Stimulus Funding and Future Program Costs

The St. Paul Public Schools offer a microcosm for the current challenges facing localities with an influx of stimulus money.

A recent St. Paul Star Tribune article reports that the district is in line to receive $29 million for the American Recovery and Reinvestment Act, but using this money in a responsible way is difficult since the district will not be able to depend on it for funding programs in future years.

The district plans to use these funds for “one-time investments that can have lasting reform benefits for schools.” Plans for the money include teacher training, making reading and math curricula consistent across schools, and software systems to track student performance.

However, Michelle Walker, the district’s chief accountability officer, pointed out that these new programs will require “new staff… up to 80 full-time positions could be ‘redesigned or newly created.’” In other words, it may be difficult for newly created programs to be maintained after stimulus funding is used up.

Whether or not cities and states are benefitted or harmed by stimulus money in the long run will depend on their ability to select projects that can benefit from a one-time injection of funds without inducing great pressure for continued long-run funding. As Eileen Norcross has previously discussed, states that are already facing budget crunches are in danger of committing themselves to higher future spending. The temptation will be present across the country to create programs that require increased tax dollars after stimulus funds are exhausted.