Some States Substitute Stimulus Dollars for Their Own Education Aid, Inspector General Says

A provision in this year’s economic-stimulus law aimed at preventing states from cutting their education budgets may be having the opposite effect, according to a new memorandum by the Education Department’s Office of Inspector General.

Under the law’s “maintenance of effort” requirement, states that receive a share of the law’s $54-billion in education aid must provide as much money for education in each fiscal year through 2011 as they did in the 2006 budget year. Struggling states that can show they are spending the same percentage of revenue on education as they did in the previous year can apply for a waiver from the requirement.

But according to the memorandum, some states—including Connecticut, Massachusetts, and Pennsylvania—are cutting spending on education to fiscal-year 2006 levels, then using stimulus dollars to fill in the gaps. In Massachusetts, lawmakers made midyear cuts to their fiscal-year 2009 budget, plugged the hole with stimulus dollars, and then applied for a waiver for fiscal years 2010 and 2011, saying the state would be unable to finance its public colleges at 2006 levels.

The memorandum urges the Education Department to track state spending on public education to determine whether the “maintenance of effort” requirement is backfiring and encouraging states to cut education spending.