School technology initiatives and other education programs are among the possible beneficiaries of $20 billion in state aid included in the $330 billion tax-cut legislation passed by Congress May 23.

Though education lobbyists say the latest federal aid is "nothing to scoff at," they note it doesn't come close to filling an estimated $75 billion in state budget shortfalls projected for the 2004 fiscal year.

The state aid was included in a package of new tax cuts for families, investors, and businesses approved by Congress late last week. The Republican-led Senate approved the measure 51-50, with Vice President Dick Cheney casting the decisive vote in the narrowly divided chamber. Two hours after midnight, the GOP-run House had used a 231-200 vote to sign off on the legislation, which President Bush was poised to sign at press time.

Of the $20 billion in state aid, half that amount is earmarked for the Federal Medical Assistance Program. The remaining $10 billion will be divvied out to states—on a population basis—to cover the cost of government-related programs, including education expenses.

States will receive $5 billion for the remainder of 2003, which will be allocated within 45 days of the legislation's effective date. The other $5 billion will be applied toward the 2004 budget year and is scheduled for delivery after October 1.

To receive the funds, states must submit a proposal to the Treasury outlining what government services and programs the funds will be spent on.

"Certainly, the $10 billion will have the effect of providing all-purpose relief to states," said Nick Johnson, director of the State Fiscal Project at the nonpartisan Center on Budget and Policy Priorities. "But this is only a modest piece of the overall solution."

State budget shortfalls are expected to surge to $75 billion overall by the next fiscal year, according to a report issued in April by the National Conference of State Legislatures. Across the nation, state and school leaders are considering steep cuts in education services—including art and foreign language classes, school counselors and nurses, field trips and athletic programs, and technology—as they try to balance the rigorous demands of the No Child Left Behind Act with the need to slash budgets. (See "Budget ax falls on school tech programs," http://www.eschoolnews.com/news/showStory.cfm?ArticleID=4407.)

Some states, Johnson said, are in such dire straits that this latest relief will hardly make a dent in overall budget deficits.

In California—where budget deficits are expected to climb above $30 billion, by some estimates—the $2.4 billion in relief that will come as part of the president's tax plan will do little to stop the bleeding.

However, smaller states might enjoy considerable respite, Johnson said: "This should go a long way in addressing their immediate budget problems."