Georgia School Funding Association


Letter to State Board of Education about Federal Stimulus Funds

April 24, 2009

Hon. Wanda Barrs and Members of the
State Board of Education
2066 Twin Towers East
Atlanta, Georgia 30334

Ladies and Gentlemen:

In addition to the supplemental funding through Title I and IDEA, which you will approve at your special board meeting on April 28, we ask you to consider another aspect of the American Recovery and Reinvestment Act (ARRA) that is vitally important to our schools.

As you know, local school systems throughout Georgia have already squeezed their budgets in FY 09 and are now making drastic cuts for FY 10 because of reductions in State support. The ability of our schools to provide even the most basic elements of an adequate education for our students has been seriously impaired.

Nevertheless, it appears that the State of Georgia does not plan to tap all of the funds that could obtained through the first phase of the Education Stabilization Fund, even though it is the clear intent of ARRA that all of the authorized funds be requested and used to restore State funding for education as soon as possible.

In addition to the general maintenance of effort required by ARRA, each state must use its allocation of stabilization funds to restore, in each of FY 09, FY 10, and FY 11, the level of State support provided through “the State’s primary elementary and secondary funding formulae” to the greater of the level that existed in FY 08 or FY 09. A copy of the relevant portion of ARRA is enclosed for reference.

The applicable funding formula for the allotments to local schools in Georgia is set forth in the Quality Basic Education (QBE) Act, and ARRA provides that these allotments should be implemented in accordance with enrollment changes and other normal adjustments, including equity and adequacy adjustments, “if such increases were enacted pursuant to State law prior to October 1, 2008.” The QBE Act meets this test, since it was approved in 1985.

As shown in the enclosed table, the support now being provided by the State to our schools is substantially below what ARRA requires in both FY 09 and FY 10. When the base for restoration is set at the level of funding which existed in the initial budget for FY 09, the deficits are $285 million in FY 09 and $421 million in FY 10.

At the same time, the State has at least $178 million in available funds that have been designated exclusively for elementary, secondary, and postsecondary education in the initial phase of the Fiscal Stabilization Fund for Georgia. There are additional funds in the allocation for other government services that can also be used for education.

ARRA has provided an allocation of $1.541 billion for the Fiscal Stabilization Fund in Georgia, of which at least 81.8% must be spent on education. Of this total, 67% is available in the initial phase of funding. The General Assembly has committed $558 million for K-12 education in FY 09 and FY 10, $93 million for the university system in FY 10, and $15 million for the technical colleges in FY 10. As a result, $178 million is still remaining in the initial phase for distribution to local school systems and institutions of higher education, with the split being based on the relative shortfall in State support for each of these sectors. We estimate that about $120 million would go to K-12 education.

Even though ARRA anticipates that these funds will be requested and disbursed as quickly as possible, the law allows flexibility to local schools in determining how and when the funds are spent. For example, a local school system which receives funds based on a shortfall in FY 09 can use these funds to meet critical needs in FY 10.

The additional funds that are currently available through ARRA would not be nearly enough to accomplish the intended restoration or to fulfill the State’s responsibility under the Georgia Constitution. There would still be large austerity cuts in addition to the continuing impact of inflation on the QBE formula. Nevertheless, these funds would provide urgently needed help to our schools.

We bring this matter to your attention in the hope that you will ask the Governor to request and use the available ARRA funds for their intended purpose. We believe this action is necessary to comply with the provisions of ARRA and protect the allocation to Georgia in the next phase of the Fiscal Stabilization Fund. The fact that these funds are granted to the Governor of each state would avoid the need for a Special Session.

Most of all, the addition of millions of dollars of federal funds would benefit our students by mitigating the cuts that have been imposed for FY 09 and FY 10. There is no compelling reason to delay the receipt and use of these funds, since they can only be spent on education. In any event, another $416 million will still be available to Georgia in the second phase of the Education Stabilization Fund for use in FY 11.

The possibility that State revenues might be reduced in FY 11 as a result of recent tax cuts and exemptions makes it all the more important that the Fiscal Stabilization Fund be used as intended to preserve the funding for our schools instead of simply replacing the revenues which the State would have otherwise received.

