CORRECTION/CLARIFICATION: American Recovery and Reinvestment Act FY 2011 Application for State Fiscal Stabilization Funds – Phase 3, due May 14, 2010

INFORMATIONAL LETTER: 109
POLICY CODE: LG/EF

TO: Superintendents of Schools
FROM: Susan A. Gendron, Commissioner
DATE: April 13, 2010 (corrected/clarified April 14, 2010)
RE: American Recovery and Reinvestment Act FY 2011 Application for State Fiscal Stabilization Funds – Phase 3, due May 14, 2010

CORRECTION/CLARIFICATION: This revised version of Informational Letter #109 corrects the SAU monthly disbursement calculation found in the paragraph under the heading “Spending and Disbursement of ARRA Funds” near the end of the letter and clarifies federal cash management rules regarding funds disbursement for SAUs with excess cash on hand.

Public Law 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA) for State Fiscal Stabilization Funds, was signed into law by President Obama on February 17, 2009. Maine’s application for these funds was approved and it includes both Education Stabilization funds and Government Services funds. Maine has been awarded 67% of the State’s allocation of those funds.

The State Fiscal Stabilization program is a one-time appropriation of approximately $48.6 billion that the U.S. Department of Education (Department) will award to Governors to help stabilize State and local budgets in order to minimize and avoid reductions in education and other essential services, in exchange for a State’s commitment to advance essential education reform in four areas: (1) making improvements in teacher effectiveness and in the equitable distribution of qualified teachers for all students, particularly students who are most in need; (2) establishing pre-K-to-college-and-career data systems that track progress and foster continuous improvement; (3) making progress toward rigorous college- and career-ready standards and high-quality assessments that are valid and reliable for all students, including limited English proficient students and students with disabilities; and (4) providing targeted, intensive support and effective interventions for the lowest-performing schools.

The U.S. Department of Education has provided the following guidance regarding the purposes and the prohibitions on use of the Stabilization funds:

1. For what purposes may the LEA use Education Stabilization funds?

Subject to the limited statutory prohibitions described below, section 14003(a) of the ARRA authorizes the LEA to use Education Stabilization funds for any activity that is authorized under the following federal education Acts:

The Elementary and Secondary Education Act of 1965 (ESEA);
The Individuals with Disabilities Education Act (IDEA);
The Adult Education and Family Literacy Act (AEFLA); or
The Carl D. Perkins Career and Technical Education Act of 2006 (Perkins).

The ARRA also provides that, to the extent consistent with State law, the LEA may use Education Stabilization funds for modernization, renovation, or repair of public school facilities, including modernization, renovation, and repairs that are consistent with a recognized green building rating system.

If the LEA uses Education Stabilization funds for modernization, renovation, or repair of public school facilities or for construction of new school facilities, the LEA must comply with specific requirements relating to the use of American iron, steel, and manufactured goods used in the project (See Section 1605 of the ARRA). The LEA may use Education Stabilization funds for construction of new school facilities as well as for modernization, renovation, or repair of existing facilities. See Question III-D-11 of the U. S. Department of Education Guidance of April 1, 2009 on the State Fiscal Stabilization Fund which may be found at:

http://www.maine.gov/education/recovery/index.html

2. What are the statutory prohibitions on the LEA’s use of Education Stabilization funds?

Section 14003 of the ARRA prohibits the LEA from using Education Stabilization funds for:

Payment of maintenance costs;
Stadiums or other facilities primarily used for athletic contests or exhibitions or other events for which admission is charged to the general public;
Purchase or upgrade of vehicles;
Improvement of stand-alone facilities whose purpose is not the education of children, including central office administration or operations or logistical support facilities; or
School modernization, renovation, or repair that is inconsistent with State law.

In addition, no Stabilization funds (either Education Stabilization funds or Government Services funds) may be used to provide financial assistance to students to attend private elementary or secondary schools, unless the funds are used to provide special education and related services to children with disabilities as authorized by the IDEA (See Section 14011 of the ARRA).

There are also other prohibitions in Section 1604 of the ARRA – for example, prohibitions against using funds for an aquarium, zoo, golf course, or swimming pool – that apply to the use of Stabilization funds by any entity.

In order to be eligible for receipt of State Fiscal Stabilization funds, each school administrative unit must submit an application containing a budget template and assurances regarding the use of these funds. The application may be found at:

http://www.maine.gov/education/recovery/index.html

Please print and complete the application, to include the:

Part 2 data elements section taken from the proposed federal application. The State’s Race to the Top application is intended to reflect what educational reform areas the SAUs will implement. The data in Part 2 of the application is critical information for us to gather to determine which SAUs are poised to be part of the Race to the Top grant.
Part 3 FY 2011 budget table, the FY 2011 project description narrative to detail planned expenditures of over $25,000, and the FY 2010 Carryover Budget table.
Part 3- Jobs Created or Jobs Retained data section, new to the FY 2011 application.

Alternate Organizational Structures [AOSs] should complete one application.

Spending and Disbursement of ARRA Funds
The State Fiscal Stabilization Funds are meant to be spent in a transparent and timely manner. These funds are to be fully obligated by September 30, 2011 and fully expended by December 30, 2011. The amount that your SAU could receive on a monthly basis can be determined by taking the amount on your unit’s ED 279, Line 59C and dividing it by 12. These funds fall under federal cash management on both the State and sub-recipient levels; therefore SAUs should carefully consider the amount of State Fiscal Stabilization funds that will be spent upon receipt of the funds at the local level. Please also note that SAUs with excess cash on hand will not receive additional money until the balance is spent down.

Sign the application in the four required boxes and return by May 14, 2010 to:

Ted Fournier, ARRA Program Specialist, Maine Department of Education,
State House Station #23, Augusta, Maine 04333.

School administrative units will be required to report ARRA Stabilization actual expenditure information on a monthly basis via a web-based form. The information provided on this monthly report form will be aggregated by the Maine Department of Education and submitted to the Federal reporting portal.

Additional information on the American Recovery and Reinvestment Act for State Fiscal Stabilization can be found at the following website:

http://www.maine.gov/education/recovery/index.html

If you have questions, please contact Ted Fournier at edward.fournier@maine.gov /624-6845 or Jaci Holmes at jaci.holmes@maine.gov /624-6620.