The coming fiscal cliff—the looming conversion of tax-break expirations and across-the-board budget cuts aimed at prodding a long-term federal deficit fix—has education advocates in Washington on overdrive.
The number-one question keeping organizations that represent school districts and educators up at night is whether Congress will be able to reach an agreement to head offa series of trigger budget cuts that will hit just about every federally funded education program on Jan. 2, unless Congress averts them by crafting a long-term agreement to curb the deficit. A number of K-12 programs, including Title I grants for districts and special education would be cut by 8.2 percent, although most districts wouldn’t feel the squeeze until next fall.
But there are many other issues in the fiscal-cliff debate that could affect K-12 schools, as lawmakers consider tax policy and changes to entitlement programs such as Medicare and Medicaid. Both President Barack Obama and U.S. Rep. John A. Boehner, the speaker of the House, have put forward plans to avert the cliff. Mr. Obama’s proposal closely mirrors his fiscal 2013 budget request, which provided a modest boost for the U.S. Department of Education, while Mr. Boehner has called for $300 billion in new spending cuts, without specifics on K-12. Mr. Boehner’s plan was rejected by the White House and congressional Democrats.
As federal lawmakers and the Obama administration confront the coming “fiscal cliff,” many educators are wondering how Washington’s decisions on taxes and spending might affect their schools.
What exactly is the fiscal cliff?
In a nutshell, it’s a perfect storm of federal tax and spending legislation that has to be dealt with quickly. A whole package of tax cuts, including the so-called Bush tax cuts, put in place under the previous president, are set to expire soon. Congress will have to figure out whether to extend them, and if so, which ones to extend. And, perhaps more important when it comes to education, across-the-board cuts are set to be triggered for just about every federal agency, including the U.S. Department of Education and the Pentagon, on Jan. 2. They will go into effect unless Congress acts to stop them.
Sequestration? What’s that? And how did it come about?
The sequestration trigger cuts were put in place as part of a deal to raise the debt ceiling in the summer of 2011. Lawmakers and the administration tried but failed to come up with a long-term solution for the nation’s debt problem. Instead of forging a deal, they set the clock ticking on those automatic cuts—which virtually no one likes—essentially to force themselves to act. The idea was that neither Republicans nor Democrats would be happy with the cuts, since they would hit both military programs (which Republicans especially favor) and domestic spending (which is typically supported by Democrats). Even though the cuts were never supposed to actually happen, lawmakers so far haven’t been able to come up with a long-term deal to head them off.
How would school districts be affected?
Most programs in the Department of Education would be cut by 8.2 percent, according to the White House Office of Management and Budget. That means federal money for disadvantaged students, now financed at $15.75 billion annually, would be cut by almost $1.3 billion. And special education programs, funded at $12.64 billion, would be cut by about $1.03 billion. It’s important to note that federal spending makes up less than 10 percent of all K-12 financing; the vast majority of the money comes from state and local sources. Still, many districts say they’re already squeezed and can’t cope with federal cuts on top of state and local reductions.
So will a district lose 8.2 percent of its federal funding on Jan. 2 if Congress doesn’t act?
Actually, no. Even if there is a stalemate on Capitol Hill, a district probably won’t lose money right away (unless it relies on the impact-aid program—more on that below). The big formula grants that school districts depend on most (Title I grants for disadvantaged students, special education, grants for teacher quality) are forward-funded. That means the cuts wouldn’t kick in until the start of the 2013-14 school year, giving districts a planning window.
Which districts should be really worried?
Some districts would be affected right away, some of them dramatically. Those districts are the ones that are in the impact-aid program, which serves some 1,200 districts nationwide that are affected by a large federal presence locally. Many impact-aid districts have a lot of Native American students or large numbers of parents who work on military bases. They would see their funding cut on Jan. 2. Some districts expect this will mean layoffs or programmatic cuts.
Are any programs exempt? And what about other programs that aren’t funded through the Education Department?
Some programs are exempt, including federal student loans, some Pell Grant money, most child-nutrition programs, and the Children’s Health Insurance Program. However, the Head Start program, which is funded through the U.S. Department of Health and Human Services, doesn’t appear to be exempt.
So if sequestration actually goes through, what about “maintenance of effort,” which requires districts or states to keep their own spending at a certain level in order to receive federal funds?
Advocates are still trying to get to the bottom of that one.
What does President Obama say? What are leaders in Congress saying?
