Overcoming the threat of a Republican filibuster, the Senate on Wednesday cleared the way for approving a $26-billion aid package for cash-strapped states that is expected to keep 138,000 teachers from being laid off nationwide and sustain medical care for the poor.
The Senate is scheduled to give its final approval to the bill Thursday. And House Speaker Nancy Pelosi called her chamber, which has already begun its August recess, back into session next week for a vote Tuesday to approve the Senate bill and send it to President Obama for his promised signature.
Governors from nearly every state had pressed for help in the face of falling revenues and state budgets broken by the recession and lagging economic recovery. Many states had already counted on the extra federal aid in their spending calculations — raising the possibility of new budget crunches if the measure failed.
"All over the country right now, there are people breathing a big sigh of relief," said Sen. Michael Bennet (D-Colo.), a former state schools superintendent, after two Republicans joined with all 57 Democrats and both independents to block a threatened GOP filibuster.
The aid for the states has been a priority for the Obama administration, and the president Wednesday thanked Congress for taking "an important step towards ensuring that teachers across the country can stay in the classroom and cash-strapped states can get the relief they need."
The Senate package includes $16 billion for Medicaid, the joint state-federal program to provide healthcare to low-income Americans. The recession and continuing high unemployment had sent Medicaid costs soaring and created a major problem for many states.
Enhanced Medicaid funding was first made available in the 2009 economic recovery act but is scheduled to expire in December. The Senate bill package would extend aid through June 2011.
The package also provides $10 billion in education funds, and the National Education Assn. estimates that 138,000 teachers' jobs could be saved.
California is in line to receive about $1.2 billion from the education package, saving an estimated 13,110 jobs, according to staff members for state Assembly Speaker John A. Perez (D-Los Angeles).
The California Teachers Assn. applauded the news from Washington. "If lawmakers can bail out big banks, we should at least also look at some funds to keep teachers in their classrooms to help our students," said spokeswoman Becky Zoglman.
The state still faces a multibillion-dollar deficit. The governor's office projects classroom funding this year at the same level as last year, about $49.9 billion, according to the state Department of Finance.
This follows two years of sharp reductions from what school officials had expected. And federal stimulus money is running dry, with most school districts having spent most of their allocations last year.
With state lawmakers still haggling over a budget, school districts had to make their best guesses on budgets for the academic year that officially began July 1. The result was layoffs numbering in the tens of thousands for teachers and other school employees, according to estimates from employee unions.
The federal money should undo some of the damage because the state must pass the dollars through to local school systems. How that money will be distributed is unclear, but school districts are expected to have broad latitude, provided the money is used to save or create jobs.
Gov. Arnold Schwarzenegger joined with Democrats and moderate Republicans in Congress to support the package.
"The Education Jobs Fund will provide vital funding to keep more of our teachers and school leaders on the job while protecting our students during these tough economic times," Matt Connelly, a spokesman for Schwarzenegger, said in a statement Wednesday.
Thousands of other public workers, including police and firefighters, could have their jobs spared with the extra money flowing to the states, Democrats said.
Many states have already been forced to make tough budget-cutting decisions and were counting on help from Washington.
"The easy choices have essentially been made by the states," said Arturo Perez, a fiscal analyst at the National Conference of State Legislatures. "We're talking about a situation where state policymakers face even more difficult decisions about how to balance their budgets if that money is not available."
Union-backed advocacy groups produced ads this week urging Republican Sens. Susan Collins and Olympia J. Snowe of Maine to cross over and support the measure. Both did, making the vote 61-38, more than enough to give Democrats the supermajority they needed to invoke "cloture" and clear the way for final passage.
Earlier efforts to provide aid to the states were derailed by Republicans and some Democrats who contended that such spending be offset with cuts elsewhere. The current, slimmed-down package covers the cost and provides additional savings by tightening tax provisions and cutting spending on several programs.
Even so, Republicans argued Wednesday that the federal government was just as broke as the states, and could not afford what they characterized as another bailout. Governors, they said, need to make tough budget cuts.
"This money doesn't appear on trees," said Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee.
Republicans also suggested saving teachers' jobs was payback to education unions who support Democrats.
"When you go to the essence of what this bill is about, it's to pay off education unions," Gregg said. "Let's not be coy."
Politically, the fight over aid to the states reflected the strategies the two major parties are pursuing as they head into the August legislative recess and the campaign for the fall elections.
Democrats, struggling to retain their majority in both chambers, are positioning themselves as the party that is helping ordinary Americans in the difficult economy.
Republicans, sensing an opportunity to make big gains as a result of voters' unhappiness over the economy and the deficit, are portraying themselves as the party of fiscal responsibility and opposition to big government.
Times staff writer Howard Blume in Los Angeles contributed to this report.