Transcript Slide 1
THE ELECTION
Key Players, Status of Education
Funding, and Sequestration
Julia Martin, Esq.
[email protected]
Brustein & Manasevit, PLLC
Fall Forum 2012
Agenda
Effect of Fiscal Issues on Education
Funding Battles So Far
Sequestration
The “Fiscal Cliff”
Where the Parties Stand on Policy
The Election and What it Means
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Effect of Fiscal Issues on Education
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Why it Matters
How do federal fiscal issues affect
education?
Control
funding levels
Congressional
appropriations determine
support for federal programs
Part
of policy debate
Size/involvement
of federal government is
still an open question
Distract
Take
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from other debate
time/momentum away from policy
Funding Battles So Far
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The
th
112
Congress
Politically divided
Along party lines and within parties
Huge nationwide fiscal and debt issues
Lack of action on policy legislation
Lack of substantive policy debate on any
issues
Focus on party-line votes, attacks
Large turnover predicted for November
2012 election
Result: little motivation to address critical
issues
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FY 2012 Budget
Not a real budget – full-year Continuing Resolution
Completed almost three months late in December 2011
Narrowly avoided government shutdown
Cut ED funding by $233 million in total
All programs subjected to 0.189% across-the-board cut
Some increases: IDEA, Title I
Includes funding for President’s priorities
E.g. Race to the Top
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FY 2013 Budget
Bipartisan agreement to pass temporary spending
measure
6-month continuing resolution (CR) keeps federal
government running through March 2013
Extends current funding levels, plus 0.612% acrossthe-board spending increase
Spending increase now means cuts later?
Remainder
of FY 2013 budget will not be finalized
until spring 2013
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Budget Control Act
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Passed August 2011
Temporarily raised Debt Ceiling
Reduced Congressional
appropriations spending caps by
$891 billion over the next ten
years
Created Congressional debt
Supercommittee
The Supercommittee: Not So Super
Tasked with cutting $1.5 trillion in spending over
next decade by Thanksgiving 2011
If at least $1.2 trillion in cuts not agreed to by
November 23, 2011, automatic cuts triggered
Total failure to come to an agreement
Conflict
over how to reduce debt – raising
taxes/revenues versus lowering spending
Failure of Supercommittee means
automatic cuts through “sequestration”
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Sequestration
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Sequestration
Only intended as a threat – never meant to
happen
Cuts take effect January 2, 2013
Automatic, across-the-board cuts for FY 2013
Little
discretion for appropriators, agencies
Apply to FY 2013 federal spending numbers
Could
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exacerbate effect of any cuts made in FY 2013
Sequestration Step by Step
Adjust total for interest to reflect lesser debt principal
$1.2 trillion $984 billion
Divide by year from 2013 through 2021 $109 billion
Split function between defense and non-defense spending
(about $54.5 billion each per year)
Take exempt programs out of the equation
Spread cuts equally among remaining programs in 2013
Cuts accomplished by reducing spending caps in 2014
and beyond
OMB estimates cuts for “non-defense discretionary”
funding including most education programs at 8.2%
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The Impact of Sequestration
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Sequestration Exemptions
What’s exempt?
Some
low income assistance programs:
Social
Security
Medicaid
TANF
SNAP
Most child nutrition and
commodity food programs
Veterans
benefits
Pell grants, in first year
What’s not exempt?
Most
ED programs, defense spending, among
other items
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When Will Sequestration Happen?
President Obama must issue a sequestration order no
later than January 2, 2013
Funds received by States July 2012 and earlier are
NOT subject to sequestration
Advance funding received in October of 2012 will not
be subject to sequestration when allocated
BUT cuts will be calculated and applied to July 2013 funds
Funding received in July of 2013 will be subject to cuts
After July 2013, cuts will be incorporated into annual
appropriations
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Guidance on Sequestration
Overall: focus on repeal, not
implementation
Pres. Obama in debate:
sequester “won’t happen”
Business as usual
Why?
Practical/legal
concerns
Political strategy
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Guidance on Sequestration - Agencies
May 2012 report from GAO: No workarounds for
federal agencies
Antideficiency Act: agencies can’t overspend in anticipation
of cuts
Impoundment Control Act: agencies can’t hold back on
Congressionally appropriated funds in anticipation of cuts
“Agencies must carry out their appropriations …
regardless of the possibility of spending reductions
beginning in the second quarter of fiscal year 2013.”
