Progress? Or Same Old, Same Old?

NASBO Annual Meeting Stowe, Vermont Federal Funds Information for States www.ffis.org

August 2015

2015 Congressional “To Do” List

     

FY 2016 appropriations Reconciliation Surface transportation ESEA (No Child Left Behind) Debt limit Other issues/deadlines

Where the money goes: pieces of the federal budget pie Composition of Federal Outlays in FY 2014 ($ in billions, % of total)

Many grants have been flat…

…and the future is uncertain

Comparison of Current Law/CBO Discretionary Baseline, FY 2016 Budget Resolution, and President's Budget

($ in billions)

Defense:

BCA/CBO Baseline* Budget Resolution President

Non-Defense:

BCA/CBO Baseline* Budget Resolution President

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025

$521 $521 $522 $492 $492 $506 $523 $523 $561 $493 $493 $526 $536 $536 $573 $504 $477 $535 $549 $549 $584 $516 $478 $545 $562 $562 $592 $530 $487 $554 $576 $576 $598 $543 $495 $559 $590 $590 $610 $555 $503 $570 $605 $623 $622 $569 $509 $582 $620 $636 $635 $583 $515 $595 $635 $649 $648 $598 $521 $608 $651 $662 $661 $613 $527 $620

*CBO baseline figures as reflected in House Budget Resolution

BCA still the law of the land

• • Mandatory sequestration occurs on October 1 for covered programs – FY 2016: -6.8% for non-defense – e.g., SSBG, PSSF, highway spending outside the obligation limitation Discretionary sequestration built into the caps

Budget Resolution Process

Divergent paths create problems

Non-Defense Discretionary Spending under FY 2016 Budget Resolution, President's Budget, and Current Law/CBO Baseline

$650 $625 $600 $575 $550 $525 $500 $475 $450 $425 $400

$506 $478 $620 $613 $527

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 BCA/CBO Baseline*

*CBO baseline figures as reflected in House Budget Resolution

Budget Resolution President

Differences of magnitude, not direction Appropriations Subcommittee

Agriculture Commerce-Justice-Science Defense Energy-Water Financial Services Homeland Security Interior-Environment Labor-Health and Human Services-Education Legislative Branch Military Construction State-Foreign Operations Transportation-Housing and Urban Development

TOTAL 302(b) Sub-allocations, FY 2016 ($ in billions) FY 2015

$20.6

FY 2016 House

$20.7

Senate

$20.5

50.1

490.2

34.2

21.8

39.7

51.4

490.2

35.4

20.3

39.3

51.1

489.1

35.4

20.6

40.2

30.4

156.8

4.3

71.8

40.0

53.8

$1,013.7

30.2

153.1

4.3

76.1

40.5

55.3

$1,016.6

30.0

153.2

4.3

77.6

39.0

55.6

$1,016.6

Change from FY 2015 House

0.2%

Senate

-0.4% 2.5% 0.0% 3.5% -7.1% -0.9% 1.9% -0.2% 3.4% -5.7% 1.3% -0.8% -2.4% 0.0% 5.9% 1.3% 2.7%

0.3%

-1.3% -2.3% 0.2% 8.0% -2.5% 3.4%

0.3%

The most progress in years

Appropriations Subcommittee

Agriculture Commerce-Justice-Science Defense Energy-Water Financial Services Homeland Security Interior-Environment Labor-HHS-Education Legislative Branch Military-Veterans State-Foreign Operations Transportation-HUD

Approval Status of FY 2016 Appropriations Level

House House House House House House

House

Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee

Veto?

* X X X * * X * * X * X

Senate Level

Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee Full Committee Note: X = specifically threatened with veto *The Office of Management and Budget has stated that it would recommend that the president veto any legislation "that implements the current Republican budget framework."

Veto?

* * X * * * * * * * * *

How do major program areas fare?

Federal Agency Agriculture Education HHS HUD Energy/EPA Justice Homeland Security Labor Transportation

Total – Discretionary ($ in millions)

FY 2015 $6,902 36,547 26,714 42,269 2,599 1,255 1,482 6,066 55,568

179,614 Proposed FY 2016 vs.

