August 31, 2010 - On August 11, 2010, President Obama signed into law a $26.1 billion supplemental spending bill (P.L. 111-226) providing immediate aid to states for education and Medicaid programs. Also known as the "Education Jobs" bill, the measure establishes a new $10 billion fund which will provide aid to local school districts to keep at least 140,000 educators employed who would otherwise be facing layoffs in the coming school year. Within 45 days of enactment, the Department of Education is required to allocate funds to states that have submitted applications for funding. Funds will be distributed to states according to a population-based formula, and then passed on to local school districts.
The bill includes provisions to ensure that states use education funds for the preservation of jobs serving elementary and secondary education, and strictly prohibits states from using funds to add to “Rainy-Day Funds” or to pay off state debt. It also allows the Secretary of Education to bypass the state government and make awards directly to other entities within the state if a governor fails to submit an approvable application for funds to the Department. While the bill does not provide direct relief to higher education institutions, more than $16 billion in Medicaid funding is expected to mitigate deep cuts that would otherwise be expected for public college systems in many states by improving states' overall budget picture. Both the House and Senate, held special sessions during this month's recess period to clear the state aid package. Congress is expected to reconvene from the summer work period on September 13.
