A funding slope, but not a cliff

Eric Knox of Support Our Schools has written a helpful analysis of Indiana’s budgetary and school-funding problems and their implications for the Monroe County Community School Corp. It’s posted on the Bloomington Online community forum.

His key point: The so-called “cliff effect” – the impact on education and other programs from the state’s loss of $2 billion in federal stimulus funds – may not be the problem that MCCSC Superintendent J.T. Coopman and other school officials have sometimes suggested. “The State of Indiana has a self-inflicted budget problem, but there is no $2 billion ‘funding cliff’ and 2012 is likely to be better than 2011,” writes Knox, who relies on budget data from Purdue professor Larry DeBoer’s website.

It’s true that Indiana was awarded $2 billion in federal stimulus dollars in 2009 under the American Recovery and Reinvestment Act, and the state has been using that money to balance its budget during the economic downturn. The money has been used to fund both education and the Medicaid health-care program. But by design, the funding was “front-loaded” — about half was budgeted in the first half of 2009 and Indiana’s reliance on stimulus is being gradually phased out.

In other words, the big drop in stimulus funding has already happened, and the decline is leveling out as the money nears zero. Continue reading

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