By MICHAEL GORMLEY
Associated Press Writer

New York and its counties are in line to get $2 billion in Medicaid funding from Washington that was feared lost and $607 million in new education aid to avoid teacher layoffs, Sen. Charles Schumer said last week.

New York City and counties will share $530 million in Medicaid reimbursement. The state will get $805 million this fiscal year and $600 million for the 2011-12 fiscal year, he said.

The windfalls for the cash-strapped state and schools facing funding cuts - and reeling from delayed state aid payments - surprised state and federal officials.

But to save those teaching positions, estimated in Washington at 7,100 jobs, the state will have to allow school districts to reopen their budgets and teachers will have to be rehired quickly. That's a tight deadline even with jobs at stake.

The state Legislature will need to convene soon in a special session because a high court has ruled federal funds must be appropriated by lawmakers, according to the state Education Department.

The time frame will be even tighter if the House doesn't reconvene to give the deal final approval before its scheduled return in mid-September.

"It's very welcomed news," said David Albert of the state School Boards Association. "It's safe to say there were probably thousands of layoffs and attrition planned."

For school districts, the Medicaid funding and the education money to avoid layoffs would have a big effect. Albert said the funds could offset the state budget's $1.4 billion cut in school aid, about a 5 percent reduction. It would also eliminate the need for Gov. David Paterson's contingency fund, which calls for further cuts and delays in school aid if the long-threatened aid never came from Washington.

"This was a bottom-of-the-ninth, come-from-behind victory to help stop layoffs in New York," Schumer said. "The last thing we could afford was layoffs."

On Aug. 3, U.S. Sen. Kirsten Gillibrand asked House Speaker Nancy Pelosi to bring the House back to act quickly on the bill. Hours later, the House announced plans to return to session next week.

"The right thing to do would be for members of the House to briefly return to Washington so that we can send the legislation to President Obama immediately," Gillibrand said. "Today we overcame obstruction and delivered for New York."

Senate Democrats broke a Republican filibuster Aug. 4 to free the bill for a vote Wednesday or Thursday. The House is also expected to pass it.

Schumer says the funding, long considered uncertain, is a major breakthrough for states. Democrats found the cash for states by cutting some social services.

The Medicaid funding is welcome news in Albany. Paterson had gotten the Legislature to agree last Tuesday to a contingency plan for the $1 billion in Medicaid reimbursement this state fiscal year that looked all but lost by Tuesday afternoon. Securing the funding would mean easing or eliminating across-the-board cuts in state funding of programs with few exceptions to keep the budget balanced.

"Either way, New York is ready," Paterson said Wednesday.