$26.1 Billion Federal Jobs Bill

“The poor man’s budget is full of schemes.”

- Unknown

On August 10^th, Congress approved a $26.1 billion federal jobs bill as a one-time payment to save approximately 300,000 non-federal government jobs, such as teachers, police officers, nurses, and other public workers from lay-offs.

The bill is believed to not add to the growing federal deficit because it also closes a tax loophole used by multinational corporations and reduces food stamps benefits in 2014 back to its pre-stimulus level.

I am not commenting nor will I comment on the wisdom or credibility of how this job bill does not add to the $13 trillion federal deficit.

I am not commenting nor will I comment on the election year timing of this job bill.

The legislation provides $10 billion to school districts to rehire laid-off teachers for the 2010-11 school year. The remaining $26 billion would extend for 6 months increased Medicaid payments to the states. This would free up money for states to save the jobs of laid-off police officers and other public workers.

California is expected to receive $1.2 billion and restore 16,500 teachers back to the classroom.

According to a California Department of Education news release, the funds will be for the 2010-11 school year to retain, recall, or rehire former employees and to hire new employees to provide early childhood, elementary, or secondary educational services.

The funds are not meant for general administrative expenses. Nor may the funds be used to directly or indirectly:

• Establish, restore, or supplement a rainy day fund;

• Supplant state funds to establish, restore, or supplement a rainy day fund;

• Reduce or retire state debt; or

• Supplant state funds to reduce or retire state debt.

According to the NSBA School Board News Today, U.S. Department of Education Secretary Arne Duncan provided more details in a conference call presentation last Friday. The following are the highlights they reported:

▪ His (Arne Duncan) goal is to award the funds to states within two weeks of the application being received.

▪ In the application, states must affirm that they are complying with Maintenance of Effort requirements and are not using the money for “rainy day” funds or other state programs.

▪ States must choose one of two options for distributing the money: 1) Through their regular state allocation formulas or 2) through their Title I distribution formulas. The law allows states to reserve two percent of the award for administrative purposes.

▪ The law stipulates that funds must be used for salaries and benefits for school-based employees, including teachers, principals, and support staff. Funds may not be used for compensation for district-level employees such as superintendents and departmental directors (an exception would be district-level employees who spend 100 percent of their time working in the schools).

▪ Duncan says his department is structuring the fund to allow “maximum flexibility” for school districts, with options such as rehiring or recalling laid off teachers, restoring furlough days or professional development days and reinstating teachers in afterschool or summer school programs. “The purpose of the law is to give funds to teachers at the local level to benefit students in the classroom,” Duncan said. If states and districts are not meeting the intent, he said, “We will challenge them.”

▪ Funds awarded to the states must be made available to districts for the 2010-11 school year. Districts have the option of using the funds for the coming year or carrying over some or all of the funds into the 2011-12 school year. All funds must be obligated by Sept. 2012.

California may have two problems in receiving and/or distributing the funds from the Federal Jobs Bill. The first problem is it still does not have a budget.

The second problem is that California may have to prove it is in compliance with the Maintenance of Effort (MOE) requirement.

Maintenance of Effort (MOE) is a federal requirement committing grants recipients to maintain a certain level of state and local spending to be eligible for full and continued participation in federal grant funding. It is meant to ensure that federal monies supplement – not supplant state and local funding obligations.

Last year, Governor Schwarzenegger wanted to cut the pay of 250,000 In-home Supportive Service Workers. The Obama administration over ruled the decision because California accepted stimulus money meant to prevent such cuts. The violation of the MOE would have saved the state $74 million – but cause California to lose $6.8 billion in stimulus money.

Also last year, California’s decision to increase the premiums in Healthy Families, the state’s Children’s Health Insurance Program, was challenged as a violation of MOE because it would reduced the number of eligible participants while the state gained more federal funding.

This creates a problem for a state that has already cut $19 billion from its education budget over the last few years. California Superintendent of Public Instruction Jack O'Connell, attempted to address the problem of maintaining MOE in a letter to the members of the California Congressional Delegation, but it still remains a concern.

In February, as reported in State EdWatch, the Parents and Students For Great Schools coalition requested that the U.S. Department of Education reject California’s Race to the Top [Phase 1] application until the state increases its support for public education to meet the minimum of MOE requirements under the American Recovery and Reinvestment Act (ARRA).

It is believed that Governor Schwarzenegger lobbied in Washington to be allowed to decrease spending on education to below the MOE requirement.

Also in March, Herb K. Schultz, Senior Advisor to the Governor and Director of California Recovery Task Force responded with a point by complex point rebuttal to their letter. There seems to be ways around the Maintenance of Effort requirements in federal grants - or at least ways to attempt to get around them.

In May, another broad coalition, including the California School Boards Association (CSBA), California PTA, and the Association of California School Administrators (ACSA), took California to court. They are suing California (Robles-Wong v. California) to fulfill its obligation to support public education.

How will all this determine the use of $1.2 billion in federal monies to save teachers and other public workers from lay-offs? We’ll know in two weeks. I suspect that it won’t make any difference. The funding model used for education is busted. There are not enough available federal monies to make up for the $19 billion cut from education. We are playing a shuffle game with state and federal monies to hide the fact that no one has money. We will continue to play this shuffle game for as long as possible in the hopes that the economy will recover enough to pay the bills before it all falls apart.

What are the odds of getting another federal jobs bill when this one is spent, the economy has still not recovered, and it’s a non-election year?

School Board News Today – ED officials give details on Education Jobs Fund rollout

California Department of Education News Release - $1.2 billion estimated for California Teachers

CNSNEWS - Obama Administration Sides With Union on California’s Proposed Wage Cuts

Fix School Finances - Robles-Wong v. California

The Quick and the ED – Will Schools End Up Under the Bus?

California Department of Education – Jack O’Connell addresses MOE problem

State EdWatch – Feds to California: Prove Maintenance of Effort

Office of the Governor (Arnold Schwarzenegger) – Response to Prove Maintenance of Effort

California Healthline – Maintenance of Effort Looms Over Health Families, Budget

First Five – State Budget Update: Maintenance of Effort Requirements Could Affect State Budget, Health Access For Kids

With All Our Might – State & Federal Tug of War on MOE?

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