States that use stimulus funds to plug budget holes could face lose out on millions of dollars, the Obama administration said last week.
That warning came in a letter to Pennsylvania Gov. Ed Rendell after a plan by the Republican-led Senate came to light. The Senate planned to use stimulus money to plug budget holes -- it would reduce the share of the state budget for education while leaving the state's rainy-day surplus untouched, according to an Associated Press article.
Education Secretary Arne Duncan told Rendell the plan could hurt Pennsylvania's chance to compete for a $5 billion competitive grant fund to reward states and school districts that adopt innovations.
While Duncan's letter specifically addressed the situation in Pennsylvania, it also has implications for other states.