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What did $459 million get us?<br>Federal stimulus creates and saves jobs, props up schools and governments

Uncle Sam set aside $459 million in stimulus money for the Buffalo area as of March 31 -- enough to buy 7,990 top-of-the-line Lexus sedans, or build 1,836 quarter-million-dollar homes, or purchase about 115 million McDonald's Happy Meals.

In reality, it's much more difficult to see that federal money at work.

The largest share of that stimulus money -- $162 million -- delayed for a year hundreds of layoffs at local schools districts now in place for the fall.

Another $62.4 million went to prop up local governments.

And other vast sums went to buy 56 new buses for the Niagara Frontier Transportation Authority, to accelerate road improvements and to help build new facilities for companies such as Yahoo!.

Those are the findings of a Buffalo News computer analysis of thousands of reports filed with the government on stimulus spending in Erie and Niagara counties from February 2009 through the end of March.

The analysis shows the bill has been more salve than stimulus, helping to heal a broken economy that, many economists say, could have collapsed completely without $787 billion in federal funding.

Trouble is, there's no easy way to measure the pain the bill averted locally -- or even the number of jobs the bill created.

The News analysis found innumerable problems with the jobs figures that recipients of stimulus money filed with the federal government.

For example, the NFTA, which was just following the federal rules, reported creating dozens of jobs from the building of its new buses -- even though the buses are being built in California.

Many economists stress that it would be a mistake to read too much into those glitches and not give the stimulus credit for what it has done.

"If there was going to be another Great Depression, this stopped it," said John Slenker, regional economist for the state Labor Department.

There is some consensus among economists that the stimulus bill helped put an end to the economy's bleeding.

"The economy's growth in the second half of last year was driven by a strong fiscal stimulus, including not only federal spending and transfers but also special subsidies to car buyers and to first-time homebuyers," Martin Feldstein, a conservative economist who opposed stimulus, said earlier this year.

Local economists say the infusion of federal cash no doubt made a huge difference in the Buffalo area as well.

The $459 million sent to Buffalo equals about 1 percent of the area's economic output in 2008, no small sum, said Richard Deitz, regional economist for the Federal Reserve.

"These federal funds have basically stemmed losses that would have occurred otherwise," he said.

That's especially true for the biggest recipients of stimulus funds: local school districts.

Buffalo city schools got more stimulus money than any other local entity -- $51.7 million -- and it prevented hundreds of layoffs, said Barbara Smith, the district's chief financial officer.

But that federal cash -- offered to patch the huge holes the recession blew in state education budgets -- is gone now.

And the School Board last week agreed to a budget for the coming school year that cuts 355 jobs, including 145 teachers -- although 41 of those teachers should see their jobs saved through grant funding.

Similar stories are playing out in suburban Buffalo districts -- where upward of 300 people could see their jobs cut.

For example, in West Seneca, 50 school jobs will be eliminated in the fall, with most of the cuts coming from retirements or resignations -- although there will be 15 layoffs.

Things would have been even worse last year without the stimulus money, said Brian Schulz, the district treasurer.

"It would have been a pretty broad stroke of 70 people" who would have lost their jobs in the district, Schulz said.

Of course, schools were not the only ones to see budgets patched by the stimulus bill.

Albany got $11.1 billion to fill the chasm in its Medicaid budget.

Erie and Niagara counties got millions more, while housing, urban renewal and sewer authorities got cash for improvements they would not have been able to make.

But that was last year.

The stimulus money "gave us a respite," Schulz said. "I don't define it as anything but that."

The stimulus has also been a job creator. The nonpartisan Congressional Budget Office said last month that the aid created anywhere from 1.3 million to 2.8 million jobs nationwide by the end of March.

That wide gap between those two numbers illustrates a problem built into the bill: it's impossible to do an accurate count of the jobs the bill created, especially on the local level.

For what it's worth, The Buffalo News analysis found that local employers reported creating or retaining 193 jobs through last September because of the stimulus bill. They said they created 297 jobs in the last quarter of 2009, and 267 in the first quarter this year.

But those numbers should be regarded as very rough estimates, for several reasons:

First, the federal government changed the way it counts stimulus jobs in December, dropping the controversial category of "jobs saved."

Second, stimulus funding recipients estimate the number of jobs created based on a complex formula that can lead to odd anomalies -- such as the bus-building jobs in California being counted as NFTA jobs.

And finally, there were big inaccuracies in the data itself. For example, The News dropped all college work-study jobs from the stimulus job totals because it appeared that several colleges, following federal rules that were later changed, grossly overestimated the number of jobs they added.