Thank you for your leadership on behalf of Georgia’s students.


Joseph G. Martin, Jr.

Enclosures (see below)


Enclosure: Section 14002 of the American Recovery and Reinvestment Act


For necessary expenses for a State Fiscal Stabilization Fund, $53,600,000,000, which shall be administered by the Department of Education.


H. R. 1—166
(1) IN GENERAL.—For each fiscal year, the Governor shall use 81.8 percent of the State’s allocation under section 14001(d) for the support of elementary, secondary, and postsecondary education and, as applicable, early childhood education programs and services.
(A) IN GENERAL.—The Governor shall first use the funds described in paragraph (1)—
(i) to provide the amount of funds, through the State’s primary elementary and secondary funding formulae, that is needed—
(I) to restore, in each of fiscal years 2009, 2010, and 2011, the level of State support provided through such formulae to the greater of the fiscal year 2008 or fiscal year 2009 level; and
(II) where applicable, to allow existing State formulae increases to support elementary and secondary education for fiscal years 2010 and 2011to be implemented and allow funding for phasing in State equity and adequacy adjustments, if such increases were enacted pursuant to State law prior to October 1, 2008.
(ii) to provide, in each of fiscal years 2009, 2010, and 2011, the amount of funds to public institutions of higher education in the State that is needed to restore State support for such institutions (excluding tuition and fees paid by students) to the greater of the fiscal year 2008 or fiscal year 2009 level.
(B) SHORTFALL.—If the Governor determines that the amount of funds available under paragraph (1) is insufficient to support, in each of fiscal years 2009, 2010, and 2011, public elementary, secondary, and higher education at the levels described in clauses (i) and (ii) of subparagraph (A), the Governor shall allocate those funds between those clauses in proportion to the relative shortfall in State support for the education sectors described in those clauses.
(C) FISCAL YEAR.—For purposes of this paragraph, the term ‘‘fiscal year’’ shall have the meaning given such term under State law.
(3) SUBGRANTS TO IMPROVE BASIC PROGRAMS OPERATED BY LOCAL EDUCATIONAL AGENCIES.—After carrying out paragraph (2), the Governor shall use any funds remaining under paragraph
(1) to provide local educational agencies in the State with subgrants based on their relative shares of funding under part A of title I of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) for the most recent year for which data are available.

(1) IN GENERAL.—The Governor shall use 18.2 percent of the State’s allocation under section 14001 for public safety and other government services, which may include assistance for elementary and secondary education and public institutions of higher education, and for modernization, renovation, or repair of public school facilities and institutions of higher education facilities, including modernization, renovation, and repairs that are consistent with a recognized green building rating system.
H. R. 1—167
A Governor shall not consider the type or mission of an institution of higher education, and shall consider any institution for funding for modernization, renovation, and repairs within the State that—
(A) qualifies as an institution of higher education, as defined in subsection 14013(3); and
(B) continues to be eligible to participate in the programs under title IV of the Higher Education Act of 1965.
(c) RULE OF CONSTRUCTION.—Nothing in this section shall allow a local educational agency to engage in school modernization, renovation, or repair that is inconsistent with State law.


