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MCCSC officials: Daniels proposes to use federal stimulus funds targeted to low-income and special education students for general fund purposes instead

As reported in The Herald-Times today, Monroe County Community School Corp. officials are criticizing Gov. Mitch Daniels’ budget proposal because, among other things, it proposes to divert federal stimulus funds intended to serve low-income and special education students into the general fund of schools across the state.

Here’s an excerpt from the story by Andy Graham of the H-T:

“The federal money is earmarked for Title I services for low-income students and for special education. MCCSC officials said they cannot legally use that money for general fund purposes. ‘Basically, we’re being asked by the state to use our own (federal) funds illegally in the eyes of the federal Department of Education,’ said board Vice President Valerie Merriam.” 

A total of $444 million in federal stimulus funds make up most of the 2-percent state budget increase that Daniels has promised to Indiana schools, according to the story.

“The governor went on TV and said education was a top priority and that his budget would provide a 2 percent increase each of the next two years and he had to know, all along, that was wrong in real terms,” State Representative Matt Pierce of Bloomington said in the story. “You can’t take federal stimulus money earmarked for other purposes and apply that to schools’ general funds. So he wasn’t being straight with the people of Indiana.”  

The MCCSC sent out a news release yesterday about the situation. Here is the entire text of that release:

Governor Daniels recently released his budget proposals for the 2010 and 2011 biennium.  Provisions contained in that proposal cause the Board and administration of the Monroe County Community School Corporation to be concerned with respect to the school corporation’s ability to continue to fund the education of our students at current levels. 

  • According to the Indiana School Boards Association the Governor has indicated his proposed budget would provide 2% new monies to schools in both 2010 and 2011.  However, the Governor’s proposal only provides .25% new state funding each year.  The proposal requires the balance of the new money generated by the State’s school funding formula to be provided by using federal stimulus moneys received by the state to fund .13% of the 2% annual increase, with the balance of the annual 2% increase in funding (1.62%) being provided by counting the stimulus dollars received by local school corporations directly from the federal government as new monies in the State’s school funding formula. These funds are specifically earmarked by the federal government for IDEA (special education) and Title I (disadvantaged) programs and may not be used to support other programs.  Under this plan the State would be providing 12.5% of the new funding each year, the State’s federal stimulus money would provide 6.5% of the new funding and federal stimulus dollars received by local school corporations would provide 81% of the new funding each year.  State Representative Crawford recently shared a letter from Arne Duncan, the U.S. Secretary of Education, in which the Secretary stated use of the federal stimulus dollars received by local school corporations to fund state tuition support was an improper use of stimulus moneys and could jeopardize the State’s Title I funding.
  • The Governor’s proposed budget would reduce funding for programs for non-English speaking students from $7,000,000 to $3,000,000.  Services must still be provided to students by the MCCSC even if the funding provided by the state is reduced by more than 50%. 
  • The Governor’s proposed budget would eliminate $13,800,000 in funding for staff development programs at a time when schools and school corporations throughout the State are struggling to meet the standards of federal No Child Left Behind legislation.
  • Funding for all categorical grants, such as special education, vocational education, honors programs and operation primetime, is no longer identified separately in the Governor’s proposal so the extent to which full day kindergarten programs will be funded has not been determined.
  • Although the Governor’s proposal is represented to provide 2% new monies annually to Indiana school corporations, the fact is the State would provide only a .38% increase in funding each year (including the State’s stimulus funding) and local school corporations would provide the balance of the 2% “increase” (1.62%) from their federal stimulus dollars.  Even the .38% increase is mitigated by the reductions in spending for staff development programs and programs for non-English speaking students cited above.  An analysis of Legislative Services Agency data by the Association of School Business Officials indicates that 57% of the school corporations will experience a decline in funding through the school funding formula in 2010.
  • The Governor’s proposed school funding formula does not provide the “reghoster” provision contained in previous funding formulas.  This provision provides for a gradual decrease in funding for school corporations experiencing a decline in enrollment.   Without the reghoster provision in the funding formula the MCCSC will lose approximately $5,300 for each student lost.  Current estimates are that MCCSC enrollment will decline by at least 80 to 100 students.  That would result in a decline in funding of at least $424,000 compared to the amount that would be received if enrollment remained unchanged.
  • The Governor’s proposal includes a requirement that all school corporations participate in the State’s health insurance plan by no later than 2012.  This could result in an enormous increase in the MCCSC’s health insurance costs since the cost of the State’s programs are currently nearly double the cost of the MCCSC’s health insurance programs.  In the absence of a careful study to determine the impact on each school corporation this proposal should be made optional.
  • The Governor’s proposal would shift funding for adult education programs from local school corporations to IVY Tech.  With significantly fewer locations in the state where those who are no longer enrolled in K – 12 programs can obtain educational services, we anticipate a significant decline in the number of adults who are able to pursue their goals to be life long learners.
  • The Governor has indicated no gimmicks or tricks would be used to fund the State’s budget, yet it appears that gimmicks and tricks are the basis upon which much of the Governor’s proposal was built.
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1 thought on “MCCSC officials: Daniels proposes to use federal stimulus funds targeted to low-income and special education students for general fund purposes instead”

  1. It is sad to see that the losers in all of this are children and families. Far too often, as indicated in the story, low-income children and the funds intended to support them are the first funds to be stripped away or denied them when funding problems occur. Hopefully the General Assembly won’t let this be the end result.

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