Transcript The Budget Control Act of 2011: Knowns and Unknowns NASBO Annual Meeting St.

The Budget Control Act of 2011:
Knowns and Unknowns
NASBO Annual Meeting
St. George, UT
August 9, 2011
Federal Funds
Information for States
Overview: BCA of 2011
Three components with potential to affect future
funding for state grant programs:
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Discretionary spending caps w/adjustments
Joint Select Committee on Deficit Reduction
Sequestration process
Other components of interest:
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Debt limit, program integrity, higher education programs,
balanced budget amendment.
Discretionary Spending Caps
Discretionary Spending Limits Under Budget Control Act of 2011*
($ in billions)
Security**
Non-Security
Total
Dollar change from previous year
Percent change from previous year
FY 2010 FY 2011 President
$683 $689
$719
$402 $361
$397
$1,084 $1,050 $1,116
-$34
-3.2%
FY 2012
House Agreement FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
NA
$684 $686
NS
NS
NS
NS
NS
NS
NS
NS
NA
$359 $361
NS
NS
NS
NS
NS
NS
NS
NS
$1,019
$1,043 $1,047 $1,066 $1,086 $1,107 $1,131 $1,156 $1,182 $1,208 $1,234
$66 -$31
6.3% -2.9%
-$7
-0.7%
$4
0.4%
$19
1.8%
$20
1.9%
$21
1.9%
$24
2.2%
$25
2.2%
$26
2.2%
$26
2.2%
*Figures exclude funding for overseas contingency operations
**Security spending consists of spending from within the departments of Defense, Homeland Security, VA, National Nuclear Security Administration, intelligence community management, and
budget function 150 (international affairs).
Sources: FY 2012 budget for FY 2010 and FY 2012 President; House Budget Committee website for House FY 2012; NGA for FY 2011
$26
2.2%
Joint Select Committee on Deficit
Reduction
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12 members: 3 from each chamber, party
Identify 10-year deficit reduction of at least $1.2
trillion through any means.
November 23, 2011 deadline for recommendations,
December 23 for congressional vote.
Approval would permit dollar-for-dollar increase in
debt limit, up to $1.5 trillion.
Sequestration
Automatic ATB cuts if joint committee process fails to
produce at least $1.2 trillion in deficit reduction.
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Split evenly between defense, nondefense.
Includes mandatory spending with several exceptions.
Effective in January 2013 for FY 2013 and beyond.
Medicare cuts capped at 2%.
Different application of ATB cuts in FY 2013 versus
future years.
Increases in the Federal Debt Limit
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President can request $900 billion now, of which
$400 billion is immediately available and
remainder becomes available absent a joint
resolution of disapproval.
With adoption of $1.5 trillion in deficit reduction
or a balanced budget amendment, president can
request an additional $1.5 trillion.
Absent those benchmarks, president can request
$1.2 trillion, also subject to disapproval.
Program Integrity
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Spending for program integrity efforts in Social
Security, health care are outside discretionary
caps.
Goal is to reduce net federal spending by targeting
overpayments for benefits.
Applies to SSA for SSI, DI and to HCFRA for
Medicare, Medicaid, CHIP.
Changes to Education Program
• Increases funding for Pell Grants.
• Eliminates subsidized loan program for
graduate students.
• Eliminates loan repayment incentives.
Balanced Budget Amendment
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•
After September 30, 2011, and before December
31, 2011, House and Senate required to vote on
joint resolution proposing a balanced budget
amendment.
Adoption would allow increase in debt limit to
$1.5 trillion.
Impact on States

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FY 2012 looks relatively benign from a
technical/budget perspective, but politics can be
tricky.
FY 2013+ hinges on joint committee
– If it succeeds, what will it recommend?
– If it fails, how will ATB cuts be applied to
individual programs?
The End
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