Understanding the Federal Budget and its Implications for Adult Education
1. 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
2. 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.
5. Mandatory v. Discretionary
• Mandatory spending • Discretionary spending
occurs automatically must be ―appropriated‖
once authorized. each year.
• Like your rent or • Like buying clothing,
mortgage, health groceries, or a
insurance, phone bill. computer.
• Includes Social • Includes adult
Security, Medicare, education, job training,
Medicaid, SNAP. health research, military
spending, disaster relief.
Debt Ceiling limits total government borrowing
6. How Did We Get Here?
Sequestration
(March 2013)
American • Has a multi-
Taxpayer year
Supercommittee Relief Act (Jan impact, with
Failure 2013) greater hits in
Budget Control (November subsequent
• Delayed
Act (August 2011) sequestration years.
2011) • Set off $1.2T in to March 1, • Will cut
• Increased debt cuts over the 2013. approx. 5 %
limit. next 10 years • Raised taxes across-the-
(“sequestration”) on high- board in
• Established
into motion to income discretionary
budget caps.
occur January 1, earners. spending.
• Reinforced by
supercommittee 2013. • Did not extend
and the payroll tax
sequestration. cut.
9. Adult Education Has Already Taken Budget
Hits – Enrollment Declines Following
$750 3.00
Enrollment by Program Year (in millions)
(in millions of constant dollars)
$700
2.50
$650
$600 2.00
Funding
$550
1.50
$500
$450 1.00
$400
0.50
$350
$300 0.00
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Federal WIA Title II Adult Education Funding
One-Time Adjustment made for underpayment between 2003 - 2008
Enrollment
10. 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.
11. More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
(April 15--
“no Fiscal Year
Sequestration budget, no 2014 Begins
(March 1) pay”) (October 1)
FY13 Debt
Continuing Ceiling
Resolution Reached
(March 27) (May 18)
12. 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
13. 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.
14. More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
(April 15--
“no Fiscal Year
Sequestration budget, no 2014 Begins
(March 1) pay”) (October 1)
FY13 Debt
Continuing Ceiling
Resolution Reached
(March 27) (May 18)
15. 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).
16. More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
(April 15--
“no Fiscal Year
Sequestration budget, no 2014 Begins
(March 1) pay”) (October 1)
FY13 Debt
Continuing Ceiling
Resolution Reached
(March 27) (May 18)
17. 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.
18. More “Deadlines” Approaching…
House and
Senate
Budget
Resolutions
(April 15--
“no Fiscal Year
Sequestration budget, no 2014 Begins
(March 1) pay”) (October 1)
FY13 Debt
Continuing Ceiling
Resolution Reached
(March 27) (May 18)
19. Debt Ceiling – May 18
• Unlikely to result in political stalemate due to
reasonable increase in January 2013.
20. 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.
21. Keep in touch!
Marcie Foster
mwmfoster@clasp.org
Jackie Taylor
jackie@jataylor.net
Notes de l'éditeur
- Ryan budget cuts 1.4T in discretionary spending over 10 years, Medicaid, Medicare, adult education, TANF spending, etc.
http://www.calculatedriskblog.com/2013/01/thoughts-on-budget-deficit.html Thisgraph shows revenue and outlays as a percent of GDP. Clearly, in fiscal 2012, the government had BOTH a revenue and spending problem. Both revenue and spending have been impacted by the great recession, and are slowly recovering.There was also a structural deficit starting in fiscal 2002, and even during the housing boom, revenue was below outlays. So the recent low level revenue was due to both cyclical and structural reasons.In fiscal 2013, revenue will increase due to the payroll tax increase, an increase in the tax rate on high income earners, and an improving economy. Spending will probably decrease as a percent of GDP due to some spending cuts and an improving economy.The sooner deficits are cut, the less debt that will be accumulated—but also the greater the drag on economic activity over the next few years. Indeed, several provisions of current law that are bringing down the deficit will weaken output and employment this year.
