Statement: CEF Applauds the President’s Budget for Investing in Education Urges Congress to Replace Sequester Caps

February 12, 2015  |  No Comments  |  by Brenda Arredondo  |  Press Releases


The Committee for Education Funding Applauds the President’s Budget for Investing in Education
Urges Congress to Replace Sequester Caps
(to download the PDF statement, click here)

February 12, 2015

The Committee for Education Funding (CEF), a coalition of 115 national education associations and institutions from preschool to postgraduate education, applauds President Obama’s Fiscal Year (FY) 2016 budget for prioritizing investing in education as a proven strategy to increase jobs and improve our nation’s economic growth and competitiveness. The budget proposes significant investments for all levels of education – early learning, K-12, and higher education.

Most importantly, the budget proposes to completely eliminate the harmful sequester cap for nondefense discretionary funding (NDD) in FY 2016. Doing so restores $37 billion for education and other important domestic programs including research. The budget also proposes to restore the sequester cuts in FY 2017 and provides partial restoration in FY 2018 through FY 2021 by replacing them with a balanced package of deficit reduction. Sequestration slashed education programs in FY 2013 by almost $2.5 billion and Head Start by $400 million. Research programs – such as those overseen by the National Institutes of Health and the National Science Foundation crucial to higher education, our nation’s innovation agenda, and support for graduate students – were cut by over $2 billion.

Based on the bipartisan Ryan-Murray budget deal of 2013, the FY 2014 Consolidated Appropriations Act was a positive step forward in undoing the majority of the sequester cuts in FY 2014. However, it only restored two-thirds of the cuts in the U.S. Department of Education, leaving many education programs frozen at their post-sequester levels. Due to the virtual freeze in the NDD cap in FY 2015, the most recent CRomnibus bill resulted in a net cut to the Department of Education, while freezing funding for Head Start.

Overall funding at the Department of Education (excluding Pell grants) is still below the FY 2008 level. Because the FY 2016 NDD cap is once again virtually the same as the FY 2015 cap, there is no room for increasing needed investments. Thus, the most important step Congress can take to help students, educators, parents, early education programs, schools, colleges, libraries and museums is to permanently eliminate the sequester cuts.

The budget proposes a $3.6 billion (+5.4 percent) increase for programs in the Department of Education. In addition, the budget proposes major new investments in education on the mandatory spending side for preschool, improving the preparation and quality of teachers and school leaders, and making community college free.

The budget also projects an increase in the Pell grant maximum award of $140 to $5,915. Several important tax provisions are proposed that would benefit higher education.  These include a permanent extension of the American Opportunity Tax Credit, scheduled to expire at the end of 2017, and excluding from taxable income the portions of student loans forgiven under income-based repayment plans and all of Pell grants.

According to CEF President Noelle Ellerson, “While we are extremely pleased with the overall comprehensive package of education investments, we are concerned with proposed freezes for several education programs, including Striving Readers, Impact Aid overall funding, 21st Century Community Learning Centers, rural education, school counseling, magnet schools, adult education State grants, campus-based aid,  GEAR UP, aid to Historically Black Colleges and Universities and other minority-serving institutions, and graduate education.” The budget also proposes the elimination of Impact Aid payments for federal property, the literacy initiative, and the Teacher Quality Partnership program in the Higher Education Act. CEF opposes these proposals.

CEF strongly supports the robust increases for Title I, Head Start and Preschool Development grants, and additional investments for IDEA, English Language Acquisition, STEM, safe and healthy students, Career and Technical Education State Grants, TRIO, educational research and data, and evidence-based practices, and the restoration of education technology grants.

CEF also applauds the budget’s support for college access though the permanent extension of the American Opportunity Tax Credit and the mandatory-funded investments in early childhood education, including $75 billion for Preschool for All and an expansion of the Child Care and Development Block Grant (CCDBG).

CEF Executive Director Joel Packer noted, “State and local budget cuts have resulted in the loss of 324,000 public school employees’ jobs since the start of the recession, and public school revenue declined in FY 2012 for the first time since 1977.  At least 30 States are providing less funding per student for the 2014-15 school year than before the recession, 46 States are spending less per student in public higher education than in 2008, and overall State support per student for higher education is at its lowest level in 25 years. That’s why the investments proposed by the president are more important than ever.”

“We look forward to working with the Administration and Congress to obtain the increases in education funding proposed by the president and permanently replace the sequester in order to provide needed investments,” said Ellerson. “The president’s budget moves our country forward through investments that grow our economy and help students get the skills they need for jobs of the future, while sequestration continues to hold us back.”

