NEW YORK (CNNMoney.com) -- What Congress giveth, governors taketh away.
Lawmakers gave cash-strapped states $10 billion last month to save 145,000 teachers' jobs. The funds were meant to reduce classroom crowding and restore programs lost to state budget cuts.
But some governors have other ideas for the money, namely using the funds to close their budget shortfalls. Several are planning to reduce state aid to school districts by the amount they receive from the feds. Others are looking to use the money for school construction and improvements.
And if state tax revenues fall short later this year, even more governors will likely slash state aid, figuring schools have the federal funds as a cushion.
The shift has left educators worried they'll never see the extra money they need to retain teachers and other personnel.
"They are not doing the right thing for students," said Dennis Van Roekel, president of the National Education Association, which has 3.4 million members. "We know what the intent was. [Governors] should use it in this fashion and not to balance their budgets."
Governors, however, feel differently. In Rhode Island, Gov. Donald Carcieri wants to claw back $32.9 million in state aid to school districts to help the state close a $320 million deficit for the coming fiscal year.
Part of the pinch comes from the fact that the Ocean State is receiving only $70 million in federal Medicaid assistance, instead of the $107 million it had budgeted. That makes the education money all the more attractive.
"We can use these funds elsewhere in the budget," said Amy Kempe, the governor's spokeswoman.
Rhode Island educators, however, were hoping to use the funds to hire back or replace the roughly 450 teachers who were laid off or retired. The additional personnel would allow the school districts to offer a greater choice of languages, more gifted and talented programs, additional reading and math instruction and full-day kindergarten, they said.
"In tough times, every penny helps and these are a lot of pennies," said Robert Walsh Jr., director of the state chapter of the National Education Association.
South Dakota Gov. Mike Rounds is planning a similar move. He intends to reduce state aid by the $26.3 million that districts will receive from the federal government and spend it on other state needs.
In the Mount Rushmore State, which hasn't had many teacher layoffs, the plan is also tinged with political perspective. Rounds doesn't want schools to get used to the extra funds since they won't be available next year, said his spokesman, Joe Kafka.
Legally, governors can reduce state aid as long as certain criteria are met. They are not allowed the add to the state's rainy day accounts, nor can they let their state education funding fall below a certain level. But federal officials are encouraging states to support their schools.
"We're urging them to keep the money for education spending, but there is some flexibility in the law," a federal Department of Education spokeswoman said.
Some state educators, however, don't mind that their governors want flexibility as long as the money stays in the school system.
In Arkansas, for instance, Gov. Mike Beebe sees the $91 million federal grant as an opportunity for school districts to use state money for school construction and improvement. The state has few teachers on the unemployment line.
"The more flexibility the local districts can have, the better they'll be," said Richard Abernathy, executive director of the Arkansas Association of Educational Administrators.
Three states -- South Carolina, Texas and Wyoming -- are still waiting to get their federal funds.
South Carolina did not apply for its $143 million share after learning that it did not qualify because it had cut funding for higher education too deeply. Gov. Mark Sanford, a Republican, lashed out at the Obama administration, saying he did not want to cut money for law enforcement and health care just to funnel it to higher education.
Texas, meanwhile, had its application rejected because it did not meet a special provision in the law that applies only to the Lone Star State, which requires the governor to promise not to cut state aid for three years. Gov. Rick Perry said state law prevents him from making such an assurance. Texas was slated to receive $830 million.
Rep. Lloyd Doggett, D-Texas, inserted the provision because he was concerned that Perry would slash state aid to schools, which Perry did when he received education stimulus funds last year, according to the lawmaker.
"The obligation that this amendment places on Texas is to spend new education dollars on education purposes," Doggett said.
And Wyoming chose not to apply for its $17.5 million in funds because it has not had any mass layoffs of teachers. The state asked federal Department of Education if it could use the money to build schools and was told it could not.
Kyle Bass is the founder and chief investment officer of Hayman Capital Management. More
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