GEORGIA SCHOOL FUNDING ASSOCIATION

(Formerly Consortium for Adequate School Funding in Georgia)

P.O. BOX 9013
ATLANTA, GEORGIA 31106
404/872-9651

April 16, 2009

Hon. Sonny Perdue

Governor of Georgia
201 State Capitol
Atlanta, Georgia 30334

Dear Governor Perdue:

As you know, local school systems throughout Georgia have already squeezed
their budgets in FY 09 and are now making drastic cuts for FY 10 because of reductions
in State support. The ability of our schools to provide even the most basic elements of an
adequate education for our students has been seriously impaired.

Nevertheless, there is still a substantial amount of funds that the State of Georgia
could obtain through the American Recovery and Reinvestment Act (ARRA) for use in
meeting the present needs. It is also the clear intent of ARRA that all of the authorized
funds be requested and used to restore State funding for education as soon as possible.
This could be done without affecting any of the other services supported by the State.

In addition to the general maintenance of effort required by ARRA, each state

must use its allocation of Fiscal Stabilization funds to restore, in each of FY 09, FY 10,
and FY 11, the level of State support provided through “the State’s primary elementary
and secondary funding formulae” to the greater of the level that existed in FY 08 or FY
09. A copy of the relevant portion of ARRA is enclosed for reference.

There is no question that the applicable funding formula for the allotments to local
schools in Georgia is set forth in the Quality Basic Education (QBE) Act, and ARRA
provides that these allotments should be implemented in accordance with enrollment
changes and other normal adjustments, including equity and adequacy adjustments, “if
such increases were enacted pursuant to State law prior to October 1, 2008.” The QBE
Act meets this test, since it was approved in 1985.

As shown in the enclosed table, the support now being provided by the State to
our schools is substantially below what ARRA requires in both FY 09 and FY 10. When
the base for restoration is set at the level of funding which existed in the initial budget for
FY 09, the deficits are $285 million in FY 09 and $421 million in FY 10.

At the same time, the State has at least $178 million in available funds that have
been designated exclusively for elementary, secondary, and postsecondary education in
the initial phase of the Fiscal Stabilization Fund for Georgia. There are additional funds
in the allocation for other government services that can also be used for education.
 -2-

As you are aware, ARRA has provided an allocation of $1.541 billion for the
State Fiscal Stabilization Fund in Georgia, of which at least 81.8% or $845 million must
be spent on education. Of this total, 67% is available in the initial phase of funding. The
General Assembly has committed $558 million for K-12 education in FY 09 and FY 10,
$93 million for the university system in FY 10, and $15 million for the technical colleges
in FY 10. As a result, $178 million is still remaining in the initial phase for distribution to
local school systems and institutions of higher education, with the split being based on
the relative shortfall in State support for each of these sectors.

Even though ARRA anticipates that these funds will be requested and disbursed
as quickly as possible, the law allows flexibility to local schools in determining how and
when the funds are spent. For example, a local school system which receives funds based
on a shortfall in FY 09 can use these funds to meet critical needs in FY 10.

The additional funds that are currently available through ARRA would not be
nearly enough to accomplish the intended restoration or to fulfill the State’s responsibility
under the Georgia Constitution. There would still be large austerity cuts in addition to the
continuing impact of inflation on the QBE formula. Nevertheless, these funds would
provide urgently needed help to our schools.

We bring this matter to your attention in the hope that Georgia will request and
use the ARRA funds for their intended purpose. We believe this action is necessary to
comply with the provisions of ARRA and protect the allocation to Georgia in the next
phase of the Fiscal Stabilization Fund. It would be consistent with the “overarching
principles” in the law to “spend funds quickly” and “ensure transparency.” The fact that
these funds go to the Governor of each state would avoid the need for a Special Session.

Most of all, the addition of millions of dollars of federal funds would benefit our
students by mitigating the cuts that have been imposed for FY 09 and FY 10. There is no
compelling reason to delay the receipt and use of these funds, since they can only be spent
on education. They also have to be used in accordance with the letter and spirit of ARRA.
In any event, another $416 million would still be available to Georgia in the second phase
of the Education Stabilization Fund for use in FY 10 and FY 11.

The possibility that State revenues might be reduced in FY 11 as a result of recent

tax cuts and exemptions makes it all the more important that the Fiscal Stabilization Fund
be used as intended to preserve the funding for our schools instead of simply replacing the
revenues which the State would have otherwise received.

Thank you for your responsible stewardship of the State’s resources for the benefit
of all Georgians. We will inform others in seeking their support for this request.

Sincerely,

Joseph G. Martin, Jr.

Enclosures