CEF’s Letter on HR 5 to Congress (Feb. 9)

February 9, 2015  |  No Comments  |  by Brenda Arredondo  |  Letters to Congress

cef side barPicture2

February 9, 2015

The Honorable John Kline
House Education and the Workforce Committee

The Honorable Bobby Scott
Ranking Member
House Education and the Workforce Committee

Dear Chairman Kline and Ranking Member Scott:

The Committee for Education Funding (CEF), a coalition of 115 national education associations and institutions representing early learning to postgraduate education, writes to express our strong opposition to the authorization levels contained in HR 5, the Student Success Act. While CEF as a coalition is not taking a position on the policy issues in HR 5, we oppose the authorization levels because they would freeze funding in the aggregate for programs authorized in the Elementary and Secondary Education Act (ESEA) through the 2021-22 school year.

HR 5 freezes the aggregate ESEA authorization level for Fiscal Year (FY) 2016 and for each of the succeeding five years at the aggregate FY 2015 appropriated level of $23.30 billion. Not only will this prevent needed investments for critical programs for the next six years, but it cuts funding below the FY 2012 pre-sequester level of $24.11 billion (a cut of 3.36 percent). Doing so locks in over $800 million in cuts to these programs compared to the FY 12 level.

Since the National Center for Education Statistics projects that public school enrollment will increase by more than 2.2 million students in this period and the Congressional Budget Office projects an aggregate increase in the CPI of 14.2 percent between 2015 and 2021, such a freeze would severely erode the purchasing power of these programs and significantly reduce services to students.

When factoring in cuts to ESEA programs that were enacted in FY 2011 and 2012, HR 5 locks in almost $1.7 billion in cuts compared to the FY 2010 appropriated level.

These cuts have come at a time when enrollments have increased, more children are living in poverty and schools and students have endured deep state and local budget cuts.

Instead of making it more difficult to improve overall student achievement, close achievement gaps, and increase high school graduation and college access rates by locking in these drastic cuts, Congress should be investing in our future through education. The need to increase the federal investment in education has never been greater. Jobs and the economy are directly linked to such investments. Both unemployment rates and lifetime earnings are based on levels of education attainment.

We urge you to reject the authorization levels contained in HR 5 and instead raise them to at least the FY 2010 level.


Noelle Ellerson, President

Joel Packer, Executive Director

Student Success Act (HR 5) – CEF Charts and More

February 6, 2015  |  No Comments  |  by Brenda Arredondo  |  Charts and Factsheets

To download the PDF’s of these charts, click on the images.

Programs Authorized in the Student Success Act (HR 5) (in thousands of $)

cef in $

Programs Authorized in the Student Success Act (HR 5)

(as introduced on February 3, 2015)

Programs Authorized in the Student Success Act (HR 5)

President’s FY 2016 budget – resources and more (updated Feb. 25)

February 2, 2015  |  No Comments  |  by Brenda Arredondo  |  Charts and Factsheets

CEF’s FY 2016 funding table (updated Feb. 6). See below.

This includes funding for most ED programs as well as related programs in HHS and IMLS from FY 2012 (pre-sequester) through the President’s FY 2016 budget. It has more details than the ED table, since it includes extensive footnotes with details from the Congressional Justifications.

Click on the image to download the PDF.


CEF Budget History Charts: We just updated our budget history charts, showing yearly funding for most programs from FY 2002 through the President’s FY 2016 budget.

Links to Budget Documents and Reactions:

ESEA Chapter 2/Title VI/Title V (CEF Chart)

February 1, 2015  |  No Comments  |  by Brenda Arredondo  |  Charts and Factsheets




(Complied by CEF from Education Department budget tables)


Click the image to download the PDF of the chart.

Resource: CBPP’s “Policy Basics: Introduction to the Federal Budget Process”

January 29, 2015  |  No Comments  |  by Brenda Arredondo  |  Resources

Center on Budget and Policy Priorities

Policy Basics: Introduction to the Federal Budget Process

PDF of this Policy Basics (9pp.)

Laws and procedures under which Congress decides how much money to spend each year, what to spend it on, and how to raise the money to pay for that spending.  The Congressional Budget Act of 1974 lays out a formal framework for developing and enforcing a “budget resolution” to guide the process but in recent years the process has not always worked as envisioned.

