Congress is moving ahead with a $26 billion bailout bill that pays for extra Medicaid expenses and protects teacher jobs. According to the Department of Public Instruction, North Carolina would receive about $300 million in grants and protect about 4,800 teaching positions. Of course the money has state law makers and educators salivating. So much so that they seem totally oblivious to the strings that come with the federal money.
For starters, Federal regulations stipulate that the funds must supplement — and not replace — state funds for education. Second, regulations stipulate that next year’s state spending on education as a percentage of state spending – must be equal to or higher than this year’s total state education spending. The strings ( or should we say noose) are meant to expand total spending on education. At a time when most states are struggling to address large budget deficits, how prudent is it to accept money that mandates unacceptably high state spending levels? What’s worse is the federal money penalizes states that take steps to live within their means. The federal regulations encourages states — no matter how dire the economic situation – to just keep spending . This is irresponsible. In several states the lure of federal money has led to the cannibalization of agency budgets to find monies to meet spending levels.
Of course, one question that has been largely ignored in the discussion is: how will states continue to pay salaries and services next year when federal monies go away?
It doesn’t take a rocket scientist to see the Obama administration goal is to make states more dependent on the federal government. The lure of federal largesse would be less appealing if states knew and understood the real costs to accepting federal money.