Data - States return millions to feds instead of spending it

WASHINGTON -- While state officials nationwide say they need more money to educate children, newly released figures show states are returning millions to the federal Treasury rather than spending it.

Last year, states returned $124 million to Washington that was to have gone toward large education programs such as special education and aid to poor children, according to Education Department data.

The states had more than three years to tap into the money before it reverted to the federal government on Sept. 30, 2003, said C. Todd Jones, a budget official in the Education Department.

The money was less than 1 percent of the $18 billion in federal funding that had been allocated to states on formulas in force during that period, Jones said Friday.

It could have been put to good use in the states, he said, and they have much flexibility in the money's use. States, he said, "should seriously investigate why they are turning such large sums back to the federal Treasury."

States and territories that returned the most were Florida, Georgia, Louisiana, Michigan, Missouri, New Mexico, Puerto Rico, Tennessee, Texas and Virginia, the department said.

Debbie Ratcliff, a spokeswoman for the Texas Education Agency, said schools sometimes let federal money lapse or fail to satisfy requirements for it, but she said the state agency doesn't always find out in time to send the money to alternative schools.

Tennessee, which returned $3.9 million to the federal government last year, is working to fix the problem by having budget officers work more closely with program experts, said Kim Karesh, a spokeswoman for the state education department.

"This is an area where we absolutely have to improve," she said. "Should we be sending this money back? No, because we have a need for it in Tennessee."

Karesh said Tennessee returned the money because costs for contracts came in lower than expected. She said the state then failed to seek out other ways to spend the extra dollars.

A range of critics, from governors to Democratic presidential contenders, say the 2002 No Child Left Behind education law is enormously underfinanced. The law places broad mandates on states, including a requirement for highly qualified teachers in all core classes, expanded standardized testing and data collection and reporting on student performance.

Jones said states have wide latitude in how they can use leftover money as long as it goes toward the intended program. For example, if a state should spend less than expected on special education teachers, it could use the extra money to hire physical therapists or pay for buses accessible by the handicapped.

Besides the $124 million in formula funding returned, states sent back $30 million last year that was supposed to have gone toward projects specific to a state. Jones said it is not easy for states to reprogram that unused money .

The money returned to the U.S. Treasury is different from roughly $6 billion in federal funding the Bush administration says states are sitting on that has not yet expired. The administration this week countered arguments that it was inadequately funding education by saying states are taking too long to spend billions of federal dollars meant for schools.

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U.S. Department of Education: http://www.ed.gov/index.jhtml