Federal Stabilization Funds are federal dollars that were appropriated to states as a part of the American Recovery and Reinvestment Act of 2009. Some of these dollars flowed to school districts in the way of competitive grants, but the largest part of the Stabilization Fund flowed to states to help them maintain the higher of 2008 or 2009 state funding levels for all areas of education, preschool through universities.
Stabilization dollars flowed to states for reappropriation to qualifying state agencies. States were required to maintain their education spending at no lower than 2006 levels for 2009, 2010 and 2011 in order to be eligible for the federal funding. They were allowed to use these funds to supplant state funds, filling the budget gaps between 2006 and 2008 or 2009 levels of funding.
