Budget Bill Quells Some, Not All, Concerns

See this post here for more on EdCentral’s take on the higher education-related budget savings in the bill. 

An agreement announced last night by a congressional budget conference committee would raise the appropriations spending limit for the current fiscal year, restore some of the anticipated budget cuts over this and next year, and reduce spending on certain student loan policies as a way to pay for the bill. One thing it wouldn’t do, though, is guarantee federal programs will actually be funded after January 15.

That’s because the bill is designed to revise spending caps already set out in law, rather than to provide the actual spending. The conference committee, which was spawned in the wreckage of the October federal government shutdown, was tasked with identifying an agreement on a budget resolution between the House and Senate. The negotiators had just two months to resolve their differences and produce legislation that Congress could vote on. They came in just under the wire, with legislative text available this morning, only three days before the House plans to adjourn its session for the remainder of the calendar year.

As media reports had suggested, the proposed bill sets the fiscal year 2014 spending target at $1.012 trillion, halfway between where the House and Senate had each voted to set it earlier this year. The House had wanted to set the limit at about $966 billion (the amount laid out in the Budget Control Act of 2011 [BCA] in the event that a sequester was triggered), while the Senate preferred to revert to the BCA’s pre-sequestration trigger limit of $1.058 trillion. That $92 billion difference proved too much to overcome in appropriating spending, and precipitated the government shutdown. The new limit splits the difference exactly.

The proposed higher limit also means that, if Congress passes the bill, it will avert the $18 billion, across-the-board cuts that were expected to hit federal programs in mid-January under the BCA. The 2014 sequester would have been the second straight year of mid-year budget cuts. Last year’s cuts hit education programs hard —especially Head Start, which lost 57,000 slots—as grantees struggled to swallow the cuts while maintaining services to students. Instead, the bill redistributes about $63 billion savings to provide approximately an extra $22 billion to non-security spending in 2014 and about $9 billion the following year.

But even that small victory won’t come free. The bill extends the portion of the sequester that applied to mandatory (i.e. entitlement) spending past its planned end in 2021 into fiscal years 2022 and 2023 – primarily affecting Medicare. The $22 billion in savings over those two years would go towards deficit reduction.

Moreover, the bill makes changes to two student loan programs. It would end a mandatory funding stream for nonprofit servicers, likely forcing payment for those contracts into the competitive arena of appropriations funding. And it would reduce the payments to guaranty agencies currently helping to rehabilitate loans made in the now-defunct Family Federal Education Loan (FFEL) program. Read more about both options on EdCentral.

And even given all the compromises and a lot of progress, the bill still isn’t home free. The House plans to vote Thursday on the budget package, and the Senate will likely take up the vote next week. If the bill passes muster with House Republicans, many of whom support sequestration, both chambers will still need to agree on a law that provides the funding for federal programs at the level agreed upon in the budget legislation sometime after the holidays, but before the expiration of the current temporary spending bill on January 15.

In the current 2014 fiscal year, federal programs are funded at $986 billion. Now, instead of finding a compromise to end sequestration, lawmakers will instead have to reach a compromise on who receives the additional spending allowable under this bill. And they won’t have a lot of time to do it – it’s likely that neither chamber will return to session before the new year. Though it will likely be less contentious to find places to stash the new money than it often is to agree on programs to cut, it will likely be a fight regardless. And with only a few weeks to turn the appropriations bill around, lawmakers will face another tight timeline and severe public scrutiny as they do so.

Check back with EdCentral in the coming weeks for more details on this and other budget deals.”