Most States Close to Spending All Their SFSF Allocations

Ever since the U.S. Department of Education first released the State Fiscal Stabilization Funds (SFSF) to states in April of 2009, stakeholders across the country have expressed concern that the funds were not getting used fast enough. The $48.6 billion program was created by the American Recovery and Reinvestment Act of 2009 to help states fill budget gaps in the wake of the economic recession. Of that $48.6 billion, $39.5 billion was slated specifically for education programs. While some states spent the money right away, as ED encouraged them to do, others stalled on distributing the funds due to various bureaucratic delays or because their fiscal situations were less dire. The SFSF monies expire at the end of this fiscal year on September 30th 2011. And with only four months left, we can safely say that most states will have no problems spending all of their funds before that deadline. However, there are a few states lagging behind.

According to data made available by the U.S. Department of Education on obligations and disbursements of SFSF Education Stabilization Funds, 39 states had drawn down 90 percent or more of their SFSF Education Stabilization funds as of June 3rd, 2011.

Of those 39 states, nine have spent all of their funds. These states include Arizona, Florida, Illinois, North Dakota, New Hampshire, New Jersey, Nevada, South Dakota, and Wisconsin. Many of these states, like Arizona, Illinois, and New Jersey, faced large budget deficits in early 2009 or even before. The SFSF monies came as a great relief to these states and they spent them quickly. An additional 12 states, including California – another hard hit state – have drawn down 98 percent or more, making that 100 percent goal well within reach.

Ten states, including Alabama, Maryland, New York, and Virginia, have drawn down between 75 and 90 percent of their funds. This means they have just less than one fiscal quarter to spend as much 25 percent of their total Education Stabilization fund allocation. Hopefully, these states have planned these expenditures carefully to ensure that the money is used before it expires in effective and meaningful ways.

Four states, however, have drawn down less than 75 percent of their Education Stabilization fund allocations, leaving them limited time to spend fairly large chunks of that money before the fiscal year ends. Nebraska and Rhode Island have drawn down 74.6 percent and 74.0 percent, respectively, leaving them just behind the group of states discussed below. But Alaska and Wyoming have only drawn down 41.6 percent and 27.0 percent respectively. These two states have far to go before they have used up all of their funds.

It is not surprising to hear that Alaska and Wyoming are lagging far behind in their Education Stabilization expenditures. Former Alaska governor Sarah Palin refused to use the state’s allocation to fill budget gaps or otherwise support K-12 or higher education in 2009 or 2010. The current governor used all of the funds to support K-12 education in 2011, creating a much shorter timeframe for spending the allocation.

Wyoming, on the other hand, faced little to no budget deficit prior to mid-year fiscal 2011 (see tables from the Center on Budget and Policy Priorities for more information). As a result, the state had no need for the funds for most of the time they were available. In fiscal year 2011, however, Wyoming allocated all but $10 million of its $67.6 million allocation to its higher education system. According to SFSF regulations, the remaining $10 million will be distributed to K-12 school districts via the federal Title I formulas.

Though not all states were able to spend their SFSF Education Stabilization funds immediately in 2009 and 2010, it is clear that the vast majority of them will use them by the end of fiscal year 2011. The program may not have created the automatic infusion of funds Congress initially envisioned, but it did help many states keep their education budgets afloat. What happens once these funds, and the still-available Education Jobs Funds, are gone at the end of fiscal year 2012 remains to be seen. However, unexpected increases in tax revenue in states like California and Michigan suggest that more federal support may soon be unnecessary.

Click here for a table containing information on all 50 states, DC and Puerto Rico.