September 2012 memo from OMB to federal
agencies: business as usual for first half of fiscal year
(“continue normal spending and operations”)
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Guidance on Sequestration - States
States sent out guidance in summer 2012 on how to
prepare
Texas:
State will withhold 10% of funds
Missouri: prepare two budgets
July 20 memo from ED to State chiefs: “there is no
reason to believe that a sequestration would affect
funding for the 2012-2013 school year…“[T]he
potential for sequestration should not upset planning
and hiring decisions for the immediately upcoming
2012-13 school year…there is little reason to
delay hiring.”
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The Search for Plan B
Congress must explicitly act to avoid sequestration
Debate influencers
Defense industry pushes back against cuts,
exerts political pressure
“NDD” organizations rally against cuts
Numerous suggestions from lawmakers
Delay impact for a year?
Exempt defense spending?
Any alternative likely to include significant cuts to
federal spending
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Potential Alternatives and Proposals
Maybe it’s not so bad?
OMB Watch releases report in November saying
administration can take actions to lessen the effect in the
short term, impact of temporary sequester will not be as
severe as projected
lessens urgency to address sequester in lame duck?
A “bridge” over the fiscal cliff?
On November 7th, Speaker of the House John Boehner (ROH) suggests that Congress delay the impact of “fiscal cliff”
items until the start of the next Congress to allow more time
for debate
Senate Majority Leader Harry Reid (D-NV) also ok with short-term
fix?
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Potential Alternatives and Proposals
A cautionary tale: the SGR “Doc Fix”
Congress passed automatic 25% cuts for Medicare provider
reimbursements into law
Must vote each year to avoid cuts to provider payments
Increased opportunities for last-minute deal angling,
acrimony, politics
Give false picture of budget
Not a real long-term solution
A “sequester fix” would need a yearly patch to stave
off massive cuts – hard for agencies and private
business to budget
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Up Next: the Fiscal Cliff
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The Fiscal Cliff
Term for anticipated economic effect when a
number of fiscal and budget-related deadlines all
happen at once
Contributors:
Expiration
of Bush-Era tax cuts
Expiration of payroll tax holiday
Implementation of sequestration
Decrease in Medicare physician reimbursement rate
(SGR)
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The Fiscal Cliff
What would it do?
Congressional Budget Office predicts (in
November 2012):
Nation’s GDP would decrease by 0.5%
Economy would contract
Unemployment would rise to 9.1%
Loss of 2 million jobs
BUT expiration of tax cuts,
sequestration would trim $487 billion
from federal budget in FY 2013
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Compared with $91 billion if current
policies extended
The Fiscal Cliff
What’s the solution?
Extension of current policies and tax cuts increases federal
debt to “unsustainable levels” per CBO
Debt to GDP ratio potentially approaching 90% in 2013, which
many say is sign of impending Greek-style financial crisis
But would also increase economic growth, decrease unemployment
in the short term
Allowing current policies to expire means economic
stagnation but better long-term economic health
CBO: “policymakers will need … to adopt policies that
require people to pay significantly more in taxes, accept
substantially less in government benefits and services, or
both”
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What’s left for the Lame Duck session?
Decisions on:
Bush-era tax cuts
Emergency unemployment benefits
The Farm Bill
Emergency agricultural aid
Sandy relief
FY 2013 spending
Sequestration or alternative spending
plan
Debt ceiling?
