Advocates Raise Concerns on Looming ‘Sequester’ Cuts

Education advocates and the Obama administration are anxiously eyeing a series of across-the-board cuts set to hit a broad swath of federal domestic and military spending programs early next year, unless a sharply divided Congress can agree on a long-term plan to put the nation’s fiscal house in order.

Most education lobbyists expect such a deal will prove elusive in the months leading up to the November elections, making the prospect of looming cuts in education and other programs a potentially volatile issue in the congressional and presidential campaigns. Congress then might have to scramble to reach an agreement on averting the cuts in a lame-duck session right after the elections.

For now, the administration is making the case that lawmakers should spare education from cuts that the Congressional Budget Office has estimated at up to 7.8 percent of the U.S. Department of Education’s budget, which is $68.1 billion in fiscal 2012. The proposed cuts would “put at risk all that we’ve accomplished in education and weaken programs that help children,” Secretary of Education Arne Duncan told lawmakers at a recent hearing of the Senate panel that oversees education spending.

Education groups have warned that cuts of that magnitude could translate into tens of thousands of job losses for the field. Estimates on the depth of the cuts vary, and the administration hasn’t yet specified an exact percentage.

The threat of automatic cuts—known in Washington as “sequestration” because the money would be held back, or sequestered, by the U.S. Treasury instead of being distributed to federal agencies—was put in place last summer to force long-term action from Congress as part of a deal to raise the federal debt ceiling.

The presidential and congressional elections could prove critical to the outcome, said Joel Packer, the executive director of the Committee for Education Funding, a lobbying coalition.

Mitt Romney, the presumptive Republican presidential nominee, has said he would like Congress to enact a short-term deal so that he can help come up with a longer-term spending plan if he’s elected. President Barack Obama has put forth a budget that would largely seek to avert the cuts with a mix of other reductions and tax increases; that plan has gone nowhere in Congress.

“Everybody agrees these are senseless cuts, they’re harmful cuts, but they are the law—they will happen unless Congress does something,” said Mr. Packer, referring to the overall package of cuts. “I do think it’s starting to become a campaign issue.”

Deficit Wrangling

The prospect of automatic cuts to both domestic and defense programs was intended as a kind of doomsday scenario to push bipartisan action on a long-term plan to rein in federal spending. But so far, Congress has failed to reach agreement. Now that the Jan. 2 effective date for the “trigger cuts” is drawing closer, education advocates are beginning to sound the alarm bells.

In his July 25 testimony, Secretary Duncan told members of the Senate panel that oversees education spending that Title I grants to school districts—the $14.5 billion program that helps cover the cost of educating disadvantaged students—could lose as much as $1.1 billion, assuming the program receives as much money in fiscal year 2013 as it did this fiscal year.

And special education state grants, which go out to nearly every district in the country, could be cut by $900 million, out of a roughly $11.6 billion program, he said.

Some other education programs, such as Pell Grants to help low-income students attend college, would be exempt from the cuts.

But some experts are skeptical that the cuts would have a dramatic impact on district finances. Given that the federal share of education funding is only about 10 percent nationwide, the cuts wouldn’t be likely to lead to drastic changes for most districts, said Michael Griffith, the senior school finance analyst for the Education Commission of the States, based in Denver.

Overall, a 7.8 percent cut in current spending, as estimated by the CBO, would not equal 1 percent of all school spending nationally, said Mr. Griffith.

“For overall school funding, it would not mean much,” he said.

Still, he said, the proposed reduction might be a bigger deal for individual schools and districts, particularly high-poverty districts in poor states, which tend to be more dependent on federal aid than the average.

“You’re going to see a range,” Mr. Griffith said. A wealthy district in Connecticut, for example, would be unlikely to feel much of an impact, while an underresourced district in New Mexico—which gets a larger share of its K-12 dollars from the federal government—would be likely to experience a bigger squeeze, Mr. Griffith said.

Districts Worried

Mr. Griffith said such automatic cuts would have had a much bigger impact last fiscal year, when state education budgets were still in the midst of the recession. Revenues have started to rebound, he said, meaning that fewer districts would have to cope with major state cuts on top of a potential federal funding cut.

Still, more than 90 percent of 1,060 district officials surveyed recently by the American Association of School Administrators, based in Arlington, Va., said they don’t think that their states are in any position to help them make up for lost federal funding.

