Skip navigation

Outlook 2010: Stimulus helps education institution stay afloat, but for how long?

The American Recovery and Reinvestment Act enacted by Congress in 2009 was a life preserver for many states and education institutions, helping to rescue budgets for the 2008-09 and 2009-10 school years. The largest recovery program administered by the U.S. Department of Education is the State Fiscal Stabilization Fund, which was given more than $48 billion to allocate — $39.5 billion is for public elementary, secondary and higher education and early-childhood programs, and $8.8 billion for a broader scope of activities that may include education, public safety or other government services.

The education department says 31 states used Phase I of the stabilization program to cover emergency shortfalls for 2008-09, and 48 states used stabilization funds to cover shortfalls in 2009-10. It also says the stabilization funds enabled at least 31 states to mitigate tuition increases at public universities.

Officials have asserted that the stimulus funds the department provided to states have saved 400,000 jobs — 325,000 of those specifically education jobs.

In 2010, the department will allocate the remaining $11.5 billion in stabilization funds as part of Phase II of the program. For this round, the funding will be tied to a state's education reform efforts.

"We are now asking states to implement reform-based action items in order to receive the remaining $11.5 billion in State Fiscal Stabilization Funds," says Education Secretary Arne Duncan.

The department says states seeking funds will need to provide data in areas such as how teachers and principals are evaluated and how this information is used to support, retain, promote or remove staff.

The Recovery Act also provides schools with opportunities in 2010 to use Qualified School Construction Bonds to build and renovate facilities. The program enables schools to issue what in effect are zero-interest bonds to pay for construction projects. Many school systems took advantage of the bonds in 2009, and the stimulus program includes another $11 billion in funding for 2010.

A similar program, Build America Bonds, enables schools and universities to borrow construction funds at a reduced interest rate.

Kennedy, staff writer, can be reached at [email protected].

Return to the Outlook 2010 main page.

Or jump to an Outlook 2010 analysis:

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.