ARRA Funds and State Budget Gaps

Congress Passed the American Recovery and Reinvestment Act (ARRA) of 2009 almost a year and a half ago, providing nearly $50 billion for education programs like Title I, Individuals with Disabilities Education Act, and Pell Grants. Additionally, the law included $48.6 billion for the State Fiscal Stabilization Fund, a new program meant to help states shore up education budget shortfalls. Since then, state budget shortfalls have continued to grow, causing lawmakers and interest groups to call for additional money to help support state education funding. But little discussion has focused on how much of the ARRA funds first made available to states in 2009 have actually been dispersed on a state by state basis. As would be expected, states with the highest expected budget gaps, for the most part, have dispersed the highest percentage of their ARRA funds. Similarly, some states with the smallest gaps have dispersed less of their ARRA funds. And of course, there are some notable exceptions to both of these trends.[1]

California, with the highest predicted budget gap in fiscal year 2010 at $54.6 billion (or 64.5 percent of the state’s current budget of $85.3 billion), has dispersed 78.3 percent if its ARRA funds, the highest in the country. Illinois, which dispersed 77.4 percent of its ARRA funds, has the fourth highest budget gap for 2010 in the country. Arizona, Iowa, Nevada, New Jersey, and Washington have all dispersed more than 70 percent of their obligated ARRA funds. Three of those states, Arizona, Nevada, and New Jersey, all have predicted state budget gaps above 38 percent of their current state budgets. Iowa and Washington, on the other hand, have relatively low budget gaps at $1.8 billion (or 22.7 percent of a current $7.9 billion budget) and $6.2 billion (or 27.8 percent of a current $22.3 billion budget), respectively.

Several states have dispersed surprisingly low percentages of their allocated ARRA funds. Wyoming, for example, has dispersed only 15.7 percent of its ARRA funds. However, Wyoming has the smallest budget gap in the country at $32 million (or 1.7 percent of the current $1.9 billion budget). Delaware, which has dispersed the second lowest percentage of ARRA funds at 24.7 percent, also has a relatively low budget gap at $557 million (or 17.2 percent of the current $3.2 billion budget). Alaska, the District of Columbia, Maryland, Nebraska, New Mexico, South Carolina, and Virginia have all also dispersed less then 40 percent of their ARRA funds. While 6 of those states have relatively low predicted budget gaps, Alaska, which has only dispersed 25.5 percent of its ARRA funds, has the 9^th highest budget gap in the country at $1.3 billion (or 30.7 percent of the current $4.2 billion budget).

Other states have also dispersed the ARRA funds more slowly than would be expected given their predicted budget gaps. New York, for example, has a predicted gap of $21 billion over fiscal year 2010 (or 38.0 percent of the current $52.3 billion budget), the 6^th highest in the country. But the state has only dispersed 42.2 percent of its ARRA funds, ranking 41^st in the country. Similarly, Rhode Island faced a large budget gap this year but has only dispersed 51.3 percent of its ARRA funds.

Conversely, a couple states have dispersed relatively high percentages of their ARRA funds despite somewhat low budget gaps. Both Massachusetts and Michigan have dispersed more than 60 percent of their ARRA funds even though both states have relatively low budget gaps.

Overall, the 50 states, Puerto Rico, and the District of Columbia have dispersed 57.1 percent of their obligated ARRA funds. While this number seems low overall, states vary widely on the percent of funds they have dispersed, often in keeping with the severity of their budget gaps over fiscal year 2010. Despite this trend, some states have fallen behind in dispersing the funds, while some states are near to running out. This disparity will likely become more problematic as states ramp up for fiscal year 2011 and the 2010-2011 school year. Ed Money Watch will continue to follow these developments.

A PDF of these data by state can be downloaded here.