sets forth the principles governing use of the funds as well as when and how funds will be disbursed.

Before March 29, 2009, the Department of Education will release to states:

• 50% of ESEA Title I Part A Grants to Local School Districts ($5 billion)
• 50% of IDEA Part B State Recovery Grants and IDEA Preschool Recovery Grants ($5.8 billion)
  States should make these funds available to school districts by the end of April, 2009.
• A minimum of 50% of IDEA Part C Grants for Infants and Families ($250 million)
• A minimum of 50% of Vocational Rehabilitation State Grants ($270 million)
• All funds for Homeless Education ($70 million)
• 40% (or $40 million) of the Impact Aid Construction funds
• $52.5 million of the $140 million for Independent Living Services.

The Department of Education is providing streamlined applications for use by states in applying for the initial 67% of the State Fiscal Stabilization Funds. After “approvable” applications are received by the federal government, funds will be released to the states within 2 weeks.

The guidance document also includes a list of funds that will be disbursed on July 1, 2009 and in the fall of 2009.

The Stimulus Bill has been signed by President Obama and institutions are anxious for the funds to start flowing. In an Education Week article, Alyson Klein highlighted some of the more significant challenges facing Secretary of Education Arne Duncan.

• Top posts within the Department of Education have yet to be filled.
• Political appointees, not the career staff at the department, will be accountable for where the funds are channeled.
• School districts are pressing for details on how much money they’ll receive and are concerned that there aren’t specific guidelines in place for the timing of disbursements from the states to the districts.
• Secretary Duncan can waive the “maintenance of effort” requirement for states in dire economic circumstances, but the Education Department will need to determine which states are eligible for the exception.
• In keeping with the government transparency, schools will need to provide public notice on the Internet regarding how the funds are being spent.

Aides to Democrats in the House hope a large portion of the education funding contained in the Stimulus Bill will make it to state governments before July 1st. Duncan said, “We have to implement and execute this in an absolutely impeccable manner.” He also said, “the department plans to be very fast…in allocating the money and will give states real guidance around speed.”

To view stimulus funding for education in detail, see the PDF in Education Week’s article.