As New Rules for Budget Take Effect, Educators Unable To Predict Outcome

By Mark Pitsch — February 27, 1991 4 min read

Washington--This year’s wrangle over the federal budget will be like no other in recent memory, and education advocates say they are unable to predict the outcome.

While reining in the federal deficit was previously the task faced by the Congress and the White House, their 1990 budget agreement changed the ground rules. What matters this year is how much they spend.

Exceeding the agreed-upon spending guidelines would lead to a funding cut, known as a “mini-sequester,” in the offending budget area instead of across all categories as was standard practice in the past.

Federal receipts will continue to exceed spending through the life of the five-year agreement, but by limited amounts, if the Congress abides by the rules.

The idea is that temporary conditions causing the deficit to balloon--the Persian Gulf war, the savings-and-loan bailout, and the recession--will fade. The $327-billion deficit for the fiscal year that began Oct. 1 will then become a surplus of $19.9 billion in fiscal year 1996, according to the budget plan, which was approved along with the 1991 budget.

“This is not merely changing the chairs on the Titanic,” Stanley E. Collender, a budget analyst with the accounting firm Price Waterhouse, told a group of education lobbyists recently. “This is a whole new ship.”

“The deficit can go through the roof and the process doesn’t give a damn,” Mr. Collender said.

Three Budget Categories

The Budget Enforcement Act of 1990 has divided the budget into three categories--defense, international, and domestic--and capped them at various funding levels. For the first three years of the budget deal, or through fiscal 1993, the Congress will be unable to transfer money from one category to another.

For example, if the Congressional budget comes in below the $291.4 billion allotted for defense spending for fiscal 1992, the Congress cannot use the amount saved for education.

The non-transfer provision “means we won’t get a ‘peace dividend,”’ said Susan Frost, executive director of the Committee for Education Funding, an umbrella group that lobbies on behalf of education organizations.

Until the onset of the military buildup in the Middle East, some budget analysts had hoped the thawing of the Cold War would result in more money for domestic programs.

But now any boost in spending for a domestic program must correspond with the elimination or reduction of other domestic programs. Such reductions would likely come from programs funded under the same bill as the program getting a boost.

As Mr. Collender put it: “It’s not just what you want and how much. It’s who else is trying to get what and how it’s going to be paid for.”

Although education lobbyists here have looked disparagingly at the rules governing the spending caps, Ms. Frost noted that the cap for domestic spending has increased by $17.2 billion, from $182.9 billion in the current fiscal year to $200.1 billion for fiscal 1992.

It is unclear how much of that money will be available for the Labor, Health and Human Services, and Education appropriations subcommittees in fiscal 1992, Ms. Frost said. That, she said, probably will not be known until the House and the Senate pass budget resolutions. The resolutions will provide a blueprint for next year’s spending.

“We are assuming, until we are told differently, that there is room for the commitment to education that we saw last year,” Ms. Frost said.

“It makes no sense to fight [against] health research or infant mortality or the [Women, Infants, and Children] program,” she added. “The idea is to make Labor-HHS more of a priority.”

‘Mini-Sequester’ Provision

The new rules also aim to cut off an escape route that had been popular in the past. If supplemental appropriations enacted outside the regular budget process cause a category to surpass its cap, a “mini-sequester” takes effect in that category.

If supplemental appropriations are enacted after June 30 of the fiscal year, those amounts are sliced from the following year’s spending cap.

Last fall’s budget agreement also calls for restrictions on spending for mandatory programs. Creation of a new entitlement or the expansion of an existing one must be offset by a tax increase or reductions in entitlement spending elsewhere.

This is known as pay-as-you-go spending, and it holds true for tax cuts as well. Violations of this rule prompt a mini-sequester among non-exempt entitlements.

The guaranteed-student-loan programs are the only educational entitlements, and are not exempt.

In fiscal 1994, the President can initiate a move back to the Gramm-Rudman-Hollings rule, which mandated across-the-board cuts if deficit targets were not reached.

If the process adopted in the Budget Enforcement Act holds, however, federal spending in all three broad categories will be lumped together for 1994, and the Congress will not be barred then from reducing funding in one category to increase it in another.

The act, which has survived one repeal opportunity, is subject to suspension in the event of a declaration of war or if the economy has two consecutive quarters of negative growth. Such suspensions are not automatic.

President Bush on Feb. 4 released a $1.45-trillion budget proposal, which includes $29.6 billion for Education Department programs. (See Education Week, Feb. 13, 1991.)

A version of this article appeared in the February 27, 1991 edition of Education Week as As New Rules for Budget Take Effect, Educators Unable To Predict