When Congress is contemplating major cuts in domestic programs, it is not a good time for states to show a significant unspent balance in their ED grant accounts. Even worse is to let funds lapse due to failure to obligate the funds before they expire.
But some states might be in danger of just that, according to a recent email to state Title I coordinators.
In a July 27 missive, an ED official reminded states of the short time period remaining before their FY 2009 money under the American Recovery and Reinvestment Act expires. Specifically, states have only until Sept. 30, 2011, to obligate the remaining funds under the first installment of School Improvement Grants (SIG). SIG was one of ED’s last major stimulus programs to get off the ground and one of the most complex, so it took states a long time to get their applications developed and approved. Now, some states might be in danger of losing a share of their funds due to the upcoming deadline.
“We are especially concerned about those States showing large balances (more than 20 percent) that have not yet been drawn down,” wrote Paul “Sandy” Brown, an ED budget official. This group comprises the District of Columbia, Nebraska, New Hampshire, New Jersey, and Puerto Rico.
Brown noted that the table he included may overstate the balances remaining “because the amount and percent drawn down may not reflect the actual obligations that have already occurred.” Obligation only takes place when local subgrantees actually enter into contracts or staff members perform work for which they must be compensated. Some states lag in reporting the obligations to the feds and drawing down the funds, so the large balances in some states’ accounts do not necessarily reflect the reality on the ground. It is roughly equivalent to neglecting to submit travel expenses on time.
“[A]s we work to meet the goal of ensuring that 100 percent of FY 2009 Title I Part A funds are obligated by Sept. 30, 2011 and execute our financial oversight responsibilities, it is important for States to monitor the current level of obligations and draw-downs among [their] subgrantees to ensure that these funds are in fact obligated by Sept. 30, 2011 and drawn down by Dec. 31, 2011,” Brown warned. Even if funds are obligated on time, the funds must be drawn down — or “liquidated” — by the latter date or, absent a waiver, be lost entirely.
Brown also encouraged states “to ensure that their subgrantees obligate older FY 2009 funds before obligating more recently available FY 2010 funds on a ‘first in, first out’ basis.” FY 2010 funds have another year to run.
The existence of expired funds has been used before — notably by then-chairman of the House education committee, John Boehner (R-Ohio) — to justify cuts in ED funding. After all, if states need the money, why are they letting their grant funds expire? Or so went the argument. State education agencies should avoid repeating this mistake if they want to defend their federal funding in the budget-cutting melee about to start.
Photo credit: djshaw