Enclosure: Table Showing Funds Required to Restore State Support through ARRA

                    Required Funding to Restore State Support to the Level in FY 08 
                                     (in accordance with the American Recovery and Reinvestment Act) 
Line  Actual FY 08 (1)   Initial FY 09 (2)   Midterm FY 09 (3)    Initial FY 10 (4,5) 
1  QBE Formula Earnings    $        8,268,731,050  $        8,573,762,729  $         8,305,050,244  $       8,700,343,508
2  Local Share of QBE           (1,542,897,518)          (1,690,849,786)            (1,689,780,568)         (1,697,504,730)
3  State Share of QBE   $        6,725,833,532  $        6,882,912,943  $         6,615,269,676  $       7,002,838,778
4  Austerity Cuts (5)              (142,959,810)               (92,927,430)               (374,044,605)            (654,050,020)
5  ARRA Funds                     145,317,456              413,145,927
6  State Funds for QBE    $        6,582,873,722  $        6,789,985,513  $         6,386,542,527  $       6,761,934,685
7  Equalization   $            548,529,543  $          548,529,543
8  Increase/Decrease                     7,978,389            (112,370,956)
9  Revised Total   $           485,779,211  $           548,529,543  $            556,507,932  $          436,158,587
10  Transportation   $            170,943,051  $          170,943,051
11  Increase/Decrease                                  -                  (2,564,146)
12  Revised Total   $           168,868,763  $           170,943,051  $            170,943,051  $          168,378,905
13  Nursing Services    $              30,000,000  $            30,000,000
14  Increase/Decrease                                  -                     (900,000)
15  Revised Total   $             30,000,000  $             30,000,000  $              30,000,000  $            29,100,000
16  Sparsity & Low-Incidence Special Education   $                7,179,165  $              7,179,165
17  Reduce Sparsity Grants                       (254,098)                   (254,098)
18  Reduce Low-Incidence Special Education                         (16,534)                     (24,802)
19  Revised Total   $               7,170,920  $               7,189,165  $                6,908,533  $              6,900,265
20  State Funds for QBE (Line 6)   $        6,582,873,722  $        6,789,985,513  $         6,386,542,527  $       6,761,934,685
21  Equalization (Line 9)                485,779,211               548,529,543                556,507,932              436,158,587
22  Transportation (Line 12)                168,868,763               170,943,051                170,943,051              168,378,905
23  Nursing Services (Line 15)                  30,000,000                 30,000,000                  30,000,000                29,100,000
24  Sparsity (Line 19)                    7,170,920                   7,189,165                    6,908,533                  6,900,265
25  Allocations to Local Systems (6)   $        7,274,692,616  $        7,546,647,272  $         7,150,902,043  $       7,402,472,442
26  Base Amount (the Initial Budget for FY 09)   $        7,546,647,272  $         7,546,647,272  $       7,546,647,272
27  Increase/Decrease in State Share of QBE (7)                (110,563,856)              277,005,246
28  Minimum Amount to be Restored   $         7,436,083,416  $       7,823,652,518
29  Deficit in Restoration (Line 28 less Line 25)   $            285,181,373  $          421,180,076
 (1)  Shown in the Governor's Budget Report for FY 10, with the addition of Nursing Services . 
 (2)  Reflects the initial budget for FY 09 as adopted by the Governor and General Assembly in 2008.  
 (3)  Reflects the amended budget For FY 09 with midterm adjustments, a one-time reduction in the employer share of the cost 
        of health insurance, and additional austerity cuts. 
 (4)  Indicates the initial budget for FY 10 as approved by the General Assembly for FY 10 but not signed by the Governor. 
 (5)  Reflects a transfer of $49,225,901 for Graduation Coaches in FY 10, which is shown as a reduction in Austerity Cuts on 
        Line 4 instead of an increase in QBE Formula Earnings on Line 1.  
 (6)  Does not include separate funding for Migrant Education, Graduation Coaches, or Classroom Cards. 
 (7)  Reflects changes in the State Share of QBE on Line 3 based on enrollment and other adjustments in the funding formula. 
 Education or 
 Use of Fiscal Stabilization Funds   Education   Other Services   Combined 
 Total Allocation for Georgia   $        1,541,319,187  $         1,541,319,187  $       1,541,319,187
 Percent in Each Category  81.8% 18.2%
 Amount in Each Category    $        1,260,799,095  $            280,520,092
 Percent in Initial Phase  67% 67% 67%
 Amount in Initial Phase   $           844,735,394  $            187,948,462  $       1,032,683,855
 Draw for K-12 Education in FY 09               (145,317,456)            (145,317,456)
 Draw for K-12 Education in FY 10              (413,145,927)            (413,145,927)
 Draw for University System in FY 10                (92,617,896)              (92,617,896)
 Draw for Technical Colleges in FY 10                (15,406,239)              (15,406,239)
 Draws for Public Safety & Other Uses in FY 10                  (140,260,406)            (140,260,406)
 Unused Funds in Initial Phase   $           178,247,876  $              47,688,056  $          225,935,931