Last week, President Obama made a somewhat controversial comment about the need to support jobs in the struggling public sector. Then this weekend in his weekly address, the president called on Congress to do just that by passing the American Jobs Act, a $450 billion bill that would help states support public sector jobs. For education jobs the proposal would create a Teacher Stabilization Fund to provide $30 billion directly to school districts to help pay for employment-related expenses like salaries and benefits. The program is quite similar to the existing Education Jobs Fund of 2010, which provided $10 billion to support such expenditures, though that funding expires on September 30th, 2012. Surprisingly, many states have yet to draw down all of their available funds despite the tight state and local budget climate.
As of June 1, 2012, nearly two years after Congress passed the Education Jobs Fund, states and territories had drawn down 86.9 percent of the available $10 billion. Five states and territories have used all of their funds – Guam, Missouri, Northern Mariana Islands, South Dakota, and the Virgin Islands – and another 11 are close to that point, including Florida, Pennsylvania, and Washington State.
But significant portions of obligated funds remain for many states. In total, 15 states have drawn down 80 percent or less of their available funds. Alaska, New York, Puerto Rico, Vermont, Virginia, and West Virginia all have 30 percent or more of their funds remaining. This means that New York, for example, has about three months to draw down nearly $240 million before the funds expire.
Texas, which has drawn down 72.6 percent of its funds, has $231 million to spend between now and the end of the fiscal year.
And many of the states with low draw-down rates faced significant budget shortfalls in 2012. According to the Center on Budget and Policy Priorities, New Jersey, which has drawn down 73.2 percent of its $272 million in Education Jobs Funds, faced a $10.5 billion (36.0 percent) budget gap in fiscal year 2012. And despite a budget gap of $3.8 billion (20.3 percent), Minnesota has only drawn down 76.2 percent of its funds.
Even states that have less than 20 percent of their funds remaining may have trouble spending them all in time. Ohio, for example, has drawn down 85.6 percent of its Education Jobs Funds. However, that remaining 14.4 percent accounts for nearly $53 million, a sizeable chunk of change to spend over three months. This is particularly the case when those months are over the summer, when education expenditures are typically lower than during the school year.
To be sure, these unobligated funds do not indicate that states and school districts are in better financial shape than first thought or that President Obama’s $30 billion Teacher Stabilization fund would be unwelcome. However, the unspent Education Jobs Funds do suggest that Congress should do further analysis before providing more federal funding for education employment costs—especially given that the president has requested three times as much as was provided in the 2010 Education Jobs Fund. Such an analysis would ideally help ensure that those funds are sufficient and properly targeted to the states that need it the most.
Of course, this whole conversation could be moot. Congress was not particularly enthusiastic about the American Jobs Act back in September of 2011 when it was first proposed. After all, $450 billion is a massive amount of funding, equal to half the cost of the American Recovery and Reinvestment Act of 2009. Even more so, it seems unlikely that lawmakers will take to it now as other education topics, such as student loan interest rates, monopolize their attention.
Click here to see data on Education Jobs Funds outlays for all states and territories.