And some districts say that recent cuts in their states will make it harder to cope with a federal funding squeeze, which they expect to hit special populations of students the hardest.

The trigger cuts “would substantially hinder our ability to provide some very important services to high-poverty students, Native American students, and students in special education,” Tim Mitchell, the superintendent of the 13,600 Rapid City, S.D., school district, said in an interview. His district just got hit by a 7 percent cut in state aid that’s set to rise to more than 8 percent in the future.

If sequestration of federal funds happens on top of that, Mr. Mitchell expects to cut back professional development—and potentially eliminate positions.

Delayed Hit

Even though sequestration is set to hit just after New Year’s Day, the cuts to education programs that school districts depend on—including Title I grants to districts, special education, career and technical education, and state grants for teacher quality—wouldn’t make their way to districts until next July, meaning that they would have to be absorbed during the 2013-14 school year, according to a letter from the federal Education Department to chief state school officers.

District and state officials had initially worried the cuts could come in January—the middle of the coming school year. Some began making preparations. For instance, 54.1 percent of the district officials surveyed by the AASA said they had planned for sequestration in figuring out their budgets for 2012-13.

But just because the cuts wouldn’t come until the following school year doesn’t mean that district leaders aren’t worried.

“It’s a huge deal—and it’s a huge deal no matter when the cut comes,” said Benny Gooden, the superintendent of the 14,000-student Fort Smith, Ark., schools. The district gets about $10 million in federal Title I and special education money annually, on a budget of about $145 million.

And at least one program would feel the squeeze immediately: impact aid, a $1.27 billion program that helps districts with lots of federal land or facilities such as military bases make up for lost tax revenue.

Billy Walker, the superintendent of the 1,200-student Randolph Field Independent district in Universal City, Texas, told lawmakers at the Senate hearing last month that about half his district’s funding comes from federal programs, including impact aid. The proposed cuts could prove devastating, he said.

And Secretary Duncan singled out impact-aid districts in his testimony. The 41,000-student Killeen school district, also in Texas and the home to Fort Hood, would lose up $4.6 million in such aid if the cuts went through, he said.

“Military families make so many sacrifices for our country,” he told federal lawmakers. “They deserve a world-class education.”

Education advocates are especially worried that Congress may opt to spare the U.S. Department of Defense while continuing to cut aid for domestic programs. That could mean a 17.6 percent cut to domestic programs, including education, according to Sen. Harkin.

To spur Congress to action, a number of advocates have made projections about how many school jobs may be lost if the trigger cuts go through as planned. For instance, the 3 million-member National Education Association projects that more than 74,000 educators could be laid off if the cuts go through.

And a report by U.S. Sen. Tom Harkin, D-Iowa, the chairman of the Senate subcommittee that handles education appropriations, estimated at the July 25 hearing that the Title I cuts could lead to more than 15,500 lost jobs, and that reductions in special education state grants could lead to roughly 10,900 job cuts.

Skeptical View

But Sen. Richard Shelby, R-Ala., cast a skeptical eye on those projections.

“The report specifies job cuts across programs and states, yet we simply have too little definitive information to know if these numbers are accurate,” he said at the hearing. “The only thing we do know is that agencies, programs, and states will have some flexibility to determine how reductions are taken, and that all cuts will not necessarily lead to layoffs.”

And Sen. Shelby made it clear he doesn’t think the Education Department has done all it can to hold down costs. The department asked for an increase of about $1.7 billion for fiscal year 2013, on a budget of about $68.1 billion in the current fiscal year, he noted. Much of that extra boost would go to cover the Pell Grant program.

State education officials, meanwhile, are hungry for more information about how the cuts would be carried out. June Atkinson, the superintendent of public instruction in North Carolina, told senators at the hearing that states have a host of unanswered questions.

For instance, state schools chiefs want to know how the cuts would affect maintenance-of-effort rules, which require states to keep their own spending at a certain level in order to tap federal aid, said Ms. Atkinson, a Democrat. She also wanted to know whether states would be able to continue setting aside 4 percent of federal Title I money for school improvement purposes, while following federal rules for distributing Title I dollars.

“States need to know the complete picture,” Ms. Atkinson said. “I implore you to use your congressional authority to prevent sequestration, or at the very least require the administration to provide states with as much information as possible.”