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President's 2014 Budget Request Released; Increases Federal Education Spending

Published:  April 10, 2013

Today, President Obama released the first budget of his second term. The budget would increase overall appropriations funding for the U.S. Department of Education by about $3 million over 2012 levels, to $71.2 billion. It consolidates a number of programs and creates a few new ones -- including a broad new pre-K package.

The president’s budget comes two months behind schedule (by law, the budget request is due on the Hill in February), and both the House and Senate have already voted on budget resolutions for fiscal year 2014, although they haven’t yet agreed on a joint resolution. Still, the budget request acts as a weathervane, indicating the president’s priorities over the next few years. Below are a few of the highlights from this year’s budget request:

Early Education

  • The White House hopes to initiate a new early learning program, first outlined in February’s State of the Union address. States would partner with the federal government to receive $75 billion over 10 years to fund pre-K for 4-year-olds at or below 200 percent of the federal poverty level. A separate, $750 million investment next year would help states develop their early learning systems. Home visiting programs for infants and children would also be extended.

PreK-12

  • The Promise Neighborhoods program would receive $300 million in fiscal year 2014, up from $60 million last year. It would be incorporated into a new cross-agency “Promise Zones initiative, and a portion of the Promise Neighborhood funds would be reserved for Promise Zone awardees.
     
  • School turnaround grants would receive $659 million, up from $534 million in 2012. That includes a new, $125 million competition to expand schools’ capacity for reform.
     
  • As in prior budget requests, Obama included a proposal to reorganize teacher programs to a “teacher and leader innovation” fund and an “effective teachers and leaders” formula grant to states – the latter with a 25 percent set-aside for competitive grants. There would be a $100 million competition to design professional development programs for school leaders, as well as a one-time, $5 billion entitlement cost for the previously proposed RESPECT program. The White House also proposes another $12.5 billion in mandatory funding to prevent teacher layoffs – a legacy proposal since the stimulus legislation was passed in 2009.

Higher Education

  • The White House request moves Race to the Top out of the early learning and K-12 arenas and into the higher education world, with a $1.0 billion competition designed to develop higher education reforms while keeping costs low. It also significantly expands the request for an innovation-focused First in the World competition, funded at $260 million, which includes approximately $175 million for an evidence-based program (similar to i3), as well as $75 million to support competency-based education efforts Both competitions have been proposed before, but neither has received funding.
     
  • Student loan interest rates, which are scheduled to double on certain loans next year from 3.4 percent to 6.8 percent, would be moved to a market-based approach. Adapted from a proposal last year by New America’s Jason Delisle, the approach would tie rates to the 10-year Treasury notes. Subsidized Stafford loans would total the 10-year Treasury rate plus .93 percent; Unsubsidized Stafford loans would total 10-year Treasury rate plus 2.93 percent, and PLUS loans would be 10-year Treasury rate plus 3.93 percent.
     
  • Pay As You Earn, the latest version of income-based repayment for federal student loans, would be available to all borrowers, not just to those who borrowed in 2008 or later, and the loan forgiveness granted after 20 years of payments would be tax-free. The budget is silent on the issues we raised last year of windfall payments for high-debt, high-income borrowers, though, so we’ll be looking to the U.S. Department of Education to see how it plans to address those concerns.

We’ll be writing on these and many other topics in the budget request in the coming weeks, so check back with Ed Money Watch for more details.

 

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