FY 2015

President House 0% 6% 5% 8% 0% 1% 1% 10% 29%

13%

-2% -4% -2% 3% -22% 6% 0% 0% -0%

-1%

Senate -1% -2% -1% 2% -20% -3% -1% -4% -1%

-1%

There’s always a “but”

• • • • OMB recommends a veto of any legislation “that implements the current Republican budget framework” CR all but certain A new budget deal to amend the BCA?

– Changes to mandatory programs?

Focus on timing: a mid-December convergence?

All’s quiet on the reconciliation front

Committee

Education-Workforce Energy-Commerce Ways and Means

TOTAL Reconciliation Directives in FY 2016 Concurrent Budget Resolution ($ in millions) House Savings/10 years

$1,000 1,000 1,000

$3,000 Senate Committee

Finance Health, Education, Labor, Pensions

TOTAL Savings/10 years

$1,000 1,000

$2,000

• • • Ambitious agenda gave way to “replace ACA, deal with King v. Burwell” July 24 deadline came and went Project creep?

Must do: surface transportation

• • • Short-term: Extend HTF, surface transportation programs (expire 10/29/15; HTF solvent through 2015) Long-term: Reauthorize programs for multiple years (Senate passed 6-year reauthorization; House plans to release bill in the fall) Expect another short-term extension…until mid-December?

ESEA reauthorization on the move

• Heading to conference. Issues: – Title structure – Authorized spending levels – Title I portability – Title I formula change in Senate – Title II formula change in House/Senate – MOE requirements – Eliminated and added programs – See www.ffis.org

for full coverage

ESEA money is in formula grants

ESEA formula money is in Title I

Program

Title I Grants to LEAs Improving Teacher Quality State Grants 21st Century Community Learning Centers Impact Aid, Basic Support Payments English Language Acquisition State Grants

Five Largest ESEA Programs ($ in thousands) FY 2015 Funding

$14,409,802 2,349,830 1,151,673 1,151,233 737,400

Cumulative %

62.9% 73.1% 78.1% 83.2% 86.4%

Title I drives $14.4B

Potential Winners, Losers Under Senate Title I Changes

(based on CRS estimates of earlier draft of amendment)

Winners

Utah Oklahoma Colorado North Carolina Tennessee Alabama Florida Texas Arizona South Dakota

Losers

New York Illinois Pennsylvania Maryland Massachusetts New Jersey Connecticut Ohio Louisiana Virginia

Title II drives $2.3B

Winners and Losers Under House and Senate Title II Changes Winners

Nevada Arizona North Carolina Utah Georgia Colorado

House Losers

West Virginia Puerto Rico New York Louisiana Michigan Pennsylvania South Carolina Tennessee Florida Texas Mississippi Massachusetts Kentucky Connecticut

Winners

Nevada Arizona North Carolina Georgia South Carolina Tennessee Florida Texas Utah Arkansas

Senate Losers

West Virginia New York Pennsylvania Michigan Connecticut Massachusetts Maryland Louisiana Minnesota Wisconsin

Will the debt limit wreak havoc?

• • • • Current estimate: end of CY 2015.

Will budget deal/CR/HTF be added to the mix?

Will reductions to mandatory programs be on the table?

These events always pose a risk to the economy, state tax revenues.

Other Issues/Deadlines

• • • • • • • TANF reauthorization (9/30/15; House discussion draft) Child welfare financing (Senate discussion draft) Older Americans Act (Senate passed) Child nutrition (9/30/15 for some; no action) PILT/SRS (9/30/15) AIP (9/30/15) Tax extenders (for CY 2015)

Take-aways

• • • • • • Appropriations: CR for sure, budget deal possible, conflict certain Reconciliation: delayed, and president must sign Surface transportation: short-term fix, long-term problem ESEA: optimism abounds Debt limit: poses the greatest risk for mayhem Focus on mid-December

Questions?

• Check for updates at www.ffis.org

[email protected]

202-624-5848