Federal

K-12 Aid Forecast Still Hazy Despite Fiscal Cliff Deal

By Alyson Klein — January 08, 2013 5 min read
President Barack Obama and Vice President Joe Biden leave the podium after the president made a statement about passage of a deal on the so-called fiscal cliff that includes a postponing until March 1 a series of across-the-board federal funding cuts, including to domestic programs such as education.

Federal education programs have a temporary reprieve from what would have been the biggest spending cuts in recent history, but they still face a murky funding forecast under the measure enacted last week to deal with the so-called fiscal cliff.

The agreement reached by Congress and signed by President Barack Obama would postpone until March 1 a series of across-the-board cuts set to hit a broad swath of programs, including aid for K-12 education. The legislation gives lawmakers time to work out a more sweeping budget agreement, but essentially sets up yet another major fiscal fight in the coming two months.

Congress will need to come up with new legislation to cope with the cuts—known in Washington political circles as “sequestration”—by March.

That could involve a fresh threat of domestic-spending cuts, which, in turn, could put education programs back on the chopping block.

The fiscal-cliff deal is “sort of like a temporary stay of execution,” said Joel Packer, the executive director of the Committee for Education Funding, a lobbying coalition of 80 education groups based in Washington. “We’re hoping we get pardoned. .... It just creates sort of another cliff two months from now.”

What’s more, the federal government is operating under a temporary budget, called a continuing resolution, which expires at the end of March. Lawmakers will have to figure out a final budget for fiscal year 2013, which began Oct. 1, or face the prospect of a government shutdown.

To top it off, the nation has hit the federal debt ceiling, meaning the government will need new legislation to be allowed to borrow more money—and keep agencies and programs in business. A measure to deal with that issue will also need to be approved in the next couple of months.

Education advocates fear the next debt-ceiling debate may result in more turmoil, since it was the last deal to raise the debt ceiling, back in August 2011, that put sequestration in play.

While lawmakers in both parties have voiced alarm over the threatened sequestration cuts, which would hit defense as well as domestic programs, some Republicans have said they oppose raising the debt ceiling without reducing government spending.

Speaker of the House John Boehner, R-Ohio, at center, looks toward House Majority Leader Eric Cantor, R-Va., as they walk to a meeting at the Capitol on the fiscal-cliff issue.

“I kind of expect that for the next month or so, we’ll see lots of rhetoric without much movement,” said Michael Casserly, the executive director of the Council of the Great City Schools, a Washington-based coalition of large urban districts.

The final deal on the “fiscal cliff"—which included various tax provisions, such as a hike in the income-tax rate for high earners, along with the postponement of sequestration—was approved by Congress on New Year’s Day. Action came after a host of tax cuts had already expired, and just hours before the country might have begun feeling the economic impact of tumbling over the cliff. Education and other domestic programs would have been cut by 8.2 percent.

Down to the Wire

The compromise measure was crafted at the 11th hour by Vice President Joe Biden and U.S. Sen. Mitch McConnell, R-Ky., the Senate minority leader, after negotiations between President Obama and Speaker of the House John A. Boehner, R-Ohio, sputtered to a halt.

The legislation received overwhelming bipartisan supporting the Senate, where it was approved 89-8 in the wee hours of Jan. 1. It ran into trouble in the GOP-controlled House, which ultimately approved it 257-167 late that night.

Nearly every House Democrat voted for the bill, while 85 Republicans supported it. Sixteen Democrats and 151 Republicans voted against it.

Jason Glass, the director of the Iowa education department, commended Congress on reaching a bipartisan accord, but added that “striking a celebratory tone may be premature.”

“In the days ahead, all sides will need to continue to work together,” he said, “to avoid catastrophic reductions in services to some of the nation’s neediest children: those with disabilities and those living in poverty.”

For now, school districts, some of which have already begun working on their budgets for the coming academic year, are being careful not to count too much on future federal funding.

“We will err on the conservative side, no doubt,” said Chris Gaines, the superintendent of the 1,500-student Wright City R-II district on the suburban fringe of St. Louis.

His district, he said, is just beginning to get out from under the “Great Recession” and would have a tough time absorbing cuts, particularly to special education.

Fiscal Forecast

The 2014 fiscal year could prove to be even more difficult than the current one, Mr. Packer of the Committee for Education Funding said, in part because of the reduced domestic spending in the fiscal cliff budget agreement, which calls for $6 billion in domestic discretionary cuts in order to help pay for postponing sequestration, and in part because the Pell Grant program, which helps low-income students cover the cost of college, continues to eat up a big share of education funding.

That program, which is exempt from sequestration, faces a structural deficit, in part because of higher demand for the grants as more students enroll in postsecondary education.

If the sequestration cuts do end up going through in March, most school districts wouldn’t feel the pinch until the start of the 2013-14 school year, because of the way that key programs, such as Title I grants for districts and special education aid, are funded.

But other programs, such as the Head Start preschool program for low-income children, which is administered by the U.S. Department of Health and Human Services, would be cut right away.

And the $1.29 billion impact-aid program would feel the sequestration sting in April, when districts receive their next payments. The program helps districts with lots of federal land or facilities, such as military bases, make up for lost tax revenue.

Still, there are some bright spots for education in last week’s deal.

Certain tax provisions, including the American Opportunity Tax Credit, which helps families pay for college, were extended. The agreement likewise extended a revamped version of the child tax credit, which aims to better help low-income parents cover the cost of caring for their families.

And it included an extension of the Qualified Zone Academy Bond program, which helps cover the cost of fixing schools, as well as a tax credit that helps teachers buy supplies for their classrooms.

A version of this article appeared in the January 09, 2013 edition of Education Week as K-12 Aid Outlook Murky, Despite ‘Cliff’ Deal

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