We address:

  • the President’s annual budget request, which is supposed to kick off the budget process;
  • the congressional budget resolution — how it is developed, what it contains, and what happens if there is no budget resolution;
  • how the terms of the budget resolution are enforced in the House and Senate;
  • budget “reconciliation,” an optional procedure used in some years to facilitate the passage of legislation amending tax or entitlement law; and
  • statutory deficit-control measures — spending caps, pay-as-you-go requirements, and sequestration.

Step One: The President’s Budget Request

The process starts when the President submits a detailed budget request for the coming fiscal year, which begins on October 1.  (The President’s request is supposed to come by the first Monday in February, but sometimes the submission is delayed — particularly when a new Administration takes office or congressional action on the prior year’s budget has been delayed.)  This budget request — developed through an interactive process between federal agencies and the President’s Office of Management and Budget (OMB) that begins the previous spring (or earlier) — plays three important roles.

First, it tells Congress what the President recommends for overall federal fiscal policy, as established by three main components: (1) how much money the federal government should spend on public purposes; (2) how much it should take in as tax revenues; and (3) how much of a deficit (or surplus) the federal government should run, which is simply the difference between (1) and (2). In most years, actual federal spending exceeds tax revenues and the resulting deficit is financed through borrowing (see chart).

Second, the President’s budget lays out his relative priorities for federal programs — how much he believes should be spent on defense, agriculture, education, health, and so on.  The President’s budget is very specific, and recommends funding levels for individual federal programs or small groups of programs called “budget accounts.”  The budget typically sketches out fiscal policy and budget priorities not only for the coming year but also for the next ten years.  The budget is accompanied by supporting volumes, including historical tables that set out past budget figures.

The third role of the President’s budget is signaling to Congress the President’s recommendations for spending and tax policy changes.  As discussed below, the budget comprises different types of programs, some that require new funding each year to continue and others that are ongoing and therefore do not require annual action by Congress.  While the President must recommend funding levels for annually appropriated programs, he need not propose legislative changes for those parts of the budget that are ongoing.


  • Annually appropriated programs. These programs fall under the jurisdiction of the House and Senate Appropriations Committees.  Funding for these programs must be renewed each year to keep government agencies open and the programs in this category operating.  These programs are known as “discretionary” because the laws that establish those programs leave Congress with the discretion to set the funding levels each year. That doesn’t mean the programs are optional or unimportant, however.  For example, almost all defense spending is discretionary, as are the budgets for a broad set of public services, including environmental protection, education, job training, border security, veterans’ health care, scientific research, transportation, economic development, some low-income assistance, law enforcement, and international assistance.  Altogether, discretionary programs make up about one-third of all federal spending.  The President’s budget spells out how much funding he recommends for each discretionary program.
  • Taxes, “mandatory” or “entitlement” programs, and interest.  Nearly all of the federal tax code is set in ongoing law that either remains in place until changed or requires renewal only periodically.  Similarly, more than one-half of federal spending is also ongoing.  This category is known as “mandatory” spending.  It includes the three largest entitlement programs (Medicare, Medicaid, and Social Security) as well as certain other programs (including but not limited to SNAP, formerly food stamps; federal civilian and military retirement benefits; veterans’ disability benefits; and unemployment insurance) that are not controlled by annual appropriations.  Interest on the national debt is also paid automatically, with no need for new legislation.  (There is, however, a separate limit on how much the Treasury can borrow.  This “debt ceiling” must be raised through separate legislation when necessary.)

As noted, the President’s budget does not need to include recommendations to ensure the continuation of ongoing mandatory programs and revenues, but it will nonetheless typically include proposals to alter some mandatory programs and revenue laws.

  • Recommendations for mandatory programs typically spell out changes to eligibility criteria and levels of individual benefits but do not specify overall funding levels.  Rather, the funding levels effectively are determined by the eligibility and benefits rules set in law.
  • Changes to the tax code will increase or decrease taxes.  Such proposals will be reflected as a change in the amount of federal revenue that the President’s budget projects will be collected the next year or in future years, relative to what would otherwise be collected.

Step Two: The Congressional Budget Resolution

Next, Congress generally holds hearings to question Administration officials about their requests and then develops its own budget plan, called a “budget resolution.”  This work is done by the House and Senate Budget Committees, whose primary function is to draft and enforce the budget resolution.  Once the Budget Committees pass their budget resolutions, the bills go to the House and Senate floors, where they can be amended (by a majority vote).  A House-Senate conference then resolves any differences, and the budget resolution for the year is adopted when both houses pass the conference report.

