State to spend more, get more?

LINCOLN — Nebraska Gov. Dave Heineman is worried that state lawmakers might have to spend $30 million more to qualify for $59 million in new federal funds for teacher salaries.

The federal money is part of a $26 billion aid package the U.S. House approved Tuesday in a special, one-day session during its August recess. The 247-161 vote went mainly along party lines, with Midlands members voting against.

The bill was intended to help states that are struggling to balance the books in the face of recession-devastated tax revenues. Nebraska is eyeing a projected $751 million budget gap.

Heineman said state officials are seeking clarification but said it appears that Nebraska would be required to spend an additional $30 million on K-12 education to qualify.

“I don't think the federal government should be dictating that we spend more money to get more money,” Heineman said after a State Capitol event.

U.S. Sen. Ben Nelson, D-Neb., also attended the event Tuesday in Lincoln. Nelson, who voted for the aid bill, said the money would help avoid property tax increases, but he noted that whether to pursue the funds is a state decision.

“I recommend that they do what they think is right,” Nelson said. States can say no, he said, but the money could help preserve teacher jobs and help low-income people retain health care coverage.

Nebraska is in line to receive $59 million in new stimulus funds for education from the package, an amount that equates to more than 1,000 teaching jobs in the state. An additional $69 million would go to Medicaid, the health insurance program for low-income residents.

For Nebraska to qualify for the money, state lawmakers would have to maintain Nebraska's state education funding at 2009 levels, a “maintenance of effort” requirement, according to Nelson's office.

That would mean spending of $840 million next year, according to state budget figures — about $30 million more in state funds than was budgeted this year.

Heineman said the state is still exploring whether it would have to spend the additional money.

The Nebraska State Education Association, which represents the state's teachers, urged Heineman to apply for the extra funding, even if it means coming up with $30 million.

“Without this federal funding, local school districts could face two choices: lay off teachers and increase school classroom sizes; or raise property taxes to keep teachers in the classroom,” said NSEA President Jess Wolf.

NSEA spokeswoman Karen Kilgarin said that even if Nebraska got the new federal money and pumped in $30 million more, the overall amount going to local schools next year would drop by about $50 million, or 6 percent, because the original federal stimulus funds will run out.

Other questions surround the timing of when the money could be spent.

At least one local school district would prefer not to snap up its share right away.

“I really would rather not have it in the 2010-11 fiscal year,” said Dennis Pool, Omaha Public Schools' assistant superintendent for general administration.

Instead, he'd like to have the money next year. At that point, the district will have run through the $27 million in previously approved stimulus money already included in the budget.

They're calling it a “funding cliff,” and Omaha schools aren't the only ones staring over the edge. Nebraska this fiscal year is using $140 million in federal stimulus funds to supplement the $810 million the state budgeted for K-12 funding — money the governor has said he has no plans to replace.

It appears the new federal money in the bill approved Tuesday must be spent during the current school year, but Pool said he hopes to find a way to roll the money over a year while still complying with the law. Perhaps the district could start paying teacher salaries from the new funding, freeing up money elsewhere that could be rolled over, he said.

“Let's look how we can craft a spending plan into our current budget and allow us to carry this money forward to soften what might be a great potential blow to us in another year,” he said. “Because if we go out and create additional expenditures this year it just makes that funding cliff ... significantly larger.”

A few hours before the House voted, Rep. Lee Terry, R-Neb., was sitting in his Capitol Hill office. President Barack Obama was on the office television making his pitch that the legislation was important to save teachers' jobs.

“It's not going to go to save any teachers' jobs in Nebraska, though,” Terry said. “Maybe California, who just absolutely refuses to get their house in order.”

Terry voted against the legislation. So did Reps. Jeff Fortenberry, R-Neb., Adrian Smith, R-Neb., and Steve King, R-Iowa.

“It's pretty interesting that we can't extend the Bush tax cuts, but we can put a permanent tax increase in place to justify a payoff to the Democrats' supporters,” King said.

Terry's opposition to the bill brought swift criticism from his challenger in this November's election, Democrat Tom White. White said the legislation would help Nebraska communities avoid the choice between laying off teachers and increasing classroom sizes or raising property taxes.

The bill, which is expected to reduce the federal deficit by $1.37 billion, is paid for by closing a tax loophole used by multinational corporations and by reducing food stamp benefits that were increased under the previous stimulus package. The previous package was financed with deficit spending.

“By opposing this bill, Congressman Terry chose to stand with corporations that ship American jobs overseas instead of standing up for Nebraska teachers, students, and property taxpayers,” White said.

Terry said local school officials assured him they already had set their budgets and weren't planning any layoffs this year. He said the money in the bill is destined to flow largely to other states.

Earlier this year, Heineman joined 46 other governors in the National Governors Association in asking Congress to extend additional funding for Medicaid, but lately he has been critical of federal stimulus funds.

“However you look at it, it's borrowed money,” the governor said.

Contact the writer:

202-662-7270, joe.morton@owh.com

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