Will More States Follow Daniels And Perry By Squirreling Away Funds Meant For Education?

When Congress finally passed the $26 billion state aid bill earlier this month, it included a provision — added at the behest of Rep. Lloyd Doggett (D-TX) — that Texas not receive any of its allocated education money unless it was willing to certify that it wouldn’t cut its state contribution to education funding.

There was a good rationale for the provision, as when the American Recovery and Reinvestment Act (the stimulus) passed, Gov. Rick Perry (R-TX) simply cut the state’s education budget by the same amount as the stimulus funding the state received, resulting in no net increase in education spending.

But maybe Indiana should have been on the list for heightened scrutiny as well. The Sunlight Foundation today highlighted a report in The North West Indiana County Times showing that Indiana, led by Gov. Mitch Daniels (R), pocketed its stimulus money and then placed its own education funding into a rainy day fund:

Indiana State Budget Director Christopher Ruhl confirmed the federal stimulus money was used to provide basic tuition support dollars for school districts, allowing the state to squirrel away funds that normally would have been used for that purpose. “The state dollars saved were placed in our education rainy day fund,” he said.

Hebron schools Superintendent George Letz said that the stimulus funding “was not used the way in which he thought it was designated by Congress.” “I had understood the Obama administration wanted the money to be used to provide personnel and programs to help our students improve their achievement level, but instead the government took the money and substituted it for basic tuition support,” he said.


East Porter County School Corp. Superintendent Rod Gardin confirmed this, saying “we didn’t receive any extra money.” In addition, Daniels changed the funding formula for his state’s education budget, actually shortchanging poorer districts that are losing students, even when the state technically had more education dollars to spend.

Daniels and Perry seem to have inspired some other states to at least look at using education funding to instead reduce their deficits. As Lucia Graves reported, “in California, legislators, including state Sen. Darrell Steinberg, have proposed using the $1.2 billion in federal money designated for the schools to help offset the state’s $19 billion deficit.” In Oregon, Gov. Ted Kulongoski (D) has also said he might cut the state education budget after receiving federal funds.

At this point, was it a mistake to not apply the Texas standard to every state, ensuring that federal dollars actually wind up with students and teachers in the classroom? “If this is a good idea, then why not make it apply to all states?” asked Debbie Ratcliffe, a spokeswoman for the Texas Education Agency.