Thursday, June 23, 2011

Feds threaten to cut funds; Zais scrambles to keep them

Says The State newspaper:

Trying to head off the 11th hour loss of more than $100 million in federal money because it has not spent enough on special education in the past few years, the state could send a whopping $75 million to school districts by June 30.

The state’s failure to spend enough on special education in the past, according to federal formulas, also means the U.S. Department of Education plans to withhold $36 million from the state each year going forward.

At issue is a Friday ruling by the U.S. Department of Education that South Carolina has failed to spend enough on special education students in the past three years. Reduced tax collections cut the state’s income during that period and, in turn, the state cut the amount it spends on students with special needs.

Because the state has not spent enough, the federal agency plans to penalize it by withholding $111 million a year in federal money for special education: $75 million because the state did not spend enough in its fiscal year that ends June 30 and $36 million for not spending enough in the fiscal year that ended June 30, 2010.

The takeaway from this little scandal is that, when faced with the prospect of losing more than $100 million in federal dollars, our federal-funding-averse Superintendent of Education suddenly found $75 million lying around and scrambled to figure out ways to get it into local school districts. Which begs an elephant-sized question: Where did this money come from and why wasn't it already in the hands of local school districts?

On that matter, Mick Zais is yet quiet.

One thing he's doing is re-labeling about $20 million from the Education Improvement Act Trust Fund -- did everyone know that the legislature sits on an "EIA Trust Fund," rather than sending that money on to school districts? -- as "special education" funds. The State reports that a legislative committee jumped on the case yesterday and quickly approved that motion, perhaps one of the quickest acts to occur this year. But the paper says the Budget and Control Board has to vote before June 30 to let this happen.

Will Governor Nikki Haley, who chairs the Budget and Control Board, vote for this move or against it? After all, she's followed pretty closely in the footsteps of her mentor, former Governor Mark Sanford, in badmouthing any funding that comes from Washington and any funding that goes to support children in public schools. Perhaps Treasurer Curtis Loftis, Haley's bete noire, will be the most relevant member of the BCB in this instance.

But $20 million is just a small piece of the money that Zais is hot to move.

The remaining $55 million will be squeezed from the state Department of Education.

Say what? The ultra-conservative Zais Superintendency, after claiming for the past six months alongside lawmakers that the state could only afford a base student cost of $1,617 per student, suddenly acknowledges that he can "squeeze" another $55 million from his department's budget? Is Zais's petty cash drawer that big?

Zais said that is doable because the General Assembly recently gave his department additional flexibility to use Improvement Act money. Also, in the last few months, the agency has paid lower-than-anticipated fuel prices for the statewide bus system that it operates.

This smells like low tide at Bowens Island in August. There's no way South Carolina "saved" so much on school bus fuel that it can afford to roll $55 million out of Zais's office into special education. Haley and the gang are going to love this news, and likely will use it next year to support her call to privatize student transportation statewide.

No, it's the "flexibility" part of Zais's answer that makes the most sense -- and represents the greatest danger. You see, this is precisely what happens when lawmakers -- who don't want to face their constitutional obligations and raise the revenues necessary to fund public education -- give a set amount of dollars to the department, and to school districts, and tell them to use those dollars in whatever way best serves the department's, and each district's, priorities. This is how they can stand before a judge in school-funding-equity lawsuits and defend themselves with a straight face: Your Honor, we gave them all the money we could, they just didn't all use the money the same way, which is their fault.

So $55 million that would otherwise have gone to every other kind of program under the department's control has now been re-labeled "special education" and shipped out. That's flexibility for you.

One interesting note arising from this new foolishness is that the lions are mauling one another over it.

State Rep. Brian White, R-Anderson, the incoming chairman of the S.C. House's budget-writing committee, asked: “If you had an idea (this would happen), why didn’t we include (a request for the money) in the normal budget process instead of having a train wreck at the 11th hour? I don’t understand why you didn’t put in a request earlier.”

Zais said he has been in communication with the governor’s office and legislative leaders since February, letting them know his office was in talks with the U.S. Department of Education.

But it was not until 3 p.m. Friday that Zais said he received word the federal agency would not grant the state waivers for its lower-than-prescribed special education spending for the past three years.

A new budget proviso should prevent future last-minute maneuverings.

It requires the state Department of Education to inform the governor and General Assembly each year by Dec. 1 of the amount the state must spend to get all of the federal special education money that it qualifies for.

Perhaps when we elect someone who views the role of superintendent as the state's chief advocate for public education and public schools, it won't require a new state law for that superintendent to tell the legislature exactly how much is needed, and when, to provide education access to all of South Carolina's children.

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