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Education Spending
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Spending Generally
Overall, pressure to cut federal spending in all
sectors including education
Recession
and stimulus put pressure on federal treasury
Need for unemployment and other benefits puts
pressure on those programs
Less tax revenue means less money to go around
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Education Funding Policy Trends
Move to cut education spending (mostly Congressional
Republicans)
Belief that spending on K-12 education has not produced
meaningful results
2012 GOP Platform: “[s]ince 1965 the federal government
has spent $2 trillion on elementary and secondary education
with no substantial improvement in academic achievement or
high school graduation rates…[c]learly, if money were the
solution, our schools would be problem-free”
Concern that federal spending drives costs up
Attempt to scale back size of federal footprint in
education – greater autonomy at State level
Movement to consolidate funding streams
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Why it Matters, Part 2
Potential for huge economic consequences overall
With or without sequestration:
Strong
likelihood of significant budget cuts, including
education
Budget and sequestration become priorities
Hotly contested issues mean there’s no time/energy
for anything else
As a result: delay in sequestration debate until after
election; delay of ESEA reauthorization and other
policy debates until 113th Congress
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Where the Parties Stand
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Republican Priorities
Less federal control (more local responsibility)
Less federal money
“Clearly, if money were the solution, our schools
would be problem-free”
Promotion of “school choice” through:
Vouchers
Charters
Parent triggers
Endorses “rigorous academic standards”
“rejects the crippling bigotry of low
expectations”
But not Common Core
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Republican Priorities
Critical of HQT requirements
Support teacher evaluations with student
achievement playing a “significant part”
Critical of teachers’ unions
Mitt
Romney on September 2012 Chicago strike:
“Teachers unions have too often made plain that their
interests conflict with those of our children, and today
we are seeing one of the clearest examples yet”
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Democratic Priorities
Education as a means of economic success for
individuals and the country as a whole
Importance of keeping teachers and school
employees on the job, through additional federal
spending if necessary
Defend place of government in education
As
driver of accountability, source of
funds
But quick to note that government is
not the only actor
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Democratic Priorities
Promote “flexibility” and “career- and collegeready standards” in party platform
Read:
Have supported Common Core and linked
assessments
Largely supportive of teachers’ unions in general
But
Waivers and Common Core
also pushing for teacher evaluations
Supportive of some “school choice” elements
Charters,
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parent triggers
Universal Trends in Education Policy
Moving away from AYP/AMOs
Greater autonomy on accountability and standards
at State and local levels
Consolidation of smaller programs into larger
funding streams
Focus on improving lowest-performing schools
through restructuring and re-staffing
Increased focus on charter schools
Increasing “parental choice” options through
charters, parent triggers, vouchers, etc.
Teacher/principal evaluations which include student
achievement as a factor
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What the Election Means
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The White House
President Obama reelected for a second
term
Likely effects:
Waivers continue to be the de facto “law
of the land” unless Congress acts to reauthorize
ESEA
Existence of waivers mean administration
may turn to other topics, including higher
education and upcoming Pell shortfall
Secretary Duncan almost certain to stay on for
second term
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The Senate
Democrats keep control of the Senate, increase
majority by narrow margin
Despite some retirements, committee of
jurisdiction for education remain largely
the same
Exception:
Senator Mike Enzi (R-WY), HELP
Committee Ranking Member, will lose that position
due to term limits
Senator
Lamar Alexander (R-TN) is the likely
replacement
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The House of Representatives
Republicans maintain control of the House of
Representatives, though Democrats gain a few seats
Rep. John Kline (R-MN) will remain Chairman of Education
and Workforce Committee
Some changes to Committee membership:
Rep. Judy Biggert (R-IL) defeated
Reps. Jason Altmire (D-PA) and Dennis Kucinich (D-OH) defeated
in primary
Rep. Mazie Hirono (D-HI) elected to Senate
Reps. Dale Kildee (D-MI), Lynn Woolsey (D-CA) retiring
Departing members means loss of experience, staff,
institutional knowledge
Especially on early education, equity, poverty issues
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How does the Election Affect Education?
No change in political control/dynamic means that
negotiating positions are unchanged.
May force compromise, but may also increase acrimony.
Kline has said Committee will continue work on ESEA
More hearings in 112th?
More oversight on ESEA waivers, especially accountability
House must take lead: Harkin has said he will wait to push
his bill until House takes action
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Overall Predictions
Continued focus on fiscal issues, including
sequestration, draws attention away from any other
issues
Likely to have sequester/budget deal – or at least
stopgap measure/ “bridge” at last possible minute
in 112th Congress
113th Congress will open with continued debate on
fiscal issues, with education possibly making an
appearance in spring
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Disclaimer
This presentation is intended solely to provide general
information and does not constitute legal
advice. Attendance at the presentation or later
review of these printed materials does not create an
attorney-client relationship with Brustein & Manasevit,
PLLC. You should not take any action based upon any
information in this presentation without first consulting
legal counsel familiar with your particular
circumstances.
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