07/22/2010 06:43 pm ET Updated May 25, 2011

$71 Million Stimulus Sat Unused As Budget Crisis Crippled Schools

This story comes courtesy of California Watch

By Corey G. Johnson

For nearly a year, California schools have missed out on the opportunity to spend tens of millions of dollars in federal stimulus dollars as lawmakers and state officials debate how to spend it.

The debate over education technology funds has kept the money in state bank accounts, unable to help thousands of K-to-12 schools it was intended for. California Watch learned of the delays yesterday through interviews and documents.

About half of the funds - $34 million - were set aside for 1,063 local education agencies. But that decision was announced on July 16, nearly a year after the money was delivered to the state. It is unclear when the remaining $37 million of the federal Enhancing Education Through Technology money (EETT for short) will be released.

While a debate about expenditures is nothing new, the stall over these stimulus funds is significant because it appears to undercut the intent of stimulus funding - to spend money quickly to help revive a sluggish economy. The delays also come as local schools deal with the impacts of a crippling statewide budget crisis.

The issue boils down to this: After receiving the one-time education technology stimulus award in late July 2009, the Department of Education asked state lawmakers to approve its plan on how to spend the money. California law requires such legislative approval before any federal monies could be spent.

For reasons that are still unclear, the Legislature did not act on the state Education Department's request. State education officials mistakenly believed they could disperse the money to schools anyway, said Keric Ashley, a Department of Education official. So they began taking applications from school districts while formally sending a request to the Department of Finance to authorize the stimulus spending.

By November, the Joint Legislative Budget Committee learned of the move and sent a letter to then Finance Director Michael Genest, rejecting the department's plan, saying legislators wanted to decide how to use the money in a more "strategic" manner. Denise Moreno Ducheny, chairwoman of the budget committee wrote:

According to the legislative analyst's office (LAO) the administration's ETTT spending proposals are not the only options allowable within federal parameters. The Legislature could consider alternative uses for ETTT funds and other allocation options. ... In light of these issues, I do not concur with the Section 28.00 request. I recommend the administration and CDE work with the Legislature to craft an alternative expenditure plan for EETT funds that furthers state and local education technology objectives in a more strategic, comprehensive manner.

The rejection by Ducheny effectively killed the education department's plans, said H.D. Palmer, director of external affairs at the Department of Finance.

"We want to get stimulus money out the door as soon as possible, Palmer said. But in order to do that in this case, it required legislative approval."

Several months passed while competing proposals by state Assembly and Senate members were argued.

Some wanted the money to be spent on the state's Race to the Top efforts. Others wanted to direct the money strengthening the state's weak data tracking systems. Still others desired money for pre-school and college career training programs. The Department of Education held fast to the position that the grant was meant to help fourth-thru eighth graders and that the local districts should decide how to spend the money.

"The money is for the school districts," Ashley said. "It isn't for the state."

After many weeks of unsuccessful meetings between officials at the finance, education and budget committees, a compromise was reached in May.

Half of the $71 million could go to school districts who got technology plans approved by the state. Last week, state education officials unveiled the list of stimulus awardees. (For information on the school districts, charters and county offices of education who have been approved to receive the first installment of education technology stimulus, click here.)

Yet, talks on how best to make the other $37 million available have continued to go on unresolved.y G. Johnson