Related link: http://www.richmondfed.org/publications/research/region_focus/2009/winter/policy_update_weblinks.cfmEconomic conditions ; Expenditures, Public

David Van Den Berg

English

Research Papers in Economics

12 Region Focus •  Winter 2009
M
oney from the American Recovery and Rein-
vestment Act of 2009, better known as the 
stimulus bill, is flowing to states around the
country and the Fifth District. 
The $787 billion legislation will provide at least $18 
billion to the states of the Fifth District to fund a variety of
projects like road building and school improvements,
according to the National Conference of State Legislatures
(NCSL). The amount of money states should expect to
receive is based on funding formulas that take into account
a state’s population, unemployment rate, and number of
low-income residents, said Michael Bird, federal affairs
counsel with the NCSL. 
Most of the money provided is for specific programs and
must be used for those purposes. North Carolina’s allocation
is the largest in the District, at about $6 billion, while West
Virginia will get $1.4 billion and the District of Columbia
will get $876 million. Virginia will receive $4.5 billion;
Maryland will receive $4 billion, while South Carolina is slat-
ed to get $2.9 billion. These allocations exclude additional
funds they will receive later this year through grant pro-
grams, disbursements for traditional unemployment
benefits, and the food stamp program. This money is not
meant to be a permanent fixture in the federal budget: 
The new money is slated to stop flowing to the states on
Sept. 30, 2010. 
Here’s a look at some of the funding coming to the Fifth
District, based on numbers obtained from the NCSL:
Medicaid
The formula by which the federal government allocates
Medicaid matching dollars will be altered so as to allow an
increase in federal spending on that program. Additional
amounts of funding will be given to a state if its unemploy-
ment rates rise higher. In the Fifth District, North Carolina
will receive the most additional Medicaid funding, $2.35 
billion. Maryland will receive $1.63 billion, while Virginia
will receive $1.47 billion. South Carolina’s Medicaid alloca-
tion will rise by $860 million, while West Virginia’s will rise
by $450 million. 
All together, this amounts to a two-year increase (FY
2009 and 2010) in Medicaid spending of $6.7 billion for the
Fifth District states (excluding the District of Columbia).
According to preliminary estimates from the National
Association of State Budget Officers, that is almost double
the amount — $7 billion — that these states received from
the federal government for that program in fiscal years 2007
and 2008. This growth is partly a result of an expansion in
the number of people who can now qualify for Medicaid.    
Fiscal Stabilization Fund/Education 
Of the $54 billion in the bill’s “fiscal stabilization fund,”
about $45 billion is directed at education. States will receive
a total of $40 billion for education-related purposes.
Another $5 billion goes to the U.S. Secretary of Education to
allocate to states for school improvement projects.
However, there is a pot of money in the “fiscal stabiliza-
tion fund” over which state governments will have complete
discretion. States will receive a total of $9 billion, allocated
by a formula, to use as they see fit. North Carolina 
will receive $254.3 million of this money, while Virginia will
receive $219.15 million. Maryland and South Carolina 
will receive at least $125 million each. West Virginia will
receive $49 million, while the District of Columbia will
receive $16.3 million. “This was seen as money the states
could use to help balance their budgets without being stuck
in a specific funding silo,” Bird said. 
Unemployment Benefits
Most of the stimulus bill does not require state legislative
changes for states to receive money. But to receive all avail-
able money for expanded unemployment benefits, states
that have not already done so will have to change their laws
about eligibility for those benefits. These changes would
expand the benefits to workers not formerly covered by
state unemployment insurance programs.   
Not all governors are interested in making these changes,
which could have a long-term impact on state budgets.
South Carolina Gov. Mark Sanford opposes changing his
state’s laws. “After the federal money runs out, we’re left to
pick up the tab at the state level,” said Joel Sawyer, a Sanford
spokesman. Twenty states have changed their laws regarding
unemployment eligibility and how those benefits are calcu-
lated. All of those states did so before President Obama took
office, Bird said. 
Infrastructure 
Expenditures in this funding category include money to
build or improve highway and bridges. North Carolina and
Virginia will receive the District’s largest allocations for this
construction, at $736 million and $694 million, respectively.
South Carolina will get $463 million, followed by Maryland
with $431 million. West Virginia ($210 million) and the
District of Columbia ($123 million) will receive the least.
Taxpayers will be able to monitor stimulus expenditures
on a federal government site, www.recovery.org. Maryland,
Virginia, West Virginia, North Carolina, and South Carolina
have launched similar Web sites to allow their residents to
track stimulus spending. RF
POLICYUPDATE
States Receive Funding from Stimulus Bill
BY DAVID VAN DEN BERG
 

Policy update : States receive funding from stimulus bill

http://www.richmondfed.org/publications/research/region_focus/2009/winter/pdf/policy_update.pdf

Policy update : States receive funding from stimulus bill

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics