State at risk of forfeiting millions in education stimulus

Six of nine stimulus grants are on pace to miss the Sept. 30 and Dec. 31 spending deadlines set by the federal government, according to a Bureau of State Audits report released last week.

The money in jeopardy includes aid to schools serving minorities and the poor and set-asides to help struggling families obtain child care services.

State auditors found numerous examples of slow spending and non-spending that they concluded could lead to loss of funds, including:

  • $2.7 million in school technology stimulus unused by 182 school districts, county education offices and charters
  • $2.4 million in Title 1 stimulus grants unspent by at least 20 school districts, county education offices and charters
  • $688,000 in special education stimulus unspent at two districts
  • $117,000 in child care aid unused by 33 day care providers
  • $111,000 in aid for students with disabilities unused by an unnamed education agency

Although it is rare to lose funds of this size, it wouldn't be the first time California has returned stimulus cash. The state forfeited nearly $865,000 in stimulus last year given for the state's Child Nutrition Program because it wasn't spent during the time allotted. And forfeiture isn't the only problem. Auditors also worry that the fix to this year's spending conundrum could result in federal money used improperly or illegally. In her Aug. 11 letter, State Auditor Elaine Howle wrote: "Specifically, subrecipients that received 76 awards from Education for this grant have spent 50 percent or less of their awards and must spend a combined total of $64 million in just six months in order to the meet the December 31, 2011 spending deadline."

As a result, there is a risk that these subrecipients will not be able to spend all remaining funds that Education awarded to them before the deadline and those funds will revert. Moreover, if they do spend all the remaining funds there is a risk that the funds may not be spent for the intended purpose.

The state Department of Education is responsible for supervising the $6.3 billion in federal stimulus, which was given to California through the American Recovery and Reinvestment Act of 2009. Obama administration officials have said the intent of the stimulus was to provide states with funds that could be spent quickly to jumpstart local economies and stave off budget shortfalls triggered by the recent recession.

But that hasn't happened in California.

The state education department, which can encourage but not force districts to spend, expressed confidence that all funds would be spent on time, the report stated.

Officials blamed the slow stimulus spending on the budget crunch and inaccurate cost projections by school districts. The department has awarded all but $300 million. The unused stimulus, officials told auditors, resulted in part from school districts that couldn't afford to make the initial purchases out of their budget and wait to be reimbursed by stimulus funds.

Yet, in the case of the technology stimulus, some blame may rest with state officials, as $71 million sat in bank accounts, unused for nearly two years. Education advocates of all stripes were continually frustrated as a debate among state education officials, finance officials and the Legislature drowned out pleas to quickly free up funds.

In July 2010, Virginia Strom-Martin, legislative director for the Los Angeles Unified School District, told California Watch: "These funds should have been used in a classroom by now. We're not sure what else we can do. We've tried and tried. I've worked with many of them in the Capitol. I believe their intentions were good. But nevertheless, the money has not reached the classroom to where it was intended (to go)."

Although the funds eventually were released, school districts have struggled to fully plan for them. If the rate of spending doesn't increase, at least $13 million of the $71 million technology grant is at risk of missing the December deadline and being returned, Howle's letter concluded.

Story courtesy of our media partners at California Watch (A Project of the Center for Investigative Reporting)

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