The budget resolution is a “concurrent” congressional resolution, not an ordinary bill, and therefore does not go to the President for his signature or veto.  It also requires only a majority vote to pass, and its consideration is one of the few actions that cannot be filibustered in the Senate.  Because it does not go to the President, a budget resolution cannot enact spending or tax law.  Instead, it sets targets for other congressional committees that can propose legislation directly providing or changing spending and taxes.

Congress is supposed to pass the budget resolution by April 15, but it often takes longer.  In recent years it has been common for Congress not to pass a budget resolution at all.  When that happens, the previous year’s resolution, which is a multi-year plan, stays in effect, although the House, the Senate, or both can and typically do adopt special procedures to set spending levels (see box: What if There Is No Budget Resolution?).

  • What is in the budget resolution? Unlike the President’s budget, which is very detailed, the congressional budget resolution is a very simple document.  It consists of a set of numbers stating how much Congress is supposed to spend in each of 19 broad spending categories (known as budget “functions”) and how much total revenue the government will collect, for each of the next five years or more.  (The Congressional Budget Act requires that the resolution cover a minimum of five years, though Congress now generally chooses a longer period, such as ten years.)  The difference between the two totals — the spending ceiling and the revenue floor — represents the deficit (or surplus) expected for each year.
  • How spending is defined: budget authority vs. outlays. The spending totals in the budget resolution are stated in two different ways: the total amount of “budget authority,” and the estimated level of expenditures, or “outlays.”  Budget authority is how much money Congress allows a federal agency to commit to spend; outlays are how much money actually flows out of the federal Treasury in a given year.  For example, a bill that appropriated $50 million for building a bridge would provide $50 million in budget authority for the coming year, but the outlays might not reach $50 million until the following year or even later, when the bridge actually is built.

Budget authority and outlays thus serve different purposes.  Budget authority represents a limit on the new financial obligations federal agencies may incur (by signing contracts or making grants, for example), and is generally what Congress focuses on in making most budgetary decisions.  Outlays, because they represent actual cash flow, help determine the size of the overall deficit or surplus.

  • How committee spending limits get set: 302(a) allocations.  The report that accompanies the budget resolution includes a table called the “302(a) allocation.”  This table takes the spending totals that are laid out by budget function in the budget resolution and distributes them by congressional committee instead.  The House and Senate tables are different from one another, since committee jurisdictions vary somewhat between the two chambers.In both the House and Senate, the Appropriations Committee receives a single 302(a) allocation for all of its programs. It then decides on its own how to divide this funding among its 12 subcommittees, creating what are known as 302(b) sub-allocations.  Similarly, the various committees with jurisdiction over mandatory programs each get an allocation that represents a total dollar limit on all of the legislation they produce that year.

    The spending totals in the budget resolution do not apply to “authorizing” legislation that merely establishes or changes rules for federal programs funded through the annual appropriations process.  Unless it changes an entitlement program (such as Social Security or Medicare), authorizing legislation does not actually have a budgetary effect.  For example, the education committees could produce legislation that authorizes a certain amount to be spent on the Title I education program for disadvantaged children. However, none of that money can be spent until the annual Labor-Health and Human Services-Education appropriations bill — which includes education spending — sets the actual dollar level for Title I funding for the year, which is frequently less than the authorized limit.

Often the report accompanying the budget resolution contains language describing the assumptions behind it, including how much it envisions certain programs being cut or increased.  These assumptions generally serve only as guidance to the other committees and are not binding on them.  Sometimes, though, the budget resolution includes more complicated devices intended to ensure that particular programs receive a certain amount of funding.

The budget resolution can also include temporary or permanent changes to the congressional budget process.

What If There Is No Budget Resolution?

Congress has seldom completed action on the budget resolution by the April 15 target date specified in the Budget Act, and it failed to complete action on a resolution for fiscal years 1999, 2003, 2005, 2007, and each year from 2011 through 2014.  In the absence of a budget resolution, the House and Senate typically enact separate budget targets, which they “deem” to be a substitute for the budget resolution.  Such deeming resolutions typically provide spending allocations to the Appropriations Committees but may serve a variety of other budgetary purposes.  Unless the House or Senate agrees to such a deeming resolution, the multi-year revenue floors and spending allocations for mandatory programs that had been agreed to in the most recent budget resolution remain in effect.

The Bipartisan Budget Act of 2013 described below took a different tack, establishing a “Congressional Budget” for fiscal years 2014 and 2015 in statute as an alternative to the concurrent budget resolution called for in the Congressional Budget Act.

