A standoff between the governor and legislators over federal stimulus money could result in the layoff of teachers if the South Carolina Senate Finance Committee is forced to enact deep cuts in its version of the fiscal 2009-10 state budget.

Finance Committee member Sen. John Matthews, D-Bowman, says what kind of budget bill is ultimately crafted will depend on whether Gov. Mark Sanford accepts the money by this Friday’s deadline.

“At this point we have done all the assessments and run all the numbers,” Matthews said. “We will hold off and see if the governor will accept the stimulus money on April 3. We will make the budget cuts across the board if he doesn’t accept it.

“That would likely involve an additional $158 million cut to schools and $105 million to health and human services programs such as nursing homes, mental health and prescriptions,” he said. “The biggest impact locally would be seen in the school districts, since the cuts would be made from Education Finance Act money, of which 85 percent has to go to salary and personnel. Under these projections, per-student spending would be $1,950, or about $550 less per student. That means the districts would probably be laying off teachers.”

As of Tuesday, South Carolina was one of four states that hadn’t told the U.S. Department of Education it planned to use the money.

Matthews says he shares the feelings of those on the Finance Committee that the logical thing to do is accept the stimulus money and move on.

“If the governor doesn’t accept the stimulus money, based on current figures that could put about 4,000 teachers out of jobs,” Matthews said. “Under the current rules, we pay an unemployed person about $240 a week in compensation but teachers’ salaries are higher. If you carry those numbers out, that means we would add 2 percent to the state’s total unemployment figure and the state Employment Security Commission — which is broke — would have to pay out an extra $1 million a week. That would have to be borrowed from the federal government.

“We would be laying off teachers because we wouldn’t have the money to pay them, but since they have paid into the system, they are entitled to unemployment benefits,” he said. “That makes no sense.”

Sanford has said he will reject the stimulus dollars unless the money can be used to reduce state debt. U.S. House Majority Whip James Clyburn engineered approval on an amendment to stimulus legislation that would allow state lawmakers to accept money should the governor opt to reject it. The constitutionality of the provision has been called into question.

On Tuesday, S.C. Attorney General Henry McMaster said the Legislature can put $350 million in the budget for fiscal 2010, but Sanford, not legislators, is in control of spending $700 million in stimulus funds intended to help schools over the next two years. McMaster went on to say the Legislature can put money in the budget but it cannot compel Sanford to act against his will.

On Wednesday, The Associated Press reported that a letter from White House budget chief Peter Orszag to Sen. Lindsey Graham, R-S.C., said there is no provision in the stimulus law for state lawmakers to accept the money without approval by the governor. The White House also urged Congress to change the law.

Clyburn on Wednesday again said Sanford or lawmakers should act. “Rather than renewing the age old debate over states’ rights and the 10th Amendment of the U.S. Constitution, our leadership should be seeking common ground to provide our schools the funds they need to retain teachers and maintain healthy, safe buildings in which our students can learn.

Sanford spokesman Joel Sawyer sees the Orszag letter as “validating what the governor has long believed — that he should be the one directing this money.”

Matthews says McMaster’s non-binding opinion could open up the possibility of legal action.

“We can override those provisions from the governor but we know that if we do, someone will take that to court because by law we have to have a balanced budget,” Matthews said. “We do believe we would prevail in court, but the accompanying time and expense means a decision would not be forthcoming in time to include the money in the budget for next fiscal year.”

The House on March 11 passed its version of the budget, which included the $350 million in stimulus money. On March 18 the State Budget and Control’s Board of Economic Advisors reduced its revenue forecast for the current fiscal year by $102 million, cutting state agencies across the board by an additional 2 percent.

Matthews says that as a result, the Finance Committee’s budget bill is out of balance by the $102 million slashed by the board, plus the $350 million in stimulus money, for a total of $455 million.

When asked if he felt the House was practicing a political “pass the buck” by passing its budget bill to the Senate after the board reduced its revenue forecast, Matthews said, “I have little doubt about that.”

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