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Legislative leaders and Governor Pawlenty's finance officials received a preliminary analysis of the $789 billion federal economic stimulus package from the National Conference of State Legislatures (NCSL) staff.  Keep in mind that this information was the best available at the time.  The staff stressed that the bill is a work in progress and the actual bill's text has not been seen. 

It was reported that the education dollars of the federal stimulus will flow through two revenue streams and all dollars will be distributed over the next two years:

The first stream is enhancements to existing federal education programs.   Nearly all existing federal education programs will get a boost including $13 billion for Title-1, $650 million on K-12 education technology, $70 billion for education for homeless children and youth, $11.7 billion for Special Education Part B grants to states, and $500 million Special Education Part C for infants and families.  Existing regular spending rules and distribution formulas for Title-1 and Special Education will be used.

The second stream is $53.6 billion for the States Stabilization Fund.  The funds will be allocated based on the state's population - 61% based on the population of school age children from 5 - 24 years old and the other 39% is based on the state's overall population. 

Of the $53.6 billion, $40.6 billion will be dedicated to maintaining each state's fiscal 2008 education funding levels and must first be used to close any funding gaps due to state budget cuts.   The money must be distributed through a state's current education funding formulas.  If dollars are available after assuring 2008 education funding levels are maintained, they must stay in education.  There is no penalty for not meeting the 2008 education funding levels as long as all these federal dollars are put towards the formula.  Therefore, it is conceivable that the state can cut education funding by more than what it will receive from the federal government and education could still experience a net decrease. 

Of the other $13 billion in the State Stabilization Fund, $8 billion can be used for other government services including education and $5 billion is for state incentive grants to reach NCLB goals.  Here there is maintenance of effort condition for the states to qualify for these funds.  The state must maintain spending levels for fiscal year 2006. 

Minnesota's Commissioner of Finance Tom Hanson estimated that Minnesota might receive approximately $2 billion dollars from the entire federal stimulus package of which the education dollars are just a fraction.   An updated February budget forecast will be released on March 3 and the state's deficit is expected to increase, some say it could reach almost $7 billion dollars.  Clearly, although helpful, the federal dollars will not erase Minnesota's staggering deficit.  The legislature and the governor will still have to make tough choices to balance the budget, hopefully without crippling the state's ability to prosper when economic times are better. 

http://www.schoolsforequity.org/LegUpdates/02-13-2009.htm