Education Funding

Fiscal Cliff Watch: State Education Cuts Loom as Midnight Oil Runs Low

By Andrew Ujifusa — December 31, 2012 6 min read
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Cross-posted from the Politics K-12 blog

Only five days are left before the country falls off the “fiscal cliff.” While there’s been a lot of political posturing, Congress doesn’t seem close to figuring out how to cope with a series of planned tax hikes and spending cuts set to kick in early next year.

So what does that mean for education? Well, it means the automatic spending cuts that are set to hit just about every federal program, including most in the U.S. Department of Education, could go through, at least temporarily. For K-12 programs and Head Start, that would mean an across-the-board cut of 8.2 percent. The trigger cuts are known in Beltway-speak as “sequestration.”

Education isn’t alone here. The cuts would also hit a wide range of what’s called “discretionary spending,” including health, labor, criminal justice, and even military programs. (Way more about the cuts here.)

Congressional leaders are slated to head to the White House Dec. 28 to meet with President Barack Obama to see if a last-minute deal can be worked out.

It seems no one on Capitol Hill would be particularly happy to see sequestration—and planned tax hikes—come to fruition. In fact, earlier this year, lots of policymakers predicted sequestration wouldn’t happen, including President Barack Obama during a debate with Mitt Romney, his Republican rival. Way back in March, Rep. John Kline, R-Minn., the chairman of the House education committee, assured members of the Council of Chief State School Officers that sequestration was “set up to be so bad that it would never happen.”

And Sen. Tom Harkin, D-Iowa, who oversees the Senate panels that deal with both K-12 spending and policy, held a hearing earlier this year on the impact of sequestration on education. He’s still hoping that Congress can figure something out in the 11th hour.

“If fully implemented, across-the-board cuts to Head Start, Title I, special education, and other programs could have a devastating impact on students, their families, and the entire nation,” said Sen. Harkin in a Dec. 27 statement emailed to Education Week. “I continue to hope that we can avoid that outcome by reaching agreement on a balanced approach to deficit reduction.”

But that may be difficult. Leaders in the GOP-controlled House of Representatives and the Democratic-held Senate each point to legislation that they’ve already passed that would avert parts of the fiscal cliff, and say it’s the other side’s turn to act. Sen. Harry Reid, D-Nev., the Senate majority leader, said in a speech on the floor Thursday that he thinks the country is headed over the cliff. Later, however, Sen. Mitch McConnell, R-Ky., the Republican Senate leader, left open the possibility that a deal could still be reached. UPDATE: After a meeting at the White House on Dec. 28, Reid and McConnell agreed to work on legislation to avert the fiscal cliff—or at least some parts of it—by the end of the year. It remains unclear whether the looming education cuts would be dealt with in any potential agreement.

The good news for education:The biggest and most important K-12 programs—Title I grants for districts and special education state grants—are “forward funded.” That means schools won’t start to feel the squeeze until next school year, giving lawmakers time to work out a deal, if they aren’t able to come to one before the end of the year.

But there’s also bad news: For one thing, at least one K-12 program will face cuts much sooner, the $1.1 billion impact-aid program. That money goes to districts that lose out on tax revenue or have to spend extra money because of a federal presence, such as a military base, or a nearby Native American reservation.

Impact-aid districts are expecting their next payments in April, said John Forkenbrock, the executive director of the National Association of Federally Impacted Schools. If Congress hasn’t figured out a way to stop sequestration by that point, they’re going to get less money, he said. Most districts have planned for the possibility already, he said, or can draw on reserve funding, but the cuts would still be painful.

Another key education program, Head Start, the federal preschool program administered by the U.S. Department of Health and Human Services, also faces cuts early in 2013.

More bad news: Even though the cuts wouldn’t hit right away, states and school districts start planning their budgets in the spring, meaning that if lawmakers continue to drag their feet, states, districts, and schools may be in the dark about their federal funding, even as they try to figure out their spending plans for next school year.

And it isn’t going to be easy for states to absorb new cuts. Most of them are still struggling to rebound from the recent recession, even as they’re working to implement “critical reforms,” such as the new common academic standards and revamped assessments, said Adam Ezring, a senior advocate at the CCSSO.

“These cuts would be devastating to reform efforts already under way in states and districts,” he said. And it’s difficult to drive that home to policymakers, given the scope of the fiscal-cliff discussions, he added. “The issue of the fiscal cliff goes well beyond education,” he said. “Negotiations are occurring at the absolute highest levels. [Most lawmakers] are not intimately involved in discussions at this point.”

On top of that, the Obama administration hasn’t spelled out yet just how sequestration would work when it comes to “maintenance of effort,” which requires states and districts to keep up their own spending at a certain level in order to tap key federal sources of funding.

And the administration hasn’t been specific about what happens when it comes to another technical, but important requirement of the Title I program, which allows states to set aside 4 percent of Title I funding for school improvement activities, as long as they hold districts harmless (meaning, make sure they get the same amount of Title I funding as the previous year). States would be unable to set aside those funds under the proposed 8 percent cut, making it difficult to provide state level technical assistance and support to school improvement activities, Ezring said.

For a rundown of what cuts districts are facing, check out this analysis of reports by the American Association of School Administrators.

The worst news: This isn’t the last spending battle that Congress is facing by a long shot, said Joel Packer, the executive director of the Committee for Education Funding, a lobbying group, and an all-around edu-budget smarty pants. Congress still has to pass a final budget for fiscal year 2013, which began Oct. 1; right now, the federal government is operating on an extension measure that expires at the end of March.

So where did these sequestration cuts come from to begin with? In a nutshell, they were the result of a deal that allowed Congress to raise the debt ceiling back in the summer of 2011. And now, yet again, the nation will likely need new legislation—or some kind of other deal—to raise the debt ceiling early next year, according U.S. Treasury Secretary Timothy Geithner.

“That could be another big fight,” Packer said. “There’s almost an endless series of fiscal cliffs we’re facing; ... it’s just endless uncertainty for everybody.”

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A version of this news article first appeared in the State EdWatch blog.