Step Three: Enacting Budget Legislation

Following adoption of the budget resolution, Congress considers the annual appropriations bills that are needed to fund discretionary programs in the coming fiscal year and legislation to enact changes to mandatory spending or revenue levels as specified in the budget resolution.  Mechanisms exist to enforce the terms of the budget resolution during the consideration of such legislation, and a special mechanism known as “reconciliation” exists to expedite the consideration of mandatory spending and tax legislation.

Enforcing the Terms of the Budget Resolution

The main enforcement mechanism that prevents Congress from passing legislation that violates the terms of the budget resolution is the ability of a single member of the House or the Senate to raise a budget “point of order” on the floor to block such legislation.  In some recent years, this point of order has not been particularly important in the House because it can be waived there by a simple majority vote on a resolution developed by the leadership-appointed Rules Committee, which sets the conditions under which each bill will be considered on the floor.

However, the budget point of order is important in the Senate, where any legislation that exceeds a committee’s spending allocation — or cuts taxes below the level allowed in the budget resolution — is vulnerable to a budget point of order on the floor that requires 60 votes to waive.

Appropriations bills (or amendments to them) must fit within the 302(a) allocation given to the Appropriations Committee as well as the committee-determined 302(b) sub-allocations for the coming fiscal year.  Tax or entitlement bills (or any amendments offered to them) must fit within the budget resolution’s spending limit for the relevant committee or within the revenue floor, both in the first year and over the total multi-year period covered by the budget resolution.  The cost of a tax or entitlement bill is determined (or “scored”) by the Budget Committees, nearly always by relying on the nonpartisan Congressional Budget Office (CBO).  CBO measures the cost of tax or entitlement legislation against a budgetary “baseline” that projects mandatory spending and tax receipts under current law.

The Budget “Reconciliation” Process

From time to time, Congress makes use of an optional, special procedure outlined in the Congressional Budget Act known as “reconciliation” to expedite the consideration of mandatory spending and tax legislation.  This procedure was originally designed as a deficit-reduction tool, to force committees to produce spending cuts or tax increases called for in the budget resolution.  However, it was used to enact tax cuts several times during the George W. Bush Administration, thereby increasing projected deficits.  Senate rules now prohibit using reconciliation to consider legislation that would increase the deficit; House rules prohibit using it to increase mandatory spending.

  • What is a reconciliation bill?  A reconciliation bill is a single piece of legislation that typically includes multiple provisions (generally developed by several committees), all of which affect the federal budget — whether on the mandatory spending side, the tax side, or both.  A reconciliation bill, like the budget resolution, cannot be filibustered by the Senate, so it only requires a majority vote to pass.
  • How does the reconciliation process work?  If Congress decides to use the reconciliation process, language known as a “reconciliation directive” must be included in the budget resolution.  The reconciliation directive instructs committees to produce legislation by a specific date that meets certain spending or tax targets.  (If they fail to produce this legislation, the Budget Committee chair generally has the right to offer floor amendments to meet the reconciliation targets for them, a threat which usually produces compliance with the directive.)  The Budget Committee then packages all of these bills together into one bill that goes to the floor for an up-or-down vote, with limited opportunity for amendment.  After the House and Senate resolve the differences between their competing bills, a final conference report is considered on the floor of each house and then goes to the President for his signature or veto.
  • Constraints on reconciliation: the “Byrd rule.”  While reconciliation enables Congress to bundle together several different provisions from different committees affecting a broad range of programs, it faces one major constraint: the “Byrd rule,” named after the late Senator Robert Byrd of West Virginia.  This Senate rule provides a point of order against any provision of (or amendment to) a reconciliation bill that is deemed “extraneous” to the purpose of amending entitlement or tax law.  If a point of order is raised under the Byrd rule, the offending provision is automatically stripped from the bill unless at least 60 senators vote to waive the rule.  This makes it difficult, for example, to include any policy changes in a reconciliation bill unless they have direct fiscal implications.  Under this rule, changes in the authorization of discretionary appropriations are not allowed, nor, for example, are changes to civil rights or employment law or even the budget process.  Changes to Social Security also are not permitted under the Byrd rule, even if they are budgetary.

In addition, the Byrd rule bars any entitlement increases or tax cuts that cost money beyond the five (or more) years covered by the reconciliation directive, unless other provisions in the bill fully offset these “out-year” costs.

What If Appropriations Bills Are Not Passed on Time?

