While some experts say that technically the recession is over, states are still wrestling with several years of budget reductions, little --if any--revenue growth, and the increasing costs of providing services. Legislatures are continuing to shore up budgets with federal recovery funds and, in some cases, they shifted reserves from dedicated trust funds to support general state operations. Several states are increasing flexibility to ease financial pressures: Alabama and Georgia passed laws that provide school districts with flexibility in spending, Georgia and Virginia districts can increase class sizes, and Florida will go back to voters in November to readdress class-size requirements outlined in the state constitution. North Carolina's governor recommends funding reductions for administrative efficiencies but would leave decisions on how to implement savings with the colleges, universities and local education agencies. This report presents final legislative and budget actions in Alabama, Florida, Georgia, Maryland, Virginia and West Virginia, plus the governor's proposal in North Carolina and notes from SREB (Southern Regional Education Board) states.