Add it up, one thing is clear.

"The raw number of local jobs added would be very hard to count accurately," said Slenker, of the Labor Department.

But that doesn't mean jobs aren't there.

The stimulus bill will mean $61 million in additional highway construction in Erie and Niagara counties, according to the Greater Buffalo-Niagara Regional Transportation Council.

That's roughly what the region spends on highway projects in a typical year -- so this season will be roughly twice as busy as a normal construction season would be, said Hal Morse, the transportation council's executive director.

"Given the requirement that these be shovel-ready projects, the money went either to projects that could be started quickly or that were in the pipeline but delayed because the funding wasn't there," Morse said.

But you can now see the stimulus bill at work around town, from the Kensington Expressway to the Cobblestone District to the Inner Harbor.

And while it's impossible to know how many jobs such projects will create, last summer the stimulus bill was responsible for 53 jobs, according to the state.

The bill has been a big boon to researchers, with the University at Buffalo Research Foundation reporting the largest number of local hires -- 75 in the first quarter.

And they're not all staring into microscopes, either.

Dr. Laurene Tumiel-Berhalter, a medical professor at UB, won a $535,271 grant to study cancer screening among minorities with chronic conditions -- and to design ways to make sure such patients get screened.

"This is just a huge opportunity to link with the community in making a change in health care," said Dr. Tumiel-Berhalter, whose project has created several jobs, including a research assistant and two community health organizers.

That's just one of 66 stimulus-funded research projects at UB. Health Research Inc. won 21 such projects.

"I consider this seed money" for projects that could pay off big in important medical discoveries or scientific innovations, said Jorge V. Jose, vice president of research at UB.

More of that stimulus seed money is taking root in Niagara County, where Pyrotek and Yahoo! are building facilities funded in part by the funds.

Pyrotek, which heat-treats materials used in lithium batteries, plans to add 50 jobs over three years thanks to an expansion of its Sanborn facility that's currently under construction.

Without the $11.3 million in stimulus funds the company received, "I would say this project would have been of a much smaller scale," said Kevin Scott, Pyrotek's operations manager, who said the stimulus funding is being used to jump-start a lithium battery manufacturing industry in the U.S.

Similarly, Yahoo! is using $10 million in stimulus money to help fund a green-tech call center in Lockport that could become an industry model.

The stimulus money "really allowed us to commit to an energy-efficient design," said Christina Page, director of Yahoo!'s energy strategy.

The Yahoo! facility eventually will employ 75, which points out another important fact about the stimulus bill: it's not yet done creating jobs.

"Even with the progress we've seen already, a lot of the good news from the Recovery Act is still on the way," said Rep. Louise M. Slaughter, D-Fairport.

That's just one side of the political debate surrounding the stimulus bill.

Some economists, such as Nobel Prize winner Paul Krugman of Princeton University, argue that the stimulus was too small, and Rep. Brian Higgins, D-Buffalo, agrees with them.

"It wasn't aggressive enough," said Higgins, who said it was essential for government to invest in the economy when the Great Recession put a halt to private investment. "We needed to do more infrastructure spending."

Republicans deride the stimulus bill, partly because it didn't fulfill promises.

A report from top Obama economic advisers on Jan. 9, 2009 -- before Obama became president -- projected that the stimulus bill would hold the unemployment rate below 8 percent through 2009.

Instead, unemployment passed 10 percent last fall, and remained at 9.7 percent in May.

"The trillion-dollar 'stimulus' has fallen well short," House Minority Leader John Boehner, R-Ohio, said earlier this month.

What's more, the bill amounted to a huge public expenditure that only delayed the inevitable, said Rep. Chris Lee, R-Clarence.

"With all this federal money coming to New York, we've done nothing to right-size state and local government," he said.

Although Lee supports research investments, he said "the bill has done little to get the private sector to start hiring."

e-mail: jzremski@buffnews.com.

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>How this story was done

This story is based on a list of all stimulus awards to entities in New York State, which is available at www.recovery.gov. The unaudited data was filed by recipients of the money. The Buffalo News edited the file down to include only recipients from Erie and Niagara counties.

The News found several errors in the jobs data and removed listings that were erroneous, but cannot guarantee that all the remaining recipients filed their reports correctly.

The jobs figures show jobs reported by the entities reporting the funding, but it is possible some of the jobs were created outside the Buffalo area.

The dollar figures used are from an accounting called "local amount," which lists stimulus money by where it will be spent. The accounting here includes stimulus grants, contracts and subcontracts.