Transcript Understanding the Federal Budget and its Implications for

Understanding the Federal Budget
and its Implications for Adult
Education (and What You Can Do
About It!)
March 25, 2013
Marcie Foster, CLASP
Jackie Taylor, National Coalition for Literacy
The Real World: Budget Process
• Congress has a multi-year budget process:
– Agencies present budgets to OMB
– President’s Budget
– Budget resolution (determines the size of the pie)
• 302(a) allocations
– Appropriations (determines the size of the slices)
• 12 subcommittees-302(b)
• Labor-HHS includes adult education spending
• Most of recent high-stakes deadlines (e.g. “fiscal cliff”)
are political fabrications, not part of the budget process.
What’s the big deal anyways?
Federal Spending
Mandatory v. Discretionary
• Mandatory spending
occurs automatically
once authorized.
• Like your rent or
mortgage, health
insurance, phone bill.
• Includes Social
Security, Medicare,
Medicaid, SNAP.
• Discretionary spending
must be “appropriated”
each year.
• Like buying clothing,
groceries, or a
computer.
• Includes adult
education, job training,
health research, military
spending, disaster relief.
Debt Ceiling limits total government borrowing
How Did We Get Here?
Budget Control
Act (August
2011)
• Increased debt
limit.
• Established
budget caps.
• Reinforced by
supercommittee
and
sequestration.
Supercommittee
Failure
(November
2011)
• Set off $1.2T in
cuts over the
next 10 years
(“sequestration”)
into motion to
occur January 1,
2013.
American
Taxpayer
Relief Act (Jan
2013)
• Delayed
sequestration
to March 1,
2013.
• Raised taxes
on highincome
earners.
• Did not extend
the payroll tax
cut.
Sequestration
(March 2013)
• Has a multiyear impact,
with greater
hits in
subsequent
years.
• Will cut
approx. 5 %
across-theboard in
discretionary
spending.
All Budget Options are Painful for NonDefense Discretionary Spending
$700
Budget Authority in Billions
$650
$600
$550
$500
$450
$400
FY 12
FY 13
FY 14
CBO Baseline
FY 15
FY 16
BCA Caps
FY 17
FY 18
Sequestration
FY 19
FY 20
Murray FY 14
FY 21
FY 22
FY 23
Ryan FY 14
COMMITTEEE FOR EDUCATION FUNDING
Non-Defense Discretionary Spending Would
be Cut to the Bone
Source: Bipartisan Policy Center
3.00
2.50
2.00
1.50
1.00
0.50
One-Time Adjustment made for underpayment between 2003 - 2008
Federal WIA Title II Adult Education Funding
Enrollment
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0.00
Enrollment by Program Year (in millions)
$750
$700
$650
$600
$550
$500
$450
$400
$350
$300
1998
Funding
(in millions of constant dollars)
Adult Education Has Already Taken Budget
Hits – Enrollment Declines Following
Taking a Balanced Approach to
Deficit Reduction
• Programs cuts have borne
the brunt of deficit
reduction. For every $1 in
revenue increases, we’ve
had $2.50 in spending cuts.
• Need to ensure a balance of
spending cuts and revenues
in a comprehensive plan.
• More spending cuts on the
horizon – continuing
resolution (FY13) with
sequestration.
More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
Fiscal Year
2014 Begins
(April 15-“no budget,
no pay”)
Sequestration
(March 1)
FY13
Continuing
Resolution
(March 27)
(October 1)
Debt
Ceiling
Reached
(May 18)
Sequestration:
Congress’ “Best” Idea
• Sequestration was
designed to bring both
Democrats and
Republicans to the
negotiating table to
agree to unpalatable
spending cuts and tax
increases in order to
reduce the deficit
Sequestration – March 1, 2013
• Most members of Congress agree that
sequestration is a bad way to reduce the deficit
BUT cuts will likely remain (5% on non-defense
discretionary)
• Some discussions about administrative flexibility
implementing the sequester.
• Programs in future years (FY14 and beyond) are
not exempt—everything is on the table.
More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
Fiscal Year
2014 Begins
(April 15-“no budget,
no pay”)
Sequestration
(March 1)
FY13
Continuing
Resolution
(March 27)
(October 1)
Debt
Ceiling
Reached
(May 18)
Continuing Resolution (FY13) –
March 27, 2013
• FY13 CR will fund the government for the
remainder of the fiscal year (until Sep. 30).
• CR will be the implementation of the sequester
(5% from non-defense discretionary).
More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
Fiscal Year
2014 Begins
(April 15-“no budget,
no pay”)
Sequestration
(March 1)
FY13
Continuing
Resolution
(March 27)
(October 1)
Debt
Ceiling
Reached
(May 18)
Budget (FY14) – April 15
• Ryan Budget (House)
– Reaches balances budget in 10 years.
– No revenues, only spending cuts.
• Murray Budget (Senate)
– Takes a balanced approach to deficit reduction
(revenues and spending cuts).
– Preserves spending in critical areas (education, job
training, infrastructure).
• President’s Budget (April 8)
– Will likely seek a balanced ratio of 1:1 revenues to
spending cuts.
More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
Fiscal Year
2014 Begins
(April 15-“no budget,
no pay”)
Sequestration
(March 1)
FY13
Continuing
Resolution
(March 27)
(October 1)
Debt
Ceiling
Reached
(May 18)
Debt Ceiling – May 18
• Unlikely to result in political stalemate due to
reasonable increase in January 2013.
The Bottom Line
• Basic grants to states in July 2013 will be
impacted unless action is taken to reverse the
sequester or introduce administrative flexibility.
• FY14 and subsequent years will pose even more
significant challenges if the sequester remains in
effect – there are no firewalls between defense
and non-defense.
• The best-case scenario (Senate FY14 budget
proposal) will still put extreme downward
pressure on funding for adult education.
Keep in touch!
Marcie Foster
[email protected]
Jackie Taylor
[email protected]