Another $2.3B Stimulus Accounting Mistake
by David Epstein, ProPublica
If only there were a stimulus edition of Quicken. With billions of stimulus dollars flowing into the economy, some via historically unprecedented avenues, accounting mistakes are inevitable. And, given the magnitude of the stimulus plan, some of the typos and slip-ups were bound to involve astronomical sums of money. Last month, there was the whole $250-checks-being-sent-to-thousands-of-dead-people thing. Then, last week, we noted that the Labor Department had slipped a footnote onto Recovery.gov that corrected by $10 billion the amount of stimulus money that the department had put in the unemployment trust fund. This week, ProPublica received a copy of a section of California's corrected application for State Fiscal Stabilization Funds that fixes an accounting error worth $2.3 billion.
The State Fiscal Stabilization Fund is a $53.6 billion pot created by the stimulus bill. Most of the money is earmarked for education, and in order to receive the money, a state has to ensure the federal government that it will spend at least as much on public K-12 and higher education in 2009 and 2010 as it did in the
2006 fiscal year.
When California submitted its original application for $4.875 billion in stabilization funds on April 15, it showed 2006 figures of $34.905 billion for K-12 funding and
$5.435 billion for public higher education. Last month, after Californians voted down various budget measures, Gov. Arnold Schwarzenegger submitted a budget plan that includes $4.7 billion in cuts to schools over the next two years.
The plan made it painfully obvious that California might have trouble topping the 2006 figures in its application, potentially jeopardizing its right to the SFSF funds. That's where the accounting error comes in.
Going over their numbers, officials in California realized that they had counted more than $2 billion in "settle-up" funds, which were guaranteed to schools in 2006 but not actually spent until the following year.
Settle-up funds are funds owed to schools that have not yet received all the money they are entitled to under California's Proposition 98, which promises that 40 percent of the state's general fund be spent on schools.
The accounting fix lowered the education funding bar that California must meet to receive SFSF funds. "This technical adjustment was made to ensure that we treat all funds consistently across fiscal years in our State Fiscal Stabilization Fund application," says Kathryn Gaither, California's undersecretary of education. "We're continuing to work with the federal government, and we expect to hear final word on our revised application soon." According to John White, a spokesman for the federal Department of Education, no state has had its SFSF
application turned down thus far, so it's a good bet that California's revised application will be accepted.
Based on its revised application (which also includes community college funding that was left out on the first go-round), California is still aiming for the funding figures in its original application but now has the wiggle room to deal with the deep and unavoidable cuts that are looming on the horizon. "It frees up $2 billion in the terms of the ‘maintenance of effort' requirement in the application," says Carol Bingham, director of the state Education Department's fiscal policy division, "so the 2009 and 2010 figures can be dropped down if they need to."
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I believe that this story misses an important aspect of this "error": the amended application now includes Community Colleges with Higher Education, which would, in practice, allow the State to cut the UC and the CSU systems below the 5.435 billion Maintenance of Effort level in the original application (2006 budget year), since they aren't protected by Prop. 98. This seems more a calculated tactic than an error.
However, the State may find that they don't even meet their new, amended amount.
In California, education is considered budgetary fat.
ProPublica I forgot to say, I read your site each and every day....Tha
America's largest investigative newsroom
Posted: June 1, 2009 12:48 PM: By any chance have you find the 9Billion lost in Iraq?
Sure make fun of Arnold. He may have made a mistake or two but have any of you guys actually seen the voting record of Californians? I was from there and can attest to the child like mentality. I don't mean to be spiteful but they want public funding for school, roads etc. yet haven't voted for a permanent tax increase in AGES. Then they get their pants in a bunch because Arnold and the rest of them decided they may, MAY have to close up to 220 parks. Then everyone gets a fire lit under their tail. "he can't do that!! It's part of California, it's our income!! Parks generate 350 million a year!!" And they forget that it costs over 410 million to keep them open. Tough times call for tightening the belt. But CA residents just plug their ears and go LA LA LA LA!!! Not all californians, mind you. Just enough to make sure no tax hikes happen at the polls. And this three month Temp Tax increase? Shennanigans.
Guess you weren't around when Ahnold slashed the car tax and cost the state a fortune just so he could make voters happy short-term.
a billion here and a billion there - pretty soon you have enough to influence and election.
you gotta believe it was teachers union official that figured this out - - -
Anawld, there is somthin called a adding machine you may want to get some and pass em around to your accounts! That abbacus must be completely worn out by now!
He doesn't use it that much... not enough zeroes.
Get real.
Have a hard look at what numbers we submitted to see if we can make sure we can get every dollar possible. It was not a mistake but new data to fix a huge problem
We are hearing about this BECAUSE of government oversight. Otherwise it would just fall into a crack like so much did during the Bush administration.
Does anyone in California have a calculator and a basic understanding of accounting? It is very easy......
How refreshing. Yes, we'll continue to hear about screw ups but at least it's transparent and many of these will have to be corrected given this new visibility.
exactly!
Because of secrecy, the banker bailout looks perfect.
Yet another corrupting influence of secrecy.
No system is perfect.
The alternative to stimulus is world war and poverty.
And because of transparency. Had the Obama Administration not created Recovery.g
So greedy people go to work in the private sector, and incompetent people go to work for the government?
Am I the only one who feels like "they" know that they're on a sinking ship and they just want to get as much wealth to the wealthy as they can while the USD is still worth something? Then they can convert that money to property or other forms of currency and make out like bandits... This feels like a big, big scam.
Well, if you're talking about the $13 trillion heist (some call it a "bailout") by the bankers since Sept. 2008 (per Bloomberg), then I agree with your theory. On that score, it's pretty much a fait accompli. If you're talking about relatively paltry sums of money going to state educational programs, I don't agree.
Cooking the books??
"If only there were a stimulus edition of Quicken." No doubt this will appear now. Probably several versions.
Gee, maybe the rethugs are right: you can't trust government to do things.
Don't trust the government especially the California government.
If you ever pay attention to the left or right . . . one thing is consistent, constant screwups.
With a system as large and complex as our government, errors are unavoidable. Just have to make sure it is transparent enough to catch most of them.
OK, so who are you going to trust instead? Bankers? The private-sector capitalists who just created the meltdown which is the reason we need a stimulus?
Are you grading their math papers?
Where's the harm here?
No harm, no foul.
Go find something useful to do - like find out how much Feinstein's husband profited from favored treatment during the Bush years, and now.
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