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Federal Stimulus Dollars Flowing to Districts

By Brett McFadden and Sherry Skelly Griffith, ACSA - April 17, 2009

Federal stimulus dollars have begun flowing to the state.  But Local Educational Agencies (LEAs) are still a few weeks away from getting them in their hands.  LEAs will begin receiving these funds in May.

There are three primary one-time funding sources in the American Recovery and Reinvestment Act (ARRA):  Title I, the Individuals with Disabilities Education Act (IDEA), and the State Fiscal Stabilization Fund (SFSF).  The Association of California School Administrators (ACSA) plans to release a detailed analysis of the federal stimulus package in the next few days.  But in the meantime, the following is a brief update on the status of stimulus dollars, and when LEAs might be receiving them.  This information was provided by the California Department of Education (CDE).

Title I funding

The state has received $564 million of Title I stimulus funds – approximately 50% of the total allocation.  The remaining 50% will be distributed sometime between July 1 and October 1.  The second installment is contingent on an evaluation by the U.S. Department of Education (USDE) of the state's utilization of the first allocation.

Title I stimulus funds will be allocated to LEAs under current Title I allocation formulas. This funding can only be spent per Census data amounts of low-income students within an LEA.  Furthermore, CDE has informed that the set asides of 5% for Highly Qualified Teacher training and 20% for choice and supplemental services for schools in Program Improvement remain in effect.  Title I stimulus dollars must be spent on Title I students in Title I schools under current supplement (not supplant) requirements in federal law.

CDE intends to release these funds in early May per current LEA allocation formulas to districts, county offices, and charter schools.  We note that estimates previously released by the federal government were inaccurate because they did not include payments to county offices and charter schools.  Guidance regarding LEA reporting and other requirements will be forthcoming from CDE.

IDEA funds

The state has received $634 million (about 50% of the total allocation) for IDEA stimulus funding. The remaining 50% will be distributed by September.  Like the Title I funds, the second phase of IDEA funds are contingent on the USDE's evaluation of the state's utilization of the first amount.

CDE expects distribution to LEAs to occur in May. IDEA stimulus funds will go to Special Education Local Plan Areas (SELPAs) based on the current AB 602 formula.  The distribution to local school districts will be based upon SELPA plans currently in place.  Additional guidelines and reporting requirements from CDE are forthcoming.

State Fiscal Stabilization Funds (SFSF)

The state has not received this funding just yet.  CDE estimates that California will receive $5.9 billion in SFSF monies. Funds will go out in two phases, with two-thirds going out in Phase One.  The ARRA requires governors to submit an application to the federal government.  We understand that this application was submitted late last week and that California was the first state to submit its application.

This funding is intended to be very flexible.  It can be spent on salaries to retain employee at risk of layoffs, or almost any other purpose, as long as an LEA can demonstrate how it will meet specified criteria.  Funding can be used for school years 2008-09, 2009-10 and 2010-11 including for summer school and intersession.  LEAs will be required to submit an application for their share of the funds.  This application and subsequent process is under development within CDE.

No decision has been made by state officials regarding the allocation methodology for this funding.  The ARRA mentions that states are to utilize their current education funding formula.  But we are unsure at this time if this means SFSF funding will go out per LEA revenue limits or a combination of revenue limit and categorical funding.   Additional information regarding the funding methodology and LEA reporting requirements will be forthcoming.

We note that it was made clear by Superintendent Jack O'Connell on an April 6 conference call that LEA allocation amounts and the timing of the most flexible of stimulus funds (SFSF funds) may not be known until after the May 15 final deadline for layoff notices.

Editor's Note: Brett McFadden is the Management Services Executive for the Association of California School Administrators (ACSA). Sherry Skelly Griffith is a legislative advocate for ACSA overseeing federal and regulatory education issues.