Federal stimulus money is running out for schools

For the past two years, the flagging budgets of local school divisions have been propped up by batches of federal stimulus dollars. But the money’s about to run out.

The two-year time limit for divisions to spend most of those funds ends in September, and school leaders in some South Hampton Roads cities are wondering what will happen when the money is gone.

“The feds warned us when the money was distributed: ‘Beware of the cliff effect,’ ” said Michael K. Brinkley, who just retired as executive director of finance for Suffolk schools. “There’s not going to be replacement money.”

At least, there won’t be replacement money from the federal government, which poured money into the coffers of public institutions in 2009. The state used the bulk of it to backfill the education component in its shrunken budget in 2010 and 2011. Although funding levels are back up for the 2011-12 school year, the divisions that delayed making cuts are going to feel the loss of that money, said Patricia Wright, Virginia’s superintendent of public instruction.

Divisions of different sizes received varying amounts of funding, and much of it came with rules. Certain sums had to be spent on special education and low-income schools, with a chunk reserved for whatever operating costs needed to be bolstered as state and local funding diminished.

Hampton Roads schools used the money in different ways, but most acknowledge that when it runs out, they’ll likely come up short.

Chesapeake, for example, received $40.5 million: $26.9 million in state stabilization funds, $9.1 million for special education and $4.5 million for Title I schools – those that serve a high percentage of students from low-income families.

Officials used the money primarily to prevent layoffs, paying the salaries of about 200 employees, Superintendent James Roberts said.

It could have been a dicey move because they knew that eventually, the money would disappear and leave those positions unfunded. So over time, the division has been reducing its number of employees by not filling positions as people quit or retired. That has left enough room to move many of those 200 positions back into the regular operating budget, Roberts said.

Suffolk and Portsmouth did the same, using some stimulus money for salaries and then reducing positions through attrition. That’s one reason why Portsmouth has 467 fewer positions now than it did five years ago, said Dan Pendarvis, assistant superintendent for budget and planning.

Such reductions come at a price. In Portsmouth, about 133 of those people were teachers, so the number of students per class has gone up, Pendarvis said. The city also has 100 fewer custodians now, and teacher assistants have been eliminated everywhere except special education and pre-kindergarten classes.

Brinkley said this year, Suffolk schools will be able to use some remaining money from the federal education jobs bill – money doled out in a separate bill after the original stimulus package – to prevent laying off the 40 or so people still being paid with stimulus funds. But that money lasts for only another year.

“This is going to be a major issue at the end of 2011-12, when we’re doing the budget for 2012-13,” Brinkley said. “If there’s no funding to replace the education jobs funds, we’re going to have to find funding or eliminate those 40 positions. … Most of these positions are ones we need and want.”

Virginia Beach, on the other hand, used relatively little of its stimulus money for salaries.

According to Farrell Hanzaker, chief financial officer for the division, $16 million was used to build a new College Park Elementary School, and other money went toward supplies, materials and technology like laptop computers and reading and math remediation software. About 85 salaries are being paid with education jobs money.

“We didn’t want to use the stimulus money to fund ongoing kinds of expenditures,” Hanzaker said. “We knew that was one-time money that would go away in two years.”

The funding has been helpful, because the money came quickly and, at first, without clear spending and reporting guidelines. Spending it wasn’t always easy.
“There was no time to plan. It was like building an airplane when you were flying,” Hanzaker said.

Other divisions also bought technology and materials with some of the money. Norfolk schools used the majority of its dollars for salaries and benefits, yet also planned for the loss of the funding for fiscal 2012, division spokeswoman Elizabeth Mather said in an email. She did not provide further details.

Wright said she expects division leaders will make a case this fall for why they will need more state funding, and the stimulus money will be part of their argument.

“Every division had to make a decision that was in the best interest of their children, and I don’t second-guess that,” she said. “But I do know (some) have become dependent on that additional funding and will lobby hard for it in the next biennium. I would like to have increased funding as well, but we need to be strategic.”

Roberts, of Chesapeake, noted that this year, the state is revising the formula that decides how much each division gets. Last time around, Fairfax received a bigger share of the state’s education money because its housing prices had begun to deflate. Since then, Hampton Roads cities have experienced the same problem, so hopefully, he said, more money will come to them this time.

Whether the state will step up and fill the funding gap remains to be seen. Gov. Bob McDonnell’s office said only that the loss of federal stimulus money will be taken into account as the governor puts together his budget.

Harry Blevins, a Republican state senator from Chesapeake, said it’s too early to tell how public schools will fare. State officials won’t start the budget process until August, and he points out that there are needs everywhere – in health care, mental health, education.

“All of it’s on the table,” Blevins said, “and we won’t know until later what we’ll have, and what we’ll end up doing.”

Elisabeth Hulette, (757) 222-5216, elisabeth.hulette@pilotonline.com