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JOINT BRIEFING: BUDGET & APPROPS Noelle Ellerson, AASA Kelly Pollitt, NAESP Overview FY 12 House Numbers Senate Numbers? Deal on Debt Ceiling and Deficit Reduction Balanced Budget Amendment The Perfect Storm LEAs continue to weather the unfortunate ‘perfect storm’ when it comes to funding: Ongoing effects of recession Cessation of ARRA and EduJobs Actual and anticipated cuts in annual federal appropriations for both FY11 and FY12 Districts and schools continue to make tough choices HR 1473, FY11 Appropriations Passed Long-Term CR that theoretically cuts $39 billion The House passed it 260-167 on April 14th (this year) 59 Republicans voted against HR 1473 108 Democrats voted against it 35 Tea Party caucus members voted for the bill and 21 against. Speaker Boehner was forced to get the support of Democrats - 81 House Democrats voted for it Senate passed it 81-19 April 14th (this year) Signed by President Obama April 18th FY11 • It may be wrapping up, but the politics and policies of FY11 budget discussions have STRONG implications for FY12 discussions. – • • • • • • Think: DC vouchers Record-setting series of 7 CRs, including precedent-setting CR cuts $38 billion below FY10 levels; includes $12 billion in reductions from previous CRs Labor, HHS section cut by $5.5 billion (3.36%) Includes 0.2% across-the-board cut Title I, IDEA, and REAP were level funded Administration priorities funded: Race to the Top receives $700 additional funding; Investing in Innovation receives $150 million, and Head Start receives $340 million Programs Eliminated in HR 1473 School Leadership Striving Readers Even Start Literacy Through School Libraries Education Technology State Grants Arts in Education Reading is Fundamental LEAP Byrd Honors Scholarships • • • • • • • Education Technology State Grants Javits Gifted and Talented Education Smaller Learning Communities Teach for America National Writing Project Close-Up Foundation Grants to Gulf States LEA’s HR 1473 Programs Cut (But Not Eliminated) Tech-Prep -$103 million Safe and Drug Free Schools National Programs -$79 million Teaching of Traditional American History -$73 million State CTE grants $31 million State Assessments -$20 million GEAR UP -$20 million English language Acquisition State Grants $15 million School Improvement Grants -$10 million Comprehensive Centers -$5 million Teacher Quality state Grants -$5 million ESEA Evaluation -$1 million FY12 • • • • FY12 budget proposal released Feb 14 (2012-13 school year) Despite tight economic times, including non-defense discretionary budget freeze, education receives historic increases Proposal includes massive restructuring in ESEA reauthorization Policy shift toward consolidation and competitive grants • • Elimination? Despite overall increases: – – Title I receives $300 million IDEA received a $200 million increase, falling to 16.5% instead of the promised 40% FY12 • • • • • • • • • House Chairman Ryan (R-WI) introduced his Plan for Prosperity Cuts the overall budget by $5.8 trillion over ten years. Non-security discretionary spending is but to pre-FY08 levels and would be frozen at that level for five years. Essentially, all of the 10-year reduction comes from cutting non-security discretionary spending. Specific details on cuts to education remain to be finalized. That said, I can give an unofficial summary of the Function 500 (education) issues within the resolution: Cuts discretionary funding for function 500 to the pre-2008 level of $80 billion for every year through 2020. For 2011, it cuts funding by $15.7 billion (16.7 percent). The cut deepens to 25 percent after 2011 and will translate into a cut of roughly $30 billion per year. Passed the House 235-193. While Democrats offered several alternatives, all were voted down. All Democrats opposed, as did four Republicans (Jones (NC), McKinley (WV), Paul (TX), and Rehberg (MT)). FY12 • • Full steam ahead. Sort of. Déjà vu? House is moving along like trains on a schedule. They anticipate moving 9 of the 12 appropriations bills before the August recess. – – • LHHS scheduled for markup July 26 The FY12 allocation for the LHHS is $18 (11.6%) billion below FY11 levels, $7 billion below HR 1 (3.9% below FY08 and roughly equal to the FY04 level). When adjusted for population and inflation, it’s even less than the FY04 allocation. Senate is a bit slow, but numbers are ready. – – Have yet to officially release a budget. Conrad details came out yesterday: $8 billion increase overall. Within that, Security takes $7 billion cut and non-security increases by $17 billion. The House-passed budget is a cut of $30 billion below FY 11, with defense going up $18 billion and non-security being cut $48 billion. Debt Ceiling Aug. 2 deadline If we have to start paying our interest, it is roughly $125 billion per month. The entire USED annual budget is $60 billion. If we default and interest rates go up ten percent, that costs roughly $130 billion over 10 years, or more than $1 billion per month. 1976 Case Study: Defaulted for Days, Paid Higher Interest for Years Debt Ceiling Conversations ongoing – meetings at White House daily Democrats want inclusion of revenue (taxes) Republicans want to cut spending Balanced Budget Amendment HJRes1: Constitutional Balanced Budget Amendment Requires balanced budget as soon as FY18 Caps spending at 18% of GDP Requires supermajority for any vote to increase taxes Passed out of committee (20-12) June 15 Up for vote this week! Balanced Budget Amendment – – – – – The last time overall spending was 18 percent of GDP was back in 1966, pre-dating ESEA, IDEA, Medicaid and Medicare. An absolute spending cap overlooks the realities of ever-growing programs like Medicare and Social Security. Even if growth is somehow slowed, there is still growth, leaving an ever-smaller slice for discretionary programs (like education). A proposal of this magnitude makes the House HR 1 budget proposal from this February look like a walk in the park. Requiring a balanced budget, no matter how the economy was performing, would force policymakers to cut spending and/or raise taxes just when the economy is weak or in recession--the exact opposite of good economic policy. The requirements of a 2/3 vote to raise taxes and limiting spending to 18 percent of GDP would prevent policymakers from closing even the most outrageous tax loop holes. Questions? Noelle Ellerson [email protected] Sasha Bartolf [email protected] Kelly Pollitt [email protected]