If Congress does not complete action on an appropriations bill before the start of the fiscal year on October 1, it must pass, and the President must sign, a continuing resolution (CR) to provide stopgap funding for affected agencies and discretionary programs.  If Congress doesn’t pass or the President will not sign a CR because it contains provisions he finds unacceptable, agencies that have not received funding through the ordinary appropriations process must shut down operations.

A dispute over delay or defunding of health reform legislation between President Obama and congressional Republicans led to a 16-day shutdown of ordinary government operations beginning October 1, 2013.  A dispute between President Clinton and congressional Republicans in the winter of 1995-96 produced a 21-day shutdown of substantial portions of the federal government.

Statutory Deficit-Control Mechanisms

Separately from the limits established in the annual budget process, Congress operates under statutory deficit-control mechanisms that prevent tax and mandatory spending legislation from increasing the deficit and that constrain discretionary spending.

  • PAYGO.  Under the 2010 Statutory Pay-As-You Go (PAYGO) Act, any legislative changes to taxes or mandatory spending that increase multi-year deficits must be “offset” or paid for by other changes to taxes or mandatory spending that reduce deficits by an equivalent amount.  Violation of PAYGO triggers across-the-board cuts (“sequestration”) in selected mandatory programs to restore the balance between budget costs and savings.
  • Discretionary funding caps.  The 2011 Budget Control Act (BCA) imposed limits or “caps” on the level of discretionary appropriations for defense and for non-defense programs in each year through 2021.  Appropriations in excess of the cap in either category trigger sequestration in that category to reduce funding to the capped level.
  • BCA sequestration.  On top of any sequestration triggered by PAYGO or funding cap violations, the BCA also requires additional sequestration each year through 2021 in discretionary and select mandatory programs, split evenly between defense and non-defense funding. This BCA sequestration was implemented as a result of a BCA-created congressional joint select committee’s failure to propose a legislative plan that would reduce deficits by $1.2 trillion over ten years.  In the case of discretionary programs, for 2014 and after this special sequestration mechanism operates by reducing the appropriations caps below the level that the BCA originally set.

If budget legislation violates these statutes, the relevant sequestration penalties apply automatically, unless Congress also modifies the requirements.  For example, policymakers modified the 2013 BCA sequestration requirement in the American Taxpayer Relief Act of 2012.  Similarly, the Bipartisan Budget Act of 2013, worked out by Senate Budget Committee Chair Patty Murray (D-WA) and House Budget Committee Chair Paul Ryan (R-WI), reduced sequestration cuts in 2014 and 2015 while extending BCA sequestration of mandatory programs through 2023.


The annual federal budget process begins with a detailed proposal from the President; Congress next develops a blueprint called a budget resolution that sets limits on how much each committee can spend or reduce revenues over the course of the year; and the terms of the budget resolution are then enforced against individual appropriations, entitlement bills, and tax bills on the House and Senate floors.  In addition, Congress sometimes uses a special procedure called “reconciliation” to facilitate the passage of deficit reduction legislation or other major entitlement or tax legislation.  Moreover, the budget is subject to statutory deficit-control requirements.  Legislation implementing a budget resolution that violates those requirements could trigger across-the-board budget cuts to offset the violations.

Updated Membership for Key Congressional Committees

January 29, 2015  |  No Comments  |  by Brenda Arredondo  |  Resources


Names in green are new members of the committee

Updated 1/30/15

key committee membership 114

ICYMI: CBO Releases “The Budget and Economic Outlook: 2015 to 2025″

January 27, 2015  |  No Comments  |  by Brenda Arredondo  |  Resources

From the Congressional Budget Office:

The federal budget deficit, which has fallen sharply during the past few years, is projected to hold steady relative to the size of the economy through 2018. Beyond that point, however, the gap between spending and revenues is projected to grow, further increasing federal debt relative to the size of the economy—which is already historically high.

Those projections by CBO, based on the assumption that current laws governing taxes and spending will generally remain unchanged, are built upon the agency’s economic forecast. According to that forecast, the economy will expand at a solid pace in 2015 and for the next few years—to the point that the gap between the nation’s output and its potential (that is, maximum sustainable) output will be essentially eliminated by the end of 2017. As a result, the unemployment rate will fall a little further, and more people will be encouraged to enter or stay in the labor force. Beyond 2017, CBO projects, real (inflation-adjusted) gross domestic product (GDP) will grow at a rate that is notably less than the average growth during the 1980s and 1990s.

Rising Deficits After 2018 Are Projected to Gradually Boost Debt Relative to