Education Funding

Lower Surplus Puts Squeeze on Education

By Erik W. Robelen — September 12, 2001 7 min read
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Economic slowdown. Tax cuts. Bipartisan pledges to “protect” Social Security funds.

Together, they spell an even tougher political struggle this fall over education spending than members of Congress and President Bush may have expected when they left town in August.

Not that anyone anticipated an easy time, especially on an issue as politically charged as education. President Bush wants a $2.3 billion increase for the Department of Education; Democrats want much more, citing education legislation Congress is trying to complete this fall that would impose higher demands on states and school districts to improve student achievement.

But coming up with the money is now further complicated, since the estimated federal budget surplus has shrunk dramatically—by about $122 billion this year and nearly $130 billion in fiscal 2002, compared with May figures, according to the nonpartisan Congressional Budget Office. The White House Office of Management and Budget has similar numbers for the short term.

While the estimated surpluses for this year and next are still sizable—$153 billion and $175 billion, respectively, the CBO says—virtually all of that is in Social Security funds that politicians of all stripes have vowed not to touch.

“What we have here is a political problem that does not square with the fiscal reality that is going to create a problem for education funding in the fall,” said Edward R. Kealy, the executive director of the Committee for Education Funding, an umbrella group that lobbies for higher spending for education.

“It’s going to make everything more difficult to come to a final resolution,” he said.

The political situation means that big increases in special education and the Title I program for disadvantaged students, for instance, may be harder to come by.

“It definitely makes the outlook more uncertain,” said Joel Packer, a senior lobbyist for the National Education Association. “I think both parties have put themselves in a box. If they hold to that, it definitely has the effect of having much less money available for increases.”

Back From Recess

One of Congress’ top priorities now that members are back from the August recess is a series of spending bills for the fiscal year that begins Oct. 1. So far, none of those bills has been signed into law. The House has approved nine of the 13 bills that fund government agencies, and the Senate five, and neither has approved the appropriation bill covering education.

White House officials have declared in recent days that even with tighter fiscal times amid the current economic slowdown, there is room for the education and defense increases the president has proposed.

“We have vastly more than enough money to meet the nation’s needs,” said OMB Director Mitchell E. Daniels on NBC’s “Meet the Press” on Sept. 2. “Spending in the president’s budget would go up over $100 billion to strengthen the economy, education, and [national] security.”

Mr. Daniels indicated during congressional testimony last week that even without the Social Security surplus, enough money would be available to pay for Mr. Bush’s request under the White House numbers, though just barely.

But Democrats, citing CBO figures, say they are not so sure. They suggest that the president would have to dip into the Social Security surplus to pay for his budget proposals, much less to meet the higher spending for education and some other areas that Democrats prefer.

Sen. Kent Conrad

“CBO’s new figures confirm what many of us have been saying for months: The president’s budget simply did not add up,” Sen. Kent Conrad, D-N.D., the chairman of the Senate Budget Committee, said during a Sept. 4 hearing.

Mr. Conrad and other Democrats have been quick to place much of the blame on President Bush’s $1.3 trillion, 10-year tax cut, which he signed into law earlier this year with support primarily from Republicans. They say that the tax cut accounts for a majority of the shrinking surplus over 10 years. This year, it accounts for $70 billion, according to the CBO.

Republicans note that Democrats were in the forefront of pushing for the tax-rebate checks that began going out this summer, and they argue that cutting taxes is a wise remedy for an ailing economy.

Democratic leaders, meanwhile, contend that it is up to Mr. Bush to figure out how to make the numbers work under the revised budget forecast without tapping the Social Security surplus. And Senate Majority Leader Tom Daschle, D-S.D., said last week that using the Social Security surplus to pay for other programs “ought not be an option.”

The president, despite unequivocal and repeated pledges to refrain from spending the Social Security surplus on current needs, late last week opened the lid on the so- called lockbox, at least slightly. And a senior Republican senator, with little immediate support from his colleagues, suggested prying open that lid completely.

“We can work together to avoid dipping into Social Security,” Mr. Bush told reporters last Thursday. “I have repeatedly said the only time to use Social Security money is in times of war, times of recession, or times of severe emergency. And I mean that.”

The same day, during a committee hearing on the budget, Sen. Pete Domenici, R-N.M., of New Mexico, according to a report in TheWashington Post, said of the Social Security surplus: “What’s wrong with looking at it for education right now? What’s wrong with looking at it if you need defense now? This would be the right time to do that.”

In an Aug. 29 speech to the American Legion in San Antonio, President Bush said lawmakers should not pit education against defense in the budget debate this fall.

“This year, we might even see our administration’s two highest priorities, education and national defense, being played off against each other,” he said. “That’s the old way of doing business, and it’s time to stop it.”

ESEA Raises Stakes

The budget debate comes as a 39- member House-Senate conference committee is working to resolve differences between the two chambers’ versions of legislation to reauthorize the Elementary and Secondary Education Act, the nation’s main law for K-12 schools.

The Senate version has especially high expectations for spending: It would authorize a total of $31.7 billion in ESEA funding in 2002, far above the $18.6 billion spent this year, plus a dramatic influx of funding for special education. The bill would mandate increases of $2.5 billion per year in special education aid for the next six years.

Even most of the biggest advocates for higher spending on education did not expect that so much would actually be appropriated, as opposed to merely being authorized, even when the overall revenue picture looked rosier last spring.

But many Democrats have made clear that increasing the Education Department’s budget well above what President Bush proposed is a vital ingredient to reaching an education deal, given the new demands to improve student achievement the ESEA reauthorization will likely impose. In fact, some have suggested that a final vote on a compromise ESEA bill might be put on hold in the Democratic-controlled Senate until Mr. Bush and Congress reach a deal on spending that is acceptable to the Democrats.

The White House reportedly plans a public lobbying campaign this week to pressure Congress to move the education bill quickly.

Given delays in completing the ESEA legislation, it now appears that the House and Senate appropriations committees will likely take action this month on education spending bills, even without a final ESEA bill to help guide them. The Education Department’s funding is wrapped into a larger bill that also pays for the departments of Labor and Health and Human Services.

When it comes to education spending, Congress has a recent record of largess. Last year, President Clinton and Congress agreed to the largest-ever increase for the Education Department, about $6.5 billion. And this summer, President Bush signed a supplemental spending bill that added another $161 million for Title I. Of course, that was accomplished under the assumption of a large, non-Social Security surplus, which has since virtually disappeared.

If not spent on other federal programs, the surplus Social Security funds, rather than being stowed away in some monumental savings account, will be used to pay down the national debt. That way, in 15 or so years, when annual benefits are expected to exceed Social Security tax payments, the general Treasury would have more money available to make up that shortfall.

But some lobbyists suggest that spending on education is no less important, even from an economic perspective.

“The very foundation of a strong economy is an educated populace,” said Dan Fuller, the director of federal programs for the National School Boards Association.

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