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Fiscal Year 2013 Continuing Resolution Neglects to Address Sequestration

Published:  September 11, 2012

With fewer than two weeks left before Congress leaves Washington for a pre-election recess, lawmakers appear to have reached a deal to avoid a government shutdown that would have occurred October 1st absent a temporary funding bill.

Fiscal year 2013 begins on October 1, 2012, but Congress has so far failed to pass any of the dozen annual appropriations bills that will fund discretionary programs. In response, lawmakers appear set to adopt a six-month continuing resolution (CR) that will maintain virtually all discretionary spending at fiscal year 2012 funding levels, plus a 0.612 percent across-the-board increase. The House is expected to vote on the bill as soon as Thursday, with a Senate vote anticipated soon after.

The CR will provide federal education programs with the same appropriations levels they received in fiscal year 2012, plus a marginal increase. In 2012, the Department of Education received $68.3 billion in appropriations dollars. Under the CR, that will increase to about $68.5 billion. A new Congress will be responsible for passing the final fiscal year 2013 Labor, Health & Human Services, Education appropriations bill before the CR expires on March 27, unless lawmakers adopt a spending bill when they return in November for a lame duck session.

However, a separate dynamic in the federal budget process this year – sequestration – confuses the issue. The Budget Control Act of 2011, which set discretionary spending limits for fiscal years 2012 through 2021, also included a mechanism to automatically cut spending by $1.2 trillion over ten years if (and inevitably, when) the Congressional supercommittee established by the law failed to agree on cuts to current spending that exceeded that amount.

That mechanism, sequestration, requires the Office of Management and Budget to rescind about $39 billion of fiscal year 2013 funding across all non-defense discretionary spending programs in January 2013. Those cuts are supposed to happen in January 2013, at least two months before the CR expires. On the mandatory side of the budget (programs not subject to annual appropriations), about $11 billion in Medicare cuts and $5 billion in other cuts, including increases in origination fees for student loans, will also take effect. Pell Grants, some welfare programs, tax credits, and Social Security are exempt from these cuts.

Now that Congress has assigned funding levels to discretionary programs for fiscal year 2013, budget analysts will be able to make a more accurate prediction of the impact of sequestration on education and other programs. Current estimates from the Congressional Budget Office anticipate the cuts will be close to about 8 percent across-the-board for non-exempt programs in 2013.

Still, this is not the end of the line. Congress has until the New Year to pass legislation cancelling the sequester, or to at least postpone it. This could happen when members return to Capitol Hill after the November elections for a lame duck session.

But the CR doesn’t entirely ignore the impending sequestration. The bill states that each of the departments and agencies covered by the CR must submit to the House and Senate Appropriations Committee two reports. The first, within 30 days of enactment of the CR, will show program-level funding under the CR appropriations levels; the second, within 30 days of sequestration orders being issued (so, the end of January), detailing the changes to program-level funding as a result of the sequesters.

And on an incongruous note, the Secretary of Education is specifically named in the CR. Under the law, he will have to submit a report by the end of the 2013 calendar year to the Senate HELP and House Education and Workforce Committees. That report will list the proportions of students with disabilities, English language learners, rural students, and economically disadvantaged students taught by “highly-qualified teachers” as defined by the No Child Left Behind Act. The topic has been a controversial one in the Elementary and Secondary Education Act reauthorization negotiations, so the report may have been ordered to inform those debates.

Check back with Ed Money Watch for additional details on the 2013 budget process and sequestration.

 

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