States scurry to use fed funds

WASHINGTON — States went on a billion-dollar spending spree in the three months leading up to a Sept. 30 deadline to commit or lose some federal education money, new figures show.

By law, the states had to commit $2.1 billion left over from 2002 by the end of the budget year in September, or they would lose their right to claim it. States did not have to spend the money by that deadline, but they did have to at least obligate it toward specific expenses.

It's unclear how much of the remaining money was earmarked by the deadline, because the Education Department collects data only on how much federal money was actually spent.

The department still lists $1.16 billion in unspent money from 2002, including aid for poor or disabled students, according to figures obtained by The Associated Press. But states have likely committed much of that money and have up to two more years to spend it.

Ultimately, money not committed or spent on time reverts to the federal treasury. In total, states have up to five years to spend the money if they satisfy steps along the way.

It's a complex process, and "you just can't make any judgments about how much states are spending or not spending, unfortunately, until the very end," said David Shreve, senior committee director for education at the National Conference of State Legislatures.

The recent drawdown of federal education dollars included a withdrawal of about $900 million at the end of June, said Todd Jones, the department's senior budget adviser. That was about the time the department sent a letter to state school chiefs, pointing out what appeared to be high balances of federal cash and reminding them of their Sept. 30 deadline.

"We are hoping that our proactive efforts led to the changes in behavior," Jones said.

Some states draw down all their federal money over the summer, to pay expenses from a recently finished school year or to cover costs of the approaching school year, she said.

The department issued its warning about cash balances totaling more than $2.1 billion to all the states, the District of Columbia and eight territories. An updated tally puts the unspent money at $1.16 billion, or 4 percent of the total amount allocated.

The money is budgeted for five broad areas of schooling, including special education, vocational education and help for children in poor schools.