Governor wants federal money saved for next year

JACKSON – Cash-strapped Mississippi school districts, expecting to get financial aid through federal legislation passed in August, may not see any of that money this year if Gov. Haley Barbour has his way.
Questions abound over how and when local school districts and other state entities, all dealing with budget shortfalls, can use about $225 million in federal money approved by Congress and signed into law by President Barack Obama.
If some school districts do not get a portion of the federal money this year, they will have to raise local taxes.
The federal legislation provides two pots of money to help Mississippi school districts and other state agencies.
Mississippi school districts are poised to get $98 million in what are known as jobs funds. Barbour recently asked the local school districts to save that money for the fiscal year beginning July 1.
The upcoming fiscal year is expected to be at least as difficult as the past three, especially since other sources of federal stimulus funds will no longer be available.
During the 2010 legislative session, the state was not expecting to receive the $98 million, which federal officials have said is designed to rehire teachers and other school employees who have lost their jobs during the current budget woes.
But officials were expecting other financial aid from the federal government. That financial aid was available by providing the states a lower matching rate to pull down federal Medicaid funds.
Lowering the Medicaid match would free up state funds designated for Medicaid to be spent in other areas, such as on education.
Mississippi officials estimated they would get about $185 million through the enhanced Medicaid rate program. The Legislature and Barbour passed legislation to spend $110 million of that total while saving the rest for the upcoming budget year.
Under the agreement, $82 million would go to the local schools, $15.3 million to the state universities and $2 million to mental health. Public health, public safety and other entities would receive a smaller portion of the funds.
But Congress did not pass the legislation in the manner the state Legislature expected. The state will get an additional $127 million because of the enhanced Medicaid matching rate instead of the anticipated $185 million.
Late Tuesday, the governor sent out a news release saying that he and legislative leaders have agreed that those funds would be saved for the fiscal year 2012 budget year, which starts in July.
“I appreciate the leadership of both houses for agreeing that these additional funds should be saved and spent in fiscal year 2012 when we face a budget shortfall of more than $600 million,” Barbour said in a prepared statement.
That means, based on past statements, that Barbour’s plan is for the school districts not to spend any of the funds passed by Congress during the current school year.
“Fiscal year 2012 looks rough,” said spokeswoman Laura Hipp. “He is giving them ample warning to save some money.”
But House Education Chair Cecil Brown, D-Jackson, said he agreed to save the enhanced Medicaid funds with the understanding that the districts would be able to expend money from the other pot of money – the $98 million in jobs funds.
Those funds go directly to the school districts. While Barbour can ask the districts not to spend the funds, he cannot stop them, Brown said.
But Sen. Hob Bryan, D-Amory, said there is no money in the jobs funds for other agencies currently facing tight budgets, such as higher education and mental health.
“The governor and a handful of legislative leaders have broken faith with legislators who passed a bill saying this money would be appropriated this year if it was available,” Bryan said.
“You have people being held in jail right now with mental illness. And you want to put money in the bank.”
New Albany Superintendent Charles Garrett said his district needs some federal funds this year to prevent an increase in local property taxes.
The New Albany school board earlier this year passed two budgets. One budget was based on getting the money from the enhanced Medicaid match the state was expecting to receive. The other was based on not getting the money.
If the district does not receive the enhanced Medicaid match, local taxes will have to be raised about $180,000.
The key, Garrett said, is that municipal officials have to set the tax rate by Sept. 15, meaning they have to know soon whether they will get the federal money.
“There is no reason for there to be a tax increase,” Garrett said. “The feds have done their job by providing the money and the law (to expend that money) has already been passed in Mississippi.
“I don’t know what the holdup is.”
Lee County Schools business manager Randy Thweatt said he has faced the same issues. He said the Lee County School District, which also faced decisions about whether to raise local taxes or depend on the federal money, decided that it would eventually get the federal money and did not ask for a tax increase.
But Thweatt said that if the district does not get the federal funds, it can absorb the loss through its reserves.
“We are probably in better shape than 98 percent of the school districts,” he said.

Bobby Harrison/NEMS Daily Journal