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.

MCH, Inc. has released an updated edition of its BudgetAware^TM Bulletin. The free report is designed to help B2B marketers stay informed about state budget deficits and how ARRA stimulus funding is impacting institutions in each state. In addition, education marketers will benefit from the special focus on estimated increases in State Fiscal Stabilization Funds (SFSF), Title I, IDEA, Early Childhood, and Technology funding dollars available to each state.

According to a study by the US Government Accountability Office, states will spend nearly 60% of the ARRA stimulus funds they receive on healthcare and education. The study also projects ARRA spending totals for each year through 2016 with the largest portion of state stimulus funds being spent in FY 2010.

MCH Director of Marketing, Kirk Chritton, said, “State budget shortfalls are a moving target. The fiscal condition in each state will influence how the governor will spend ARRA discretionary funds. MCH believes the most effective way for B2B marketers to capitalize on stimulus spending is to create a state-by-state strategy. The StimulusMarketing website and BudgetAware Bulletin are solid resources that can be used by marketers in fine-tuning their strategy for 2009.”

MCH is America’s leading compiler of business-to-institution (B2i) databases and mailing lists and has served institutional marketers for 80 years. The MCH database features information on 1.1 million institutions and 8 million decision makers. The largest institutional markets include governments, hospitals, medical practices, schools, school districts, and churches. MCH also provides custom telephone research and data processing services. Click here to get a copy of the free BudgetAware^TM Bulletin.

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.