Rep. John A. Boehner, the speaker of the House, put forward a plan that would call for $300 billion in spending cuts, although it is unclear just how much of that would come from education specifically. Administration officials met with GOP leaders in the House of Representatives and essentially put forward their fiscal 2013 budget proposal, which would include a spending boost for education. And Mr. Boehner, R-Ohio, has said he would be OK with some revenue increases, although he’d like them to come from closing tax loopholes and reducing tax deductions, not raising taxes on the highest earners, which is what the president wants to do. U.S. Sen. Tom Harkin, D-Iowa, who chairs the Senate appropriations panel that deals with education spending, has been outspoken about the potential cuts to K-12 and says he is really worried about their effect.
As the negotiations unfold, education organizations are watching every aspect closely.
“It’s not simply the 8.2 percent mid-year cut. There are a lot of moving pieces here,” said Randi Weingarten, the president of the American Federation of Teachers, in an interview.
The 1.5 million-member AFT and the 3 million-member National Education Association both support the Obama administration’s plan to continue tax increases for most Americans while raising taxes on the highest earners.
If Congress is unable to agree to significant revenue increases, that could translate to more spending cuts, which could ultimately affect K-12, said Chuck Marr, the director of federal tax policy for the, an organization in Washington that studies the impact of fiscal policies on moderate and low-income Americans.
“It’s really sort of the first question, how much revenue contributes to the overall agreement,” he said. “There’s going to be pressure on [education spending] even if revenues are strong. That’s why education people care tremendously about the revenue numbers.”
But others say that Congress is unlikely to be able to cut the deficit simply by raising taxes on the wealthiest individuals.
“It’s not surprising that education groups want to tax the rich,” said Michael J. Petrilli, a vice president for the Thomas B. Fordham Institute, a think tank in Washington. Mr. Petrilli served in the U.S. Department of Education under President George W. Bush. “What nobody wants to admit is that in order to keep revenues going for these social programs [including education], you’re going to have to tax the middle class. You can’t just offload it onto the rich. The math is pretty compelling that even if you dramatically increase taxes on the rich, you’ve got to address entitlement spending in particular.”
And entitlement spending carries its own implications for K-12. Education advocates are keeping a particularly close eye on Medicaid, which helps low-income people gain access to health care. Medicaid, along with K-12 education, is a key driver of spending at the state level. If the federal government were to significantly scale back its share of Medicaid spending, that could ultimately put the squeeze on schools, said Michael Leachman, the director of state fiscal research for the Center on Budget and Policy Priorities.
“If states had to absorb that kind of big cost shift, that just makes it that much harder for them to restore their school funding,” he said.
What’s more, about half of Medicaid recipients are children, said Mary Kusler, the director of government relations for the NEA. Trimming the program could have an impact on student achievement.
“They’re not going to be ready to learn if they’ve never seen a doctor, or if they can’t see the blackboard at school,” she said.
Education advocates are also monitoring whether Congress will make changes to the, which helps districts finance school renovation projects. And the NEA and AFT are watching the fate of certain tax breaks, such as the state and local tax deduction. If Congress were to scrap or limit those deductions, it could have an indirect effect on education spending at the local level. Local leaders may feel pressured to keep rates lower, which could translate to less money available for schools.
Education organizations are mobilizing to get their views heard. The NEA, in conjunction with the American Federation of State, County and Municipal Employees, as well as the Service Employees International Union, is running radio and television advertisements in the districts and states of key members of Congress, urging them to spare education, Medicare, and Medicaid.
Meanwhile, the National Association of School Boards, based in Alexandria, Va., has been collecting some 360 resolutions passed by local school boards across the country that urge Congress to fend off the cuts to K-12. Tom Gentzel, NSBA’s executive director, delivered them to Sen. Patty Murray, D-Wash.
Thethat aims to give estimates of just how much money districts around the country would lose if the education trigger cuts become a reality. The analysis found that certain states would likely be hit harder than others. Those states include Alaska, Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Kentucky, Louisiana, Missouri, Mississippi, New Mexico, Oklahoma, South Carolina, and West Virginia.
But, if lawmakers can’t reach agreement, and tax increases and spending cuts kick in, there could be an economic dip, or even another recession, said Scott Pattison, the executive director of the National Association of State Budget Officers in Washington. That could ultimately squeeze state budgets, which are just beginning to rebound from the recent recession.
“The [sequestration cuts] are a big concern, obviously, but the greater concern from a state perspective would be if we go over the cliff,” Mr. Pattison said. “If we have a mild recession or even a tick downward, that could mean a lot of money” lost to states. And no matter how discussions on Capitol Hill shake out, school districts and states are going to have to adjust to the new landscape of doing more with less, Mr. Pattison added.
“Government resources are going to be tighter,” he said. “That’s just a mathematical reality.”
A version of this article appeared in the December 12, 2012 edition of Education Week as K-12 Education Advocates Lobby to Avert Fiscal Cliff