Whatever Happened to the State Fiscal Stabilization Fund?

Last week, Ed Money Watch published a post about the impact of the proposed Education Jobs Fund, a $23 billion fund pending in Congress that would help states pay for salaries and benefits in schools and institutions of higher education. However, most of the debate over the Education Jobs Fund assumes that states have already used all of the State Fiscal Stabilization Funds (SFSF) they received through the American Recovery and Reinvestment Act in 2009 and 2010. While some states have used up all of their funds, and would be the main beneficiaries of the proposed Education Jobs Fund, our analysis of U.S. Department of Education data suggests that many states still have significant SFSF monies remaining.

According to Department of Education data on the amount of Education Stabilization and Government Services funds that have been obligated and disbursed to states as of April 16th 2010, only five states have already used more than 90 percent of their total SFSF allocation. These states are California, Illinois, Nevada, Washington, and Wisconsin. However, 21 states have used less than 50 percent of the total funds allocated to them. This includes both West Virginia and Wyoming, which appear not to have used any of their SFSF monies. Nationally, 60.5 percent of the SFSF funds have been used.

The story is slightly different if you look at the Education Stabilization funds (money meant only for education) and the Government Services funds (money that can be used for other government services) separately. Nine states have disbursed more than 90 percent of their Education Stabilization funds including Nevada, Washington, and Wisconsin, who have used 100 percent of these funds. The other states are California, Colorado, Idaho, Illinois, North Dakota, and South Dakota. Twenty states, on the other hand, have spent less than 50 percent of their Education Stabilization funds.

Nine states have also disbursed more than 90 percent of their Government Services funds. California, Rhode Island, and Wisconsin have all used 100 percent of these funds while Maine, Michigan, North Carolina, New Hampshire, New Jersey, and Nevada have spent slightly less. However, 31 states have disbursed less than 50 percent of their Government Services funds.

Clearly, states vary widely on how rapidly they have spent both their Education Stabilization and Government Services funds. Some, like California and Illinois, have spent the funds quickly due to desperate fiscal situations. Others, like Texas, have spent them slowly because their budgets have not demanded significant support. And still others, it is possible, will receive these federal funds on a reimbursement basis, meaning they have already spent them but have not yet drawn them down from the federal coffers. Regardless, there are still quite a few states that have a ways to go before they run out of SFSF monies.

These findings suggest that Congress could make the Education Jobs Fund more effective by targeting federal funds to states that need the money most (given their lack of remaining SFSF monies or significant budget gaps) or making receipt of funds contingent on the implementation of certain cost-saving strategies. Either way, it seems that some states are going to need a new infusion of funds much sooner than others.

To see this information for all 50 states and the District of Columbia, click here.