April 10, 2009
Governor Submits Application to Receive State Fiscal Stabilization Funds
Yesterday, the governor's office announced that they were submitting the application required to receive approximately $5.9 billion in State Fiscal Stabilization Funds (SFSF) for education. The SFSF are available from the federal government to help local school districts minimize layoffs and avoid reductions in education. California is only one of two states that have completed the application process in such a timely manner. The timely submission is due to the insistence of CSEA and our Education Coalition partners that the administration expedite this process to help prevent layoffs, protect jobs and restore cuts made to education.
California is estimated to receive a total of $6 billion in SFSF funding. Of that amount, approximately $4.9 billion will be used to restore cuts proportionally between K-12 and higher education. The remaining $1.1 billion will be used for other state programs.
Under guidance established by the U.S. Department of Education, states will receive the SFSF in two installments. If California’s application doesn’t require extensive review, the first SFSF installment may be available as early as May. The first installment, approximately $3.1 billion will be allocated to California once this application is approved. The balance of the funding is expected to be allocated sometime this fall. Approximately $2.6 billion of this first installment will be allocated to K-12 and $537 million to higher education to restore the cuts made within the budget. This level of funding will fully restore the $2.6 billion in direct program cuts that were imposed on districts in the February 2009 budget.
The Governor’s office has indicated that they will require the school districts to follow the same principles that were required of the state to receive the SFSF. While there is no established process at this time, school districts may be required to provide some type of certification to receive SFSF.
On a related note, the U.S. Department of Education is committed to SFSF being used to mitigate layoffs and protect education funding and not for districts to increase general reserves. Any district found to use the money to pad their reserves will be assessed a quarterly interest penalty on that amount of funds.
What’s Next?
The U.S. Department of Education has committed to reviewing applications in a timely manner. If the applications do not require extensive review, they indicate that states can expect to receive funding approximately two weeks after the application is approved.
The California Department of Education is currently working with the Governor’s Office to determine the amount of funding that each district can expect to receive.
We will keep you updated as more information becomes available.
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