Utah has three months to spend more than $15 million in federal funds for disadvantaged and disabled kids or kiss the money goodbye.

That's the message the U.S. Department of Education is sending state education agencies, which reportedly have yet to draw down more than $2 billion in federal money for schools.

But state associate superintendent Patrick Ogden has no worries that 99 percent of the money will be spent by the due date. Most of the money has been earmarked, and reimbursement requests are expected soon.

"What this boils down to really is the federal government spinning the numbers to paint a picture that the states are drowning in a flood of federal funding . . . that could be used for No Child Left Behind," Ogden said Thursday. "It's simply not true."

The department's action comes amid national debate over whether states have enough money to comply with federal mandates including No Child Left Behind, which expects all children to read and do math well by 2014. The Utah Legislature last winter debated a bill to opt out of No Child Left Behind, which several lawmakers called underfunded and an imposition on states' rights. Following repeated visits by federal officials, who disagreed with the characterizations, lawmakers sent the matter to interim study.

Federal officials last week reminded state leaders they have large cash balances and a ticking clock. In fiscal 2003, $154.7 million in federal education grants expired before they could be spent, states a letter addressed to state school chiefs and signed by Jack Martin, Chief Financial Officer for the U.S. Department of Education.

"The department regards canceled funds as a serious matter," the letter states. "I wanted to bring these balances to your attention because . . . there is still time for you to take steps to ensure that your agency and its subgrantees make appropriate obligations before (Sept. 30)."

Federal dollars work like a line of credit.

Schools have a certain amount of federal dollars available, and 27 months — until Sept. 30 — to use them. School districts earmark dollars for specific programs, pay for them, then seek reimbursement.

Utah now has balances for nine programs, including special education, reading grants for disadvantaged students, and English language acquisition. More than three-fourths of the reading grant's $4.8 million remains unspent; so does nearly 60 percent of a $1.5 million grant for 21st Century Community Learning Centers and 60 percent of $300,000 for community service for expelled or suspended students programs.

But Ogden expects districts, closing the books on FY04, will start requesting federal reimbursements soon.