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 Ellersonnellerson@aasa.org

Sasha Bartolfsbartolf@aasa.org

Kelly Pollittkpollitt@neasp.org