By Joe Luppino-Esposito
Originally Posted by State Budget Solutions on October 25, 2013

South Dakota’s education system and budget officials are learning that the federal government’s involvement in local issues does not pay off – literally or figuratively.

South Dakota’s attempt to rein in higher education spending actually cost the state a federal grant–money that it had factored in to the budget when the legislature decided it would be able to cut back.

The federal government gave South Dakota a $1.5 million grant for College Access, a program that targets low-income and underrepresented students to encourage them to apply for college. South Dakota had to ask the federal government for permission to use previously-allocated funds in order to continue the program this year, which was still not enough to provide services at the same level as in year’s past.

College students can receive $2,000 per year scholarships through College Access. The federal cuts will results in fewer scholarships being awarded this year. Some College Access funds support the hiring of education counselors that work with students and their families to show them the opportunities that are available for pursuing higher education, and assist them with applying for need-based student aid. Other College Access money goes to the state universities directly to pay for outreach efforts to this community, or to high schools and tribal institutions to work directly with local students and parents.

South Dakota ran into trouble because College Access grants require a certain funding level, known as “maintenance of effort.” This is calculated by taking the five year average of higher education funding and ensuring that the current year’s funding is equal to or greater than that average. States can request a waiver if their funding level falls below the maintenance of effort requirement, but only if a waiver would be “equitable due to exceptional or uncontrollable circumstances, such as a natural disaster or a precipitous and unforeseen decline in a State’s financial resources,” according to the federal guidelines.

In South Dakota’s case, the funding level budgeted two years ago dipped below the required maintenance of effort. The federal government decided that the state didn’t deserve a waiver because the financial situation was not dire enough to warrant a cut in funding. Or in other words: playing it safe with shortfalls is a bad idea.

The fed’s fiscal misery must love company. Thanks to these perverse incentives, states are forced to spend more money just for the sake of spending money, or else dig themselves into a bigger hole. Rather than incentivizing smart education funding, Washington D.C. is only looking at the bottom line, and all it wants to see is money being spent.

This is the risk that many states take in order to get more “free money” from the federal government. Just ask the opponents of the Common Core, who are now realizing that, for the chance to obtain federal stimulus money, the vast majority of states blindly walked in to a program they have little control over.

There are always strings attached–strings that often tie up other parts of the budget, not just that particular grant. Time and again, though, states are all too willing to give up local control for more federal dollars. This is especially dangerous in education, an issue that is inherently a state and local issue.

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