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Post Supercommittee Failure: Back to 2008 Education Funding Levels?

Published:  November 29, 2011

Note: This post was updated December 12, 2011. The update clarifies that if Congress follows the scenario outlined below, it must still pass a law overriding across-the-board cuts mandated by the Budget Control Act. If not, the cuts will occur anyway on the already-reduced appropriations. (We thank the Center on Budget and Policy Priorities for suggesting the clarification.)

Here’s a simple (albeit imperfect) way to understand what the federal education budget will look like in 2013 now that the Joint Select Committee on Deficit Reduction (aka the supercommittee) has failed to reach an agreement on a ten-year, $1.2 trillion deficit reduction bill. Think of a shrinking pie. And think of it in 2008 size.

Yes, the Budget Control Act is set to impose a complicated across-the-board spending cut called “sequestration” in 2013 that will affect nearly all education programs. But even if Congress and the president don’t turn off sequestration (they could do so on any piece of legislation), these cuts aren’t likely to happen—at least not how people imagine them.

The across-the-board cuts are set to occur only a few months after the start of fiscal year 2013, so it is possible that Congress will set fiscal year 2013 funding without regard to the pending sequestration, and then watch that funding get cut January 2013. But that’s highly unlikely. Instead, Congress is more likely to front run the cuts when it draws up the fiscal year 2013 appropriations bills. That is, lawmakers will preempt the cuts by enacting fiscal year 2013 appropriations at the start of the fiscal year to what they will be after sequestration takes place. (Congress must, however, still pass legislation to turn off sequestration, otherwise it will still occur by law. If Congress does not act to do so, the across-the-board cuts would occur on top of the already-reduced appropriations bills.)

In other words, the supercommittee failure probably won’t so much retroactively cut funding as it will shrink the size of the overall pie for fiscal year 2013 appropriations. How much does the pie shrink? Congress will have $953 billion to divvy up across all agencies. That’s the same amount as in fiscal year 2008. It is a 9% cut from the still-unfinished fiscal year 2012 funding limit set in the Budget Control Act and a 14% cut from the fiscal year 2011 appropriations.

Education advocates will get to see the shrinking pie effect in action just two months from now. The fiscal year 2013 appropriations process starts in February 2012 when the president submits his budget request to Congress. And as stated above, the president will have to keep his appropriations proposal to just $953 billion. Any more than that and funding will be automatically cut by the sequestration formula a few months into fiscal year 2013. It would be silly for the president to propose one level of funding knowing that under current law it will be altered by a formula so full of exemptions and limits that is nearly impossible to know what ultimate funding level the president actually proposed for specific programs.

To be sure, the shrinking pie effect for non-defense programs won’t be quite as severe as it will be for defense programs. The Budget Control Act (the debt ceiling agreement that Congress passed in August) imposes a pre-determined uneven division of the $953 billion appropriations limit between defense and non-defense spending for fiscal year 2013. As a result, the law forces Congress to make “disproportionate” cuts to defense in the wake of the supercommittee failure. Because defense spending will be cut by a larger proportion, the non-defense portion of the $953 billion limit won’t go all the way back to 2008 levels. But it’s awfully close.

This is not to say, however, that education programs will automatically go back to something near 2008 funding levels. The president can still propose, and Congress will ultimately determine actual funding levels for all programs for fiscal year 2013. Nevertheless, the total pie from which funding will be divvyed up has shrunk. If lawmakers want to maintain or increase current year funding for education programs, other non-defense programs will be in for massive cuts. That won’t be a pretty fight.

For now, we’ll spare readers a rundown on fiscal year 2008 funding levels for specific education programs. Consider instead that the total appropriations budget for the U.S. Department of Education that year was $59 billion. In fiscal year 2011 it was $68 billion (excluding about $6 billion in “emergency” Pell Grant funding).

The supercommittee failure has ultimately put a big share of automatic deficit reduction on programs funded in the annual appropriations process (about a third of the federal budget) instead of making changes to entitlement programs (the other two thirds of the budget).

That should be a big incentive for Congress and the president to find other ways to achieve the $1.2 trillion in deficit reduction, even if the supercommittee is now defunct.

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