OMB Director Responds to South Carolina Governor Mark Sanford on Stimulus Dollars

March 16, 2009 -- Washington, DC – The White House Office of Management and Budget (OMB) today responded to an inquiry from South Carolina Governor Mark Sanford. The Governor requested to use funds from the American Reinvestment and Recovery Act to reduce that state’s deficit instead of for the programs specified in the law.

The letter from OMB Director Peter Orszag is reproduced below (pdf):

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EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
THE DIRECTOR

March 16, 2009

The Honorable Mark Sanford
Governor of South Carolina
Columbia, SC 29211

Dear Governor Sanford:

Thank you for your letter to the President dated March 11, 2009. He has asked me to respond on his behalf.

During this severe economic downturn, Congress and the President wanted to provide States and localities with emergency funding in order to prevent the layoffs of teachers, police officers, and other vital public servants; spur economic activity and private sector job growth; and make critical investments in providing every child with a world-class education thus improving long-term economic growth. Thus, in the American Recovery and Reinvestment Act of 2009 (ARRA), Congress appropriated $53.6 billion for the State Fiscal Stabilization Fund to be administered by the Department of Education. Of this amount, nearly $48.6 billion is to be made available to the States.

Specifically, by statute, the State allocation must be used as follows:

• 81.8 percent “for the support of elementary, secondary, and postsecondary education and, as applicable, early childhood education programs and services.” (ARRA § 14002(a)(1)).

• 18.2 percent “for public safety and other government services, which may include assistance for elementary and secondary education and public institutions of higher education, and for modernization, renovation, or repair of public school facilities and institutions of higher education facilities, including modernization, renovation, and repairs that are consistent with a recognized green building system.” (ARRA § 14002(b)(1)).

Congress has not authorized the Executive branch to waive any of the above statutory requirements governing the State Fiscal Stabilization Fund. Accordingly, States’ spending under the State Fiscal Stabilization Fund must satisfy the statutory requirements.

Sincerely,
Peter R. Orszag
Director

Source: OMB