Blogs:

There is a vociferous demand from Washington for another stimulus package. In California, the demand is slightly off beat. The strong feelings expressed by Sacramento, California tells the government in no uncertain terms to just stop instructing them on what to do as they do not even want more money.

R-Calif’s Governor Arnold Schwarzenegger will be taking up this issue with the Obama administration and Congress. He will be asking them to withdraw many of the strings that are attached to the aid funds provided to the State through the previous year’s stimulus bill. With Washington’s permission, he will be looking to close the $21 billion gap in the budget with the help of $8 billion cuts in State-Federal programs according to Bloomberg reports.

Stimulus dollars come with many conditions attached including an agreement by the state to guidelines defining ‘maintenance of effort’. This means that states will no longer be able to cut on eligibility and on spending below the minimum specified limits in areas that are funded.

States such as California already struggling to cope up with stringent funds are unable to take the load of the stimulus funding requirements as the levels specified are at par with the 2006 spending levels.

Especially for states such as California that are high-spending, it becomes a big burden when most of the funds are locked into the pre-stimulus programs. The same problem is faced by the healthcare industry where the states cannot manipulate and cut down on Medicaid eligibility requirements.

While states can still play around on the optional coverage and reimbursement cuts, they are cautious as such steps may affect or even halt other funding programs including higher education. This was clear last year when California almost lost stimulus funds trying to cut down on the health care worker’s pay.

The bundle of Federal stimulus funds has resulted in severely limiting the states’ spending on health care and education and their options on cuts. According to those who are against these strict rules that come bundled with the funds, Congress is definitely going to say that the government has the right to dictate rules and regulations on the money it provides and how it can be spent for the benefit of all involved. They however feel that what Congress is offering states is not a clothing allowance from a parent to a child.

The very purpose of stimulus funds is to make it easy for States to resolve issues related to budget. However, with the budgets tied tight by the MoE rules, the very purpose stands defeated. States feel that depending on their own individual economies, the States must be given a free hand to spend the funds.

Schwarzenegger’s request must be strongly supported by Washington as this will ensure all States are released from the clutches of the stimulus. This is the only thing that can effectively aid states in managing and balancing their budget. Skeptics feel that it is Obama’s duty to direct Arne Duncan, the education secretary to use his limited powers to waive a few MoE requirements.