Federal stimulus funds critical to offset state K-12 budget cuts, Rex tells senators

COLUMBIA, SC – March 17, 2009 – State Superintendent of Education Jim Rex today told state senators that federal stimulus funds are critically important to South Carolina schools hit with $365 million in budget cuts this year and facing even deeper cuts next year.

Appearing before the Senate Finance Committee, Rex said the General Assembly should move quickly to request any federal stimulus funds rejected by Gov. Mark Sanford.  A provision inserted in the American Recovery and Reinvestment Act by South Carolina Congressman Jim Clyburn allows legislatures to accept the money in states where governors reject it.

“It’s pretty clear that Congress wants these dollars to either save jobs or create jobs,” Rex said.  “Right now, South Carolina school districts are building their budgets for next year, and saving classroom teaching positions is Priority One.  Districts need to know whether those federal dollars are in the pipeline, and they need to know very quickly.”

The South Carolina Department of Education surveyed district superintendents this week and found that more than 300 local educators will be laid off this year, most of them administrators.  More than 1,100 positions have been left unfilled when they were vacated.

“Those numbers could skyrocket next year,” Rex said, “because districts have already reduced their operating expenses and they’ve used their fund balances to absorb this year’s cuts.”

In healthier times, districts use their fund balances to keep bond ratings healthy and to pay operating expenses during months when fewer state dollars arrive.  Minimal fund balances mean that districts can be forced to borrow operating expenses and make interest payments.

“Once a district has reduced its operating expenses and drained its fund balance, then you’re talking about cuts that eat into muscle and bone,” Rex said.  “Eighty to 85 percent of a typical district’s budget is salaries, and the vast majority of that goes to teachers.
Eliminating thousands of teaching positions would be a disaster for South Carolina, and these federal stimulus dollars could forestall that possibility in the short term and give our economy a chance to recover.”

Rex told senators that they are in a better position to draft their version of the budget than House members were in last week because new information has begun to clarify the use of federal stimulus funds.  The House used $1 billion in stimulus funds to balance its version of the budget.

Feedback from Washington has led Rex to question whether the federal government will approve state attempts to “repurpose” federal education dollars for non-educational functions.  About $600 million is headed for South Carolina schools, with additional dollars available through grant applications. 

In addition to asking senators to move quickly in applying for federal stimulus funds, Rex also urged them to approve a joint resolution that gives local school districts more flexibility to manage their dwindling budgets.  A key provision of that resolution, already approved by the House, would extend the date by which districts must offer next year’s contracts to teachers from April 15 to May 15. 

“Districts can’t build next year’s budgets based on dollars they ‘might’ have,” Rex said.  “If they’re going to avoid budgets that lay off hundreds or even thousands of classroom teachers, they have to know – and know very quickly – what resources they’re going to have and how many teaching positions they can afford.  That means they have to know how much federal assistance they’re going to get, and they have to know if the General Assembly is going to give them the flexibility they need.”

Rex said that if federal stimulus funds are made available to offset districts’ current budget problems, there will be a different set of issues to deal with in two years when the federal stimulus dollars go away.  To help state agencies prepare for that, Rex said South Carolina’s newly proposed tax realignment commission should complete its work on a one-year timetable rather than two.

Rex stressed the importance of local school districts using federal stimulus funds wisely and making certain that taxpayers know how they are being spent.

Rex met in late February with South Carolina Comptroller General Richard Eckstrom to ask how the state’s public schools could be proactive in showing parents and taxpayers how federal stimulus dollars are being used.  Since that meeting, the House has passed a budget proviso requiring that the State Treasurer track how schools spend their stimulus funds.

“Whether we work with the Comptroller General or with the Treasurer, the important thing is that local schools need to account for every dollar of this money.  They should be able to defend every expenditure to parents, teachers, citizens and business leaders.”