K-12 Tax & Spending Climate: Stimulus Funds "Fall Short" & A Worsening US Debt Outlook

Stacy Teicher Khadaroo:

The announcement earlier this year that roughly $100 billion in federal stimulus funds would flow to public schools came with great expectations - both for saving jobs and for fostering reforms in education. But the way the money is being used so far is decidedly more mundane.

In a new survey of 160 school-district leaders, 53 percent say they have not been able to use the money to save teaching positions in core subject areas or special education. And 67 percent say the opportunity to direct the money to reforms has been limited or nil.

"Everybody appreciated getting the money ..., but primarily all the money did was help to backfill the budget deficits they were already facing," says Daniel Domenech, executive director of the American Association of School Administrators (AASA) in Arlington, Va., which released the survey Tuesday.

The majority of survey respondents did prioritize saving various personnel positions, along with investing in professional development. Other top uses of the money included buying technology, equipment, and supplies for classrooms and paying for school repairs.

Survey respondents cited several key reasons for not being able to focus more on reforms.

The money is coming through several streams, and the most flexible one, known as State Fiscal Stabilization, was primarily used to fill holes left by declining state and local funding.

Sarah O'Connor, Edward Luce & Krishna Guha:

The CBO released sharply higher deficit projections predicting the 10-year deficit would reach $7,140bn, some $2,700bn more than it had thought in March. Unlike the White House's calculations, the CBO estimate assumes all policies will stay exactly as they are.

"If you include the administration's fiscal plans, this implies a deficit increase way in excess of $10 trillion over the next decade - the numbers are deeply alarming," said Bill Gale, a senior economist at the Brookings Institution.

The deficit projections are a political millstone for the Obama administration as it seeks to promote health reform and other priorities. However, there is no sign of a rebellion in the bond market, where 10-year Treasuries were on Tuesday yielding 3.44 per cent. This suggests the market still sees a weak recovery ahead, even though data on house prices and consumer confidence suggested the recession was ending.

Posted by Jim Zellmer at August 26, 2009 9:33 AM
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