POST FALLS - A proposal would allow school districts to declare a financial emergency with a significant reduction in federal money.

"It's a tool districts can think about using if things get even worse than they are now," said Post Falls Superintendent Jerry Keane.

The Post Falls School Board will consider the resolution on Monday and is expected to forward it on to the Idaho School Boards Association. It would ultimately need to be approved by the Legislature.

Stimulus funds for schools were provided on a one-time basis and will not be available to help districts in fiscal 2012.

With those funds dissolving, the proposal would give cash-strapped districts another way to declare an emergency to meet their budgets. A 2009 amendment by the Legislature gave districts the ability to declare based on at least 1.5 percent less state and/or local money and a fund balance of 5.5 percent or less, but the criteria does not include loss of federal funds.

Several districts declared emergencies two years ago based on a drop in state and local revenue. The state Legislature declared the emergency for districts during the current fiscal year.

Financial emergencies are needed to decrease salaries and avoid increases that districts are otherwise bound by law to pay.

"We'll ask other districts to get on board," Keane said of the proposal. "This is the start of the process."

Keane said a proposed percentage of loss of federal funds to declare an emergency has not been determined.

"The ISBA and the Legislature ask folks to not pin them down to a certain percentage," Keane said. "I would assume they would have to use a higher percentage (than criteria for state and local funds) because the federal funds are a much smaller part of our overall budget than the state maintenance and operation monies."

Post Falls drafted the same proposal last year, but held off on floating it elsewhere due to more pressing financial matters at the time, Keane said.

"This year it's in our face and it wasn't before," he said, adding that it may be presented to other state education groups for support.

Steve Briggs, chief financial officer for the Coeur d'Alene School District, said his district has attempted to wisely allocate knowing that the stimulus funding was temporary.

"Our ability to adjust will also be dependent of the economic climate for FY2012 and the stability of state funding," Briggs said. "We are, however, in a better position than most districts since we have been able to keep some financial reserves.

"I am hopeful that the impacts will be less than those we've dealt with over the past two years. But, our recent experience doesn't provide much to be too optimistic about in that regard."

A new study conducted by Education Northwest and commissioned by the Idaho State Department of Education found that stimulus funds have been a critical funding source for Idaho schools to weather the recession.

In 2009 Idaho received more than $280 million in stimulus funds for education, including $35 million for Title I reading programs (for students of families that live in poverty) and $58 million for the Individuals with Disabilities Education Act (IDEA) program.

The majority of the funds - $180 million - went to the State Fiscal Stabilization Fund, which was intended to address budget shortfalls and to "backfill" education budget cuts.

Post Falls has received $800,000 in federal stimulus funds per year for the past two years, with $250,000 for Title I and $550,000 for special education.

"We've been able to free up money in our general fund to fund other teachers," Keane said. "When that goes away, it will create another gap in our budget.

"The information in the study just confirms that most districts, including Post Falls, are going to have additional financial difficulties if the federal money goes away for good."

Based on the survey, 79 percent of Idaho's Title I and IDEA funds were spent on personnel, most often to pay the salaries and benefits of teachers, paraprofessionals and other staff. As the study points out, this aligns with the first principle stated in the stimulus program - to create and save jobs.

Ninety-five percent of those surveyed agreed that stimulus funds have been crucial to their district, while 92 percent agreed that those funds would also have a positive impact on school reform and student achievement.

According to the study, another major principle of the stimulus program - that the funds be invested in one-time expenditures that would not require ongoing funding - has not been met. Because most Title I and IDEA funds have been spent on personnel, an ongoing expense, Idaho school districts are anticipating a "funding cliff" after Dec. 31, 2011, the date by which all stimulus funds must be spent.

Only one in 10 surveyed believed such a funding cliff had been avoided, while 46 percent said it had not been avoided at all.

Staff members in 123 Idaho school districts were surveyed and the response rate was 69 percent.

Staff writer Maureen Dolan contributed to this report.