Budget Showdown 2007: The Facts Behind Education Funding

The White House and Congress are approaching a major budget debate that could markedly influence federal education funding. This is the first budget cycle since 2000 during which different political parties control the Executive Branch and both chambers of Congress. The federal budget and appropriations process is rarely without acrimony, but this year’s battle may be especially rancorous.

The Federal Education Budget Project finds that although Congress plans a significant increase in federal spending on schools, teachers, and students -- the most significant this decade when considering discretionary and mandatory sources -- education funding has not been a driver of recent increases in federal spending and the contemplated increase is relatively minor with respect to the overall budget. Opponents of proposed increases in education spending argue that the overall federal budget is growing faster than is prudent, and this argument is likely to be a key component of this year’s budget debate. One could argue against proposed increased spending on education because of concerns about program effectiveness, efficiency, or value, but any attempt to single out education spending as the main driver of a federal budget that some believe has become too large would be misguided.

Summary

1. If a Presidential veto threat does not derail proposed education appropriations legislation, Congress will increase spending on students, teachers, and schools cumulatively this fall by between $7 billion and $8 billion for the following school year. It represents the most significant change to federal education funding in the last decade. Most of the proposed increase is on the discretionary side of the budget and without offset. But $3 billion worth of the total increase is on the mandatory side of the budget and offset by cuts in federal subsidies to student loan providers.
2. From fiscal year 2001 to fiscal year 2006, discretionary spending grew at a faster rate than mandatory spending. The increase has been driven primarily by defense and other “war on terror” spending. Between fiscal years 2001 and 2006, spending on defense, international affairs, and the Iraq and Afghanistan wars was responsible for 69 percent ($231.3 billion) of the total increase in discretionary spending. In contrast, domestic discretionary spending on matters such as health, transportation, and education was responsible for only 31 percent ($101.6 billion) of the increase. Spending on Department of Education programs was responsible for only 5.5 percent of the increase in overall federal discretionary spending between fiscal years 2001 and 2006.
3. The budget battle between Congress and the White House could end in a number of ways that will affect education funding. Three possible scenarios for how the budget showdown might play out are presented—one that could result in a government shutdown, one that shifts funding to supplemental appropriations bills, and a third that considers a deal involving federal education funding and the No Child Left Behind Act reauthorization.

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