"[W]e can't stand by and do nothing while pink slips are given to the men and women who educate our children," said Barack Obama on August 10th from the White House Rose Garden. That was the day the House passed another $26 billion states bailout, which included $10 billion for state education spending.
Obama insisted that the passage of the bill was urgent, and that if it was not passed, teachers would be fired. "I urge Congress to pass this proposal so that the outstanding teachers who are here today can go back to educating our children," he declared. So urgent was it, you will recall, that Nancy Pelosi hurriedly brought the House back from August recess to pass the bill.
Well, now, the teachers are getting fired anyway. According to the New York Times, several school districts will be stockpiling the money for 2012, when more budget cuts are expected. Others are hesitant to spend the one-time bailout, because it undermines year-to-year stability in budgeting.
"We're a little wary about hiring people if we only have money for a year, but we know that's the intent of the bill," said the chief financial officer of Clark County schools, Jeff Weiler. Others, like, like Lydia Ramos of the Los Angeles Unified School District, intend to use the money tackle the "herculean task [of] next year's deficit."
This comes amid other news that over $100 billion of infrastructure projects in the original $862 billion "stimulus" has gone unspent, as reported by the Washington Post. Although most of the original $145 billion dedicated to states was spent, which included $87 billion for Medicaid and another $53.6 billion to balance state and local budgets, the unspent moneys piling up calls into question Obama's urgent rationale for yet more spending.
Congressional Republicans have argued for using the unspent funds to pay down the national debt, amongst other things. Instead, it appears that the financing will lay idle for the time being, while states figure out how to fix their worsening budget pictures.
One thing Obama apparently did not anticipate were states prioritizing a sustainable budget over one-time handouts.
The hoarding by state and localities of the funding also reveals that they have learned what the American people already know — that the "stimulus" is indeed a failure. It's not a down payment, and it has not brought about immediate growth. Now we know the states know it, too.
Despite promises that the "stimulus" would lead to a V-shaped recovery, states that put off making necessary cuts to their budgets last year are now caught in a bind as revenues have failed to recover, nor are they expected to next year. This is in turn has undermined the political fortunes of state lawmakers, with Republicans expected to pick up new majorities in several state legislatures this year.
These states now face a choice: Use the money today, as the public sector unions are demanding, and risk even steeper cuts next year, or hoard the money since the law allows it to be spent as late as September 2012.
Other states, like Texas, are rejecting the money out of hand since the $10 billion fund "mandates that the governor guarantee the Legislature will provide a certain level of state funding through 2013, a funding scheme prohibited by the Texas Constitution," according to Katherine Cesinger, Deputy Press Secretary of Texas Governor Rick Perry.
Still other states have complained about the mandatory nature of the funding contained in Section 101(8) of H.R. 1586which states that if a governor fails to apply for funding within 30 days, "the [Education] Secretary shall provide for funds allocated to that State to be distributed to another entity or other entities in the State … for support of elementary and secondary education, under such terms and conditions as the Secretary may establish."
According to a statement issued by New Jersey Governor Chris Christie's press secretary yesterday that "the Governor will apply for the education funding passed by the House today in order to ensure it is managed and distributed to local school districts by the State of New Jersey, and not the federal government."
One has to wonder that since the federal government intended to force reluctant governors to accept the money, if it will now attempt to force states to spend the money for the upcoming school year as proposed. They're already hijacking sovereign state decisions about whether or not to accept federal money — a clear violation of the 10thAmendment — so what's to stop the Obama Administration from forcing states to allocate money in the precise manner it wishes?
Perhaps upon learning about the reluctant states and localities not spending the money right away, Nancy Pelosi and Harry Reid will speedily reconvene Congress to pass billions of dollars of more spending that they must use this year. Or, maybe not.
Maybe they'll just pretend that they "saved" the jobs, even though they didn't.
Robert Romano is the Senior Editor of Americans for Limited Government (ALG) News Bureau.
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