AUSTIN, April 20 – The vice chair of the Senate Finance Committee said serious repercussions could be felt if federal lawmakers deem the Texas Legislature is misusing federal stimulus monies.

“We used our discretion. For some reason if the federal government was to come back and say ‘You can’t use the money in the way that (you) used it,’ well we are going to be in trouble,” said Sen. Juan “Chuy” Hinojosa, D-McAllen.

During the Senate’s budget debate earlier this session, some Democrats questioned whether money they said was earmarked for specific education programs was instead supplanted to the general revenue fund.

Last week 11 of 12 Senate Democrats reiterated those concerns when they authored and signed a letter sent to United States’ Secretary of Education Arne Duncan requesting guidance on the matter.

“We write regarding the use of State Fiscal Stabilization Funds (SFSF) in the budget recently passed by the Texas Senate. We have significant concerns that the budget utilizes SFSF in a matter not allowed by the American Recovery and Reinvestment Act,” the letter states. “We are requesting specific guidance on whether the Senate’s decision to supplant general revenue using SFSF is an allowable use under ARRA.”

Senate Republicans cast off the “concerns” as a partisan stunt, and even Hinojosa, a veteran Democrat, said he should have read the content of the letter more closely before signing it.

Some have questioned why as vice chair, Hinojosa would have attached his name to something questioning his committee’s actions. But Hinojosa said he didn’t realize the correspondence was more than a simple inquiry.

“In retrospect I had second thoughts on signing the letter and the reality is I should have read it much closer because, in fact, it was not a natural inquiry on clarification. It was more of an advocacy position,” he said. “The tone of the letter, in my opinion, was not necessary for just a neutral inquiry and clarification for the use of stimulus funds. I thought it was a little harsh and partisan in nature.”

The crux of the Democrats’ concerns revolves around the use of the SFSF funds. The SFSF is an appropriation of about $53.6 billion in federal stimulus monies state and local governments were allotted to stabilize their budgets and avoid cuts to education and other public services, the letter explains. It adds that 81.8 percent of the funds must be used for the support of “public elementary, secondary and higher education, and, as applicable, early childhood education programs and services.”

“If any SFSF funds remain after the state has restored state support for elementary and secondary education and higher education, the state must award funds to LEAs (local education agencies) on the basis of the relative Title 1 shares but not subject to Title 1 program requirements,” the letter continues. Title 1 schools are classified as such because they are located in economically disadvantaged areas and many of their students are deemed “high-risk.”

The senators claim that the money, however, went instead toward the state’s general revenue funds to avoid dipping into the reserves, also called the Rainy Day Fund.

“Our concern lies with the fact that the SFSF was used to supplant general revenue in the Senate budget, swapping out – dollar for dollar – state funds for federal funds,” the letter continues.

“Image you have an uncle who said … ‘I want you to use this money to pay the mortgage. But if the mortgage is current, use it for the kids,’” said Sen. Eliot Shapleigh, D-El Paso, whose signature is present on the letter. “If the mortgage was current here (in the Senate), then the stimulus package directed that the money be spent on the kids directly. Title 1 money was to go directly to at-risk kids. That’s the issue here.”

According to the Senate Democrats, the state shortchanged the school districts by more than $3 billion and included in the correspondence a breakdown of how each affected district faired under the budget.

According to their calculations, the El Paso Independent School District would have received more than $99 million, the Brownsville district more than $69 million and the Ysleta (also in El Paso County) more than $57 million. The districts of La Joya, Edinburg, Pharr-San Juan-Alamo and Corpus Christi would have received approximately $47 million, $40 million, $39 million and $37 million, respectively. Laredo’s two school districts, Laredo ISD and United ISD, were scheduled to receive about $48.5 and $34 million and the Weslaco ISD more than $30 million.

The Texas House of Representatives approved its version of the state’s 2010-2011 budget last week, and a conference committee must still hash out the differences between that version and the Senate’s. Members of that committee should be announced before the end of the month. Should the federal aid be allocated in the way the Senate laid out in its version of the budget, Hinojosa said the state would have limited options if a subsequent federal review concludes that Texas misused its monies.

“That means we will not be able to balance the budget and our options would be two options: cut the budget by whatever amount we need to disqualify those stimulus monies, or second option, go into the Rainy Day Fund,” he said. The Rainy Day Fund has been advocated by some as a source that must be kept in tact because the outlook for Texas’ economic future is even more bleak, which Hinojosa reiterated Monday.

“Keep in mind that next session we are looking at a structured deficit of anywhere from nine to 10 billion dollars, so we have some difficult issues to deal with on the budget,” he said.