State schools to get double stimulus funds

Arizona schools are going to get twice as much in stimulus cash as they expected — at least for the time being — all because federal officials say someone at the state didn’t follow instructions.

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The governor’s office put $250 million into the budget for K-12 education for the fiscal year just ended, a figure based on the amount of money Arizona anticipated in its first “draw” on federal stimulus funds. Gubernatorial press aide Paul Senseman said the plan was to reimburse the state treasury once the check came from Washington.

Only thing is, that’s illegal, according to Sandra Abrevaya, spokeswoman for the U.S. Department of Education. She said any cash received has to go directly to schools.

The fact that the state pre-funded the schools is irrelevant.

She said none of this should come as any surprise to Arizona officials.

“According to law as it has always been written, the stimulus education dollars have to go directly to school districts,” Abrevaya said. “Taking education dollars and moving them into the state treasury is just not an allowable use under law.”

The fact that the state has a $250 million hole in its budget, she said, is not the problem of the federal government.

Abrevaya said that’s not the only thing the state did wrong.

“It’s written into the law that states are supposed to ask school districts for applications,” she said. “And those applications have to indicate an immediate need.”

Instead, the state simply adjusted its funding formula to add the federal dollars to each district.

Senseman, however, denied that anyone in the governor’s office did anything wrong.

“We did follow the instructions,” he insisted. Senseman said these late objections from the Department of Education are unexpected.

“The federal government knew every detail of Arizona accounting process when they approved our application process on June 4,” he said.

Senseman said the state will now seek to comply with what the Department of Education wants.

The first step, he said, will be soliciting those applications. These can be either for money the schools already spent, going back to Feb. 17, or for money they plan to spend in the immediate future such as for salaries or equipment purchases.

Senseman said there should be no problem coming up with $250 million in immediate needs given that schools are spending more than $300 million a month right now in state aid.

And, as required by the law, the funds will be forwarded to the schools. Senseman figures the process could take about a month.

That, however, still leaves the treasury out the $250 million it was counting on getting reimbursed from the state’s share of stimulus dollars.

Senseman defended the decision to pre-fund the schools with stimulus dollars the state did not yet have.

“If there’s any mistake that we made it was that the governor worked to advance funds in midyear to prevent disruption of schools and to make sure teachers were paid,” he said. Senseman said it is not a “given” that the state would have provided those funds anyway if federal reimbursement were not anticipated.

“It’s the intent of the Brewer administration to make sure (schools) didn’t go without while we were waiting to get the proper obligations fulfilled to the federal government,” he said. “We accomplished that.”

Now comes the more difficult question of figuring out how to get that $250 million back, at least indirectly.

“Our intent is not to overpay or to create a deeper deficit problem,” he said.

One option, he said, would be to reduce future state aid payments in a like amount, essentially telling districts to use that double payment of federal stimulus dollars to make up the difference.

The failure of the state to follow the law also created another problem: the need to borrow money.

Arizona had been counting on getting that stimulus check by Wednesday, the day it had to make a $317 million payment to public schools. When the money didn’t arrive, state Treasurer Dean Martin said he had to borrow $130.9 million to make sure the checks to schools did not bounce.

A similar problem exists, but on a lesser level, for the anticipated $153 million sought in stimulus funds for the state’s three universities and $20 million for community colleges.

Senseman said no state funds were advanced in either case. But he said the state does need to get specific applications from individual schools of how they intend to use the money before the federal dollars can be released.