6 States Are Accused of Bending Education-Spending Rules in 2009 Stimulus Law

December 09, 2010

When Congress passed the $787-billion economic-stimulus legislation, in 2009, lawmakers included a pot of nearly $54-billion specifically shoring up spending on elementary, secondary, and higher education.

The law was meant for states to use the money, known as education-stabilization funds, to offset cuts in education spending, rather than simply replace their own appropriations with the federal dollars. In addition, the law included a "maintenance of effort" clause, which said states could not put less money into education than they did in the 2006 fiscal year.

But a report by the New America Foundation, released on Thursday, concludes that several states violated the spirit of the law by supplanting state dollars with federal money. "While most states have cut both higher-education spending and overall state spending, others have used the education-stabilization funds as an opportunity to cut state higher-education funding more than necessary."

In six states—Arkansas, New York, Pennsylvania, Tennessee, West Virginia, and Wyoming—"it appears that education-stabilization funds were used to replace state funds for higher education, allowing states to shift that funding to other areas of their budgets and increase other spending," the report says.

The report is the first of four that the foundation plans to release examining how stimulus money was spent on higher education.