States That Don’t Need Stimulus Funds to Benefit Anyway
While some states whose colleges are starving for money due to
budget cuts are eagerly awaiting their share of the federal economic
stimulus bill, the states that don’t need the stimulus money, or may
not want it, may be getting it anyway, reports The Chronicle of
Higher Education (“Some States Get Stimulus Whether They Need or
Want It,” Feb. 16, 2009).
Under the $54 billion “State Fiscal-Stabilization Fund,” the portion
of money states receive will be based on their population and not
based on the state’s level of need or whether the state’s facing
significant reductions in higher education spending. Several smaller
states that are currently experiencing severe budget crises will not
get enough money to address their financial needs, while several
larger states will get much more than their budgets call for.
For instance, Nevada, which has a population of almost 2.5 million,
is facing a $1 billion budget gap — a figure that represents 38
percent of the state’s general fund, the Chronicle reports. Even
though Nevada Gov. James Gibbons intends to cut approximately one-
third of funding for state colleges, the state will only receive
about $400 million from the stimulus bill, leaving a staggering $600
million shortfall.
Oklahoma, on the other hand — a state with 3.6 million people and a
$309 million budget shortfall, representing only 4 percent of the
state’s budget — will receive $579 million from the fund, resulting
in a $270 million surplus.
And Arkansas, which isn’t projected to face a state budget shortfall
in either the current or following fiscal year and won’t have to
make any cutbacks in higher education, will receive $445.7 million
from the stabilization fund.
Governors to Decide How to Spend Funds
States are directed to spend almost 75 percent of their
stabilization funds on public schools and colleges in order to
restore budget cuts, update facilities, and prevent layoffs, the
Chronicle reports. But the remainder of the funds will be given to
state governors to be allocated at their discretion for high-
priority educational needs, including construction projects for
colleges.
Those states that aren’t experiencing cuts in the area of higher
education may still choose to allocate the money for higher
education construction projects, which could help stimulate state
economies and reduce unemployment rates by providing work for
contractors and builders. And states that spared higher education by
making cuts in other areas may use their stimulus money to makeup
for those deficits they created.
Some states, however, may not accept the federal stimulus funds at
all. South Carolina, for example, has said it will refuse the money
even though lawmakers cut 18 percent from the state’s higher
education fund last year, the largest percentage reduction in the
nation.
“We’re getting into a danger zone with our country’s borrowing,”
said Joel Sawyer, Gov. Mark Sanford’s spokesperson. “It’s something
that, sooner rather than later, may have some very negative effects
on the value of the American dollar.”