Governor Steve Beshear's Communications Office
Kentucky Approved for State Fiscal Stabilization Funds

Press Release Date:  Monday, July 27, 2009  
Contact Information:  Jay Blanton
Jill Midkiff

ARRA program helps maintain SEEK formula for basic P-12 classroom funding and postsecondary education funding

Kentucky at WorkFRANKFORT, Ky. – Kentucky will receive $651 million as part of the American Recovery and Reinvestment Act’s (ARRA) State Fiscal Stabilization Fund (SFSF) program, Gov. Steve Beshear announced today.

The new, one-time appropriation is part of approximately $48.6 billion the U.S. Department of Education has awarded to governors to help stabilize state and local budgets and help school districts and postsecondary institutions avoid severe budget cuts and retain teachers and other staff.

Gov. Beshear and the Office of the State Budget Director submitted Kentucky’s application in June.  Approval of the application was today received from the U.S. Department of Education.

“We are pleased with the approval of Kentucky’s application for these much-needed funds,” Gov. Beshear said. “It’s important to understand that these are not extra dollars, but dollars we relied on to keep SEEK funding and higher education funding whole as part of the 2010 Fiscal Year budget.”

Gov. Beshear’s plan to fill an estimated $1 billion hole in this fiscal year’s budget protected critical priorities including the basic P-12 classroom funding formula known as SEEK as well as higher education. To accomplish this goal, 55 percent of the SFSF dollars ($358 million) will be used to fill the gap between the amount of state funds appropriated for SEEK and the amount needed to guarantee the $3,866 base per-pupil funding.

That leaves $293 million in state stabilization funds for the 2011 Fiscal Year budget. Many states used state stabilization dollars to balance Fiscal Year 2009 budgets. Kentucky did not, leaving funding to help address budget challenges in 2010 and 2011.

Kentucky’s public K-12 school districts and postsecondary institutions will receive SFSF funds in combination with General Fund appropriations.

Funds are being provided to states in exchange for a commitment to advance essential education reforms to benefit students from preschool through postsecondary education.

In the application for initial funding, Gov. Beshear indicated that Kentucky will abide by the four major criteria for SFSF monies, which include taking action to:

  • Make improvements in teacher effectiveness and in the equitable distribution of qualified teachers for all students, particularly students who are most in need;
  • Establish pre-K-to-college-and-career data systems that track progress and foster continuous improvement;
  • Make progress toward rigorous college- and career-ready standards and high-quality assessments that are valid and reliable for all students, including limited English proficient students and students with disabilities; and
  • Provide targeted, intensive support and effective interventions for the lowest-performing schools

In addition to supporting the prescribed school improvement and reform strategies, funds may be used to pay salaries to avoid teacher and other staff lay-offs. The SFSF program may also help support the modernization, renovation and repair of school and college facilities, particularly facilities for early childhood education and for the community and should create “green” buildings.

School districts will access their SFSF through an application process that will be managed by the Kentucky Department of Education.

Funds will be made available in two phases. Phase I state applications were due by July 1, and upon approval, a portion of the funds can be made available. The balance of the funds will be made available to states with approval of Phase II applications which will be due in September.

Eighty-two percent of Kentucky’s SFSF allocation is dedicated to education, while 18 percent of the funds will be distributed to other essential government services.

SFSF is a key element of the ARRA and is guided by the principles of ARRA. The overall goals of the ARRA are to stimulate the economy in the short term and invest in education and other essential public services to ensure the long-term economic health of the nation. Four principles guide the distribution and use of ARRA funds:

  • spend funds quickly to save and create jobs
  • improve student achievement through school improvement and reform
  • ensure transparency, reporting and accountability
  • invest one-time ARRA funds thoughtfully to minimize the "funding cliff"