The past two years have seen America weather a devastating recession. The stabilization and recovery, though halting, can be credited in large part to the Economic Stimulus Package, which was established by the American Recovery and Reinvestment Act (ARRA) in early 2009. Even as the economy begins to show signs of life, however, the aftermath of the downturn continues to be felt in our nation’s schools.
In conjunction with the Economic Stimulus Package, schools across the country received approximately $100 billion in additional federal funding this year. This boost was sorely needed, and its expiration will significantly constrict district budgets for the upcoming 2010/2011 school year.
Some of the specific programs that were targeted for stimulus funding are as follows:
- State Fiscal Stabilization Fund - $48.6 billion
- Pell Grants - $17 billion
- IDEA, Part B/Special Education - $11.7 billion
- Title I, Part A/Education for the Disadvantaged - $10 billion
- Race To The Top Fund - $4.8 billion
- Title I/School Improvement Grants - $3 billion
- Child Care Block Grant - $2 billion
- Early Head Start - $1.1 billion
- Head Start - $1 billion
- State Educational Technology Grants - $650 million
- Vocational Rehabilitation State Grants - $540 million
- IDEA, Part C/Special Education - $500 million
Although 28 states and the District of Columbia have reduced K-12 funding this year, the availability of ARRA-related federal funds allowed many school districts to postpone making major cuts to 2009-2010 budgets. With so much pressure on already stretched resources, the ARRA funding has been a lifeline for struggling districts across the county. Now, as they plan budgets for the 2010-2011 school year, districts are being forced to deal with two sobering economic realities: the ARRA-related funding is coming to an end, and state funding may be cut even more in the next budget cycle.
Several states have already proposed additional cuts for K-12 funding. These include the following:
- California (More than $1 billion);
- Colorado (Non-restoration of prior cuts and an additional $223 million in new cuts);
- Delaware (5 days of unpaid leave for all teachers);
- Georgia (11%);
- Maine (7%);
- Maryland ($330 million);
- Mississippi (More than 9%);
- New York ($1.1 billion); and
- Vermont (Increased class size of 20%).
In many cases the extent of additional cuts will not be known until states actually pass budgets for the next fiscal year. Most states and the District of Columbia have fiscal years that begin on July 1st. Exceptions include Alabama (October 1st), Michigan (October 1st), New York (April 1st), and Texas (September 1st).
One bright spot in this haze of uncertainty is the Senate’s recent decision to extend the temporary 6.2% increase in the federal medical assistance percentage (FMAP) by six months. This is good news for cash strapped districts, as many of the proposed state budgets have been built on the assumption that these higher Medicaid reimbursement rates would be extended past the scheduled expiration date of December 31, 2010.
Another factor that may negatively impact school districts’ budgets is the expected increase in foreclosures. Recent reports by the U.S. Treasury indicate that more than 23% of homes in the United States are currently worth less than the amount owed on them, and that the percentage of mortgages that have not been paid for at least three months is at an all-time high. Decreased home ownership, and the subsequent decreased property tax revenue, will impose tighter constraints on state budgets, which will trickle down to school districts.
The worst of the financial crisis may be over, but it will be some time before true relief is felt across the country. In looking ahead to the 2010/2011 school year, districts will need to closely examine how to maximize their available funds and offset increasingly tight budgets.
About Accelify
Accelify is currently the second largest school-based Medicaid billing agent in the country, currently serving school districts in nine states with more than 500,000 special education students. More than 70 districts have chosen Accelify in the past six months. The company is headquartered in Brooklyn, NY and has offices in seven states. Accelify is endorsed by numerous state school board associations and other educational associations for its people, technologies, processes and training. On average, our clients receive 2-3 times the Medicaid revenue than they did when working with another vendor or navigating the process alone. Accelify is proud to be helping school districts find solutions in these rocky economic times.
To request additional product information, or to schedule a demonstration, please contact:
Megan McCann
Public Relations Manager
Phone: 347-532-3209
Email mmccann@accelify.com
