Federal Economic Recovery Dollars Soften Impact of State Cuts to Schools

In May, California received its first infusion of education funding from the federal economic recovery act. It’s not chump change – some $3.4 billion has already been allocated to the state’s public schools and universities. More funding from the feds will be on the way between July and October. All told, California could receive approximately $11 billion over three years – funds that will help schools and universities avert deeper cuts than they’re already contemplating, which will help keep a bad situation from becoming even worse.

But as outlined in a CBP analysis released yesterday, how that funding interacts with Proposition 98 – California’s minimum school funding guarantee – and the Governor’s proposals to cut education spending is complicated, to say the least. Here are some points worth noting:

  • Federal economic recovery dollars cannot be used to help the state fulfill the Proposition 98 guarantee. Any amounts received must be added to the state’s level of support for programs covered under Proposition 98, which limits the extent to which the state can use economic recovery dollars to help close its budget gap.
  • In order to receive certain federal economic recovery funds, the state must spend at least as much on K-12 and higher education in 2008-09, 2009-10, and 2010-11 as it did in 2005-06. In the state’s applications to the US Department of Education for these economic recovery dollars, the Governor claimed California will meet these “maintenance of effort” requirements. But some advocates have questioned the state’s calculations, and it remains unclear whether recent proposals to cut K-12 and higher education spending will cause California to fall short of this requirement.

— Jonathan Kaplan

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2 thoughts on “Federal Economic Recovery Dollars Soften Impact of State Cuts to Schools

  1. Thanks for your question. The answer depends on decisions by state and federal policymakers. If state policymakers do suspend Proposition 98, how much will they suspend it by? It is possible that the state could suspend Proposition 98 and still meet federal maintenance of effort requirements or federal policymakers could grant a waiver if the state does not meet these requirements.

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