AUSTIN -- The U.S. Education Department has rejected Texas' application for $830 million in federal aid, which many school districts were counting on to salvage jobs and avoid potential layoffs.
Gov. Rick Perry called on the federal agency to "find legally appropriate ways" to deliver the money to Texas school districts this year or to set aside the funds so Texas can apply again next year, after lawmakers write the next biennial budget.
Perry's office also left open the possibility of a legal challenge.
"Texas continues to explore our options, including legal options, to secure these funds for Texas classrooms," spokeswoman Lucy Nashed said.
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The federal aid is part of a $10 billion jobs package approved by Congress in August. Under a Texas-only provision by Rep. Lloyd Doggett, D-Austin, the governor must commit to keep education funding at the same proportionate level for three years to receive the aid.
Federal officials say the aid package could help fund an estimated 14,500 jobs in Texas as school districts consider staff reductions amid shrinking budgets.
Tarrant County area schools were set to receive nearly $60 million. The Fort Worth school district was eligible for $21 million of that.
Texas Education Commissioner Robert Scott and an emissary for Perry met with federal officials late last month in an attempt to bypass the conditions and get the money. But the Education Department notified Scott in a letter released Thursday that granting the aid "would not be consistent with the statutory requirements."
"As such, we cannot award Ed Jobs funds to Texas at this time," Assistant Education Secretary Thelma Melendez de Santa Ana said in the letter.
Melendez, however, noted in her letter that the Education Department is prepared to release the money to Texas if it gets a request that conforms with the Texas-only provision. She also noted that Scott and other state officials have indicated that they envision submitting another application that "does not contain conditional assurances.
"If Texas submits an approvable application, the department will award the state its Ed Jobs allocation without delay so that local school districts may hire or retain teachers and other employees to provide educational and related services" in 2010-11, she said.
The Fort Worth district has an expected shortfall of $31 million for this school year. Next year's budget will entail difficult cuts that could include eliminating jobs, said Hank Johnson, the district's chief financial officer. He estimated that the federal money could pay for about 400 positions.
"It's really a disappointment because it could have helped us bridge a gap to a stronger economy," Johnson said. "It may be good as a front-end effort for the Legislature to hold education funding level where it is, but if it puts the state in such a bind, it may not be a good thing."
Johnson is hopeful that the funds will still be available to Texas schools after the next legislative session, but he knows that nothing is certain.
Rita Haecker, president of the Texas State Teachers Association, said the money "could have been a significant boost to school districts." She assailed Perry for not meeting "reasonable" requirements to obtain the funds.
"Gov. Perry has turned his back on Texas educators, many of whom are worried about their jobs, and Texas school districts, many of which are struggling with deep budgetary problems," she said.
Many school officials were hoping the use the money to beef up staff, boost salaries and return laid-off teachers to the classroom. Between 1,000 and 2,000 teachers didn't have their contracts renewed after last school year, according to teachers union spokesman Clay Robison.
Jobs on the line
"I think we'll see thousands of reduction in force if we don't get some relief," said Lonnie Hollingsworth of the Texas Classroom Teachers Association. "We're very concerned about the rejection by the Department of Education. We're hoping that the parties will work this out and make this money flow."
Most area districts avoided job cuts this year, but some hinted that such reductions could be a reality next year after stimulus money runs out.
Last session, the Legislature used $2 billion in stimulus money, which runs out at the end of this fiscal year, as part of the education budget. Some critics said the state was using the funds to supplant state funding rather than supplement it.
In Scott's application letter last week, he noted that federal officials assured him that the Education Department would hold the state's share of the funds until after Texas' 2012-13 budget became law.
State officials earlier threatened a lawsuit if the Doggett provision was included in the aid package. But they softened those threats while trying to get the $830 million designated for Texas.
The education aid is at the center of a political dispute pitting Perry and the state's Republican leaders against Doggett and other Democrats in the Texas congressional delegation.
Preventing diversion of funds
Assailing Doggett's "anti-Texas language" in the bill, Perry again asserted that the Texas Constitution prohibits binding commitments to future funding levels, thus keeping Texas from meeting the terms of the mandate.
"Surely Congress did not intend to require states to violate their own constitutions and statutes in order for schools to receive this money," Perry said. Doggett's provisions, he said, "made sure that Texas schoolchildren and hardworking teachers will see none of these funds this year."
But Doggett and his congressional allies say the provision is designed to prevent state officials from diverting the federal aid to other purposes as the state confronts a multibillion-dollar budget shortfall. The lawmakers charged that state officials did so during last year's legislative session.
"This struggle is not about more spending," Doggett said in releasing the rejection letter. "It is about ensuring that the federal spending we already have is used for the purpose for which it is intended -- in this case strengthening public education."
Dave Montgomery is the Star-Telegram's Austin bureau chief. 512-476-4294
Eva-Marie Ayala, 817-390-7700