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    A new study released by the New America Foundation (NAF) examines the effect of the American Reinvestment and Recovery Act (ARRA) on state spending for higher education. The study, released in December 2010, is the first in a four-part series; specifically, it examines the efficacy of the State Fiscal Stabilization Funds (SFSF) on buttressing higher-education funding. The study implicates six states in manipulating the education funding provisions prescribed in the ARRA. .

    First, the background of the SFSF. The SFSF was instituted by Congress as a component of the ARRA to buttress state funding for K-12 and higher education in lieu of decreased tax receipts caused by a tepid economy. The funds were apportioned into two parts: education stabilization funds, which were apportioned to support education purposes; government services funds, which were apportioned to support other government services in addition to education. Wholly, $48.6 billion were appropriated for the SFSF; $39.8 billion of that was appropriated for the education stabilization funds. Inserted in the SFSF was a provision requiring states to maintain 2006 funding levels. This was intended to prevent states from cutting education funding and using SFSF funds to buttress other aspects of the budget. However, the NAF's study concluded that six states manipulated the SFSF by decreasing higher-education appropriations while simultaneously increasing overall spending.

    Technically, the rules were not violated as funding levels did not decrease below 2006 levels; however, the NAF implicates the six states in manipulating the law. The six states, Arkansas, New York, Pennsylvania, Tennessee, West Virginia, and Wyoming, "appear to have cut their higher-education funding while actually increasing total state spending." For example, Tennessee cut higher-education funding from 2008 to 2009 while simultaneously increasing overall spending. The NAF posited that "Tennessee likely created these gaps in funding for higher education to ensure that it could use the Education Stabilization funds to support higher education in 2009." The other five states made similar budget maneuvers to manipulate the funding.

    Nevertheless, the study concluded that the SFSF largely achieved its goal of buttressing higher-education funding amid severe budget shortfalls. And as the data is further examined and refined, perhaps new information will be discovered. Moreover, the NAF intends to examine the efficacy of the SFSF relating to other areas; this includes the effects on K-12 education funding.

    Source:

    New America Foundation-The State Fiscal Stabilization Fund and Higher Education Spending in the States

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