- This is just to show that the proportion of the budget that many of the budget proposals are addressing is a small fraction of our total federal spending. While Congress and the President have made previous statements about addressing entitlement issues, there is essentially a political firewall around that set of issues.
Budget Control Act (August 2011)Sequestration was created as part of the Budget Control Act of 2011, which ended that year's showdown over raising the federal debt ceiling. BCA called for the creation of a deficit reduction plan developed by a supercommittee. Upon the failure of that committee, the Budget Control Act calls for $1.2 trillion in automatic spending cuts over the next decade, divided equally between defense and "non-defense discretionary" programs.Policymakers crafted the Act with the expectation that these indiscriminate cuts would be so devastating that lawmakers would be forced to come to the table before they would take effect and hammer out another, longer-term deal to responsibly get the government's fiscal house in order.The BCA also created budget “caps” which we’ll talk about in the next slide. These are yearly caps for 10 years over which the approrpriations process cannot appropriate funds.Supercommittee failure (November 2011)To no one’s surprise, the supercommittee was unable to come to an agreeement on a deficit reduction plan. This kicked in sequestration, which was set to occur January 1, 2013.ATRA (January 2013)Delayed sequestration to March 1, 2013.Raised taxes on high-income earners.Did not extend the payroll tax cut.Lowered the sequestration target figure for FY13 (fewer months out of the year)SequestrationSEE: http://www.cbpp.org/cms/index.cfm?fa=view&id=3910
The Budget Control Act (BCA) of 2011 imposed caps on discretionary programs that will reduce their funding by more than $1 trillion over the ten years from 2012 through 2021, relative to the Congressional Budget Office (CBO) baseline from 2010. It also established a Joint Select Committee on Deficit Reduction to propose legislation reducing deficits by another $1.2 trillion over that period, and established a backup “sequestration” procedure to increase the incentive on the Joint Committee to reach a compromise. Because the Joint Committee failed to achieve its goal, sequestration — a form of automatic cuts that apply largely across the board — is now scheduled to occur starting in January 2013 and to cover the period through 2021.The sooner deficits are cut, the less debt that will be accumulated—but also the greater the drag on economic activity over the next few years. Indeed, several provisions of current law that are bringing down the deficit will weaken output and employment this year.
FY13: $564m in basic grants to states for PY14 since adult education is advance-funded.
- For discretionary programs, the supercommittee sequestration works very differently after 2013. Instead of Congress enacting appropriations bills at levels that do not breach the existing discretionary caps and the President then ordering an across-the-board sequestration of the funding provided by those bills, the law requires that the sequestration of discretionary programs be implemented up front through reductions in the defense and non-defense discretionary caps themselves. Policymakers then determine how to live within those reduced caps. Essentially, after 2013, there are no automatic, proportional cuts of affected discretionary programs; instead, the Appropriations Committees (and then, more broadly, the President and Congress) decide how to fund discretionary defense and non-defense programs within the newly reduced funding caps.Specifically, in each year from 2014 through 2021:The $109.3 billion sequestration amount is divided evenly between defense and non-defense: $54.7 billion for each category.The defense sequestration comes almost entirely from discretionary defense funding, with only a tiny amount from mandatory defense funding.For the non-defense sequestration, the first step is to calculate the 2 percent cut in Medicare payments to providers and health insurance plans. Because Medicare costs are projected to rise from 2013 through 2021, the dollar amount saved by this 2 percent cut will increase each year, from $11.1 billion in 2013 (see Table 4) to $11.6 billion in 2014 and ultimately to $18.2 billion in 2021 (see Table 6).[19]In each year from 2014 through 2021, the remaining amount of the $54.7 billion in annual non-defense cuts will be applied proportionally to: a) the statutory cap on overall NDD funding, and b) other non-exempt mandatory programs.[20] Because Medicare will account for a growing share of the $54.7 billion annual non-defense cut — 21 percent in 2014, rising to 33 percent in 2021 — other non-defense programs will absorb a falling share of the cut, as Table 6 shows.