‘Funding cliff’ looms as stimulus money runs out

School districts could face huge budget shortfalls as the stimulus money dries up.

As lawmakers around the country debate their states’ budgets, they’re staring over the edge of a massive fiscal cliff—the point where about $100 billion in federal stimulus money for education will run out.

The end of that money will compound states’ severe budget woes and likely lead to thousands of layoffs and the elimination of popular school programs around the country.

The bulk of the money, part of $814 billion provided under the American Recovery and Reinvestment Act passed in 2009, went to save the jobs of teachers and other school employees, as state and local revenue dried up during the prolonged economic downturn. Lawmakers in many states have drawn criticism for making deep cuts in state education funding and replacing it with stimulus money, thus avoiding cuts elsewhere in their budgets.

States are required to have spent most of their education stimulus money by September, and most will burn through it by the end of the current academic year, budget officials say.

And while state economies are showing signs of life, tax revenue is not increasing fast enough to make up the loss.

More on education funding:

How to fight back against devastating budget cuts

Where to find grants for education

How to find private sources of funding

“It’s not like that money was the icing on the cake,” said Michael Griffith, a senior policy analyst at the Education Commission of the States, in Denver. “It was the cake.”

Officials in some states saw the cliff coming from the start and encouraged districts to use stimulus money in ways that would not produce ongoing costs they could not cover when the emergency aid ran out, such as for temporary tutors, educational software, or improvements to buildings to make them more accessible for students with disabilities.

“There was a lot of caution about people employing folks, because when that money is gone, it’s gone,” said Ray Lankford, Missouri’s Deputy Commissioner of Education. “A lot of [schools] did program improvements and short-term employment to address specific issues.”

While Congress tried to cushion the blow for states through its approval last year of a $10 billion Education Jobs Fund, state officials say that fund is not enough to replace the lost stimulus money.

Want to share a great resource? Let us know at submissions@eschoolmedia.com.