Education Funding Rhetoric: The Budget Reserve Fund

When Congress took up the 2009 budget resolution earlier this month, Members of Congress gave stirring speeches about how the budget would “strengthen the federally subsidized student loan program” or carry out other education policies. Some pointed to something called a “deficit-neutral reserve fund” in the budget resolution as proof. The press also highlighted these reserve funds, writing of a “pool of funds” set aside for various education initiatives. Advocacy groups issued press releases touting policy success.

Anyone trying to make sense of the congressional budget process and what it means for education funding likely was led astray by these reports. Reserve funds can’t accomplish any of the things promised by lawmakers and celebrated by advocacy groups, although they can serve an arcane procedural purpose. But this procedural purpose is rarely why reserve funds are included in a budget resolution. The budget resolution doesn’t specify funding levels for any particular program, so reserve funds allow Members of Congress to point at a particular page of the budget resolution (the reserve fund) and talk about any sort of pet education project.

Arcane Procedure With Little Influence

Here is why the reserve fund can’t influence education policy in the manner that lawmakers would have us believe. (The reserve fund text appears on page 60 of the Senate budget resolution and page 34 (right) of the House version.)

The budget resolution sets a spending plan for the upcoming five fiscal years that loosely governs all legislation considered later in the year. When Congress adopts a budget resolution, each congressional committee (the appropriations committee and each authorizing committee) is allocated a slice of the overall federal spending plan. Procedural hurdles called “points-of-order” help ensure that legislation consider throughout the year stays within these allocations.

A reserve fund allows the congressional budget committees to adjust a committee’s spending allocation after the budget resolution has been adopted. So, if the Senate Health, Education, Labor and Pensions (HELP) Committee brings up a bill that spends more than the budget resolution allocated to it, say by increasing student loan limits, the Budget Committee Chairman may use the reserve fund to grant the HELP Committee extra room in its allocation. Thus, a reserve fund can prevent a point of order from killing an education bill. While that might sound influential, it rarely is, because points of order are a weak budget enforcement tool.

No Need to Worry About Points of Order

Points of order do not automatically kill legislation. A Member of Congress must raise the point of order for it to have effect, but Members often choose not to raise them. And points of order can always be waived. In the House a point of order is meaningless, because it takes a simple majority vote to waive a point of order. If a majority of Members will vote to pass an education bill, then the same majority will vote to waive a point of order.

The mechanism has more teeth in the Senate. A point of order can kill a bill unless 60 Senators (three-fifths) vote to waive it. So preventing a point of order in the Senate could allow a bill to pass by simple majority. But even if the point of order does not apply, Senators could still fillibuster the bill, subjecting the bill to a separate 60 vote hurdle. In other words, a bill almost always needs 60 votes to pass in the Senate, so it matters little whether or not a point of order applies to it.

“Deficit Neutral” Means More Taxes

One final point makes reserve funds even less likely to come into play. This year’s education reserve funds are “deficit neutral.” This means that education allocations cannot be increased unless taxes are first raised to offset new spending, and Congress is loath to raise taxes. Instead of a tax increase, another committee could offer to reduce spending in its allocation to offset the education increase and satisfy the deficit neutral requirement – but don’t count on it. No committee wants to voluntarily give some of its budget allocation to another committee.

Empty Rhetoric

The truth is, reserve funds do not enact policy or provide funding for programs, nor can they set aside a pool of money for education initiatives. They are merely a procedural tool that gives Congress more flexibility in how it outlines future spending in the budget resolution. Education funding promises in deficit neutral reserve funds are empty rhetoric.