The Status of State Fiscal Stabilization Fund Phase 2 Applications

Back in November of 2009, the Department of Education released the Phase 2 application for the State Fiscal Stabilization Fund (SFSF), a $48.6 billion fund created by the American Recovery and Reinvestment Act (ARRA) to help states fill budget gaps. This extensive application required states to declare the public availability of specific education data or devise plans for making that data available by September 2011. Since then, we haven’t heard much about the outcomes of those applications besides a few press releases from the Department of Education (ED). But it turns out, even ED is a little confused on the status of the applications.

Based on ED’s press releases, 15 states’ SFSF Phase 2 applications have been approved so far. New Jersey had the first approved application back in mid-February and the most recent approvals were announced on March 25^th (Tennessee and Delaware). It appears to be somewhat slow going for these application approvals.

But the ED online listing of submitted and approved applications tells a different story. According to that list, all 50 states, Puerto Rico and the District of Columbia have submitted applications but only three states – Illinois, Massachusetts, and New Jersey have been approved.

This discrepancy is somewhat disconcerting. This second phase of the SFSF will distribute as much as 33 percent of the $39.8 billion Education Stabilization fund (81.8 percent of the total SFSF) or about $13.1 billion. This is not an insignificant amount of money and all the talk about transparency and close reporting of ARRA spending would suggest that oversights like this shouldn’t happen.

To get to the bottom of this Phase 2 mystery, we compared the most recent Education Stabilization fund data on current obligations (as of March 19^th) to data on total Education Stabilization allocations under the ARRA from the Department of Education. These data revealed that the Department of Education had obligated the full Education Stabilization fund amount to nine states as of March 19^th and all of these states received approval for their Phase 2 applications before that date. As a result, the 6 remaining states whose applications were approved after March 19^th would do not yet show complete fund obligations for Education Stabilization. So, it appears that 15 states have indeed had their Phase 2 applications approved (a subsequent conversation with a staffer at the Department of Education confirms this number).

This means that the online listing of approved applications is woefully out of date. Illinois and Massachusetts received approval for their applications on February 18^th, more than a month ago. No new approved applications have been posted online since then. If ED is dedicated to full transparency and quick-turnarounds on all aspects of the ARRA, then why are they being so slow to post these approved applications? These applications provide important details on education data availability. Hopefully we’ll get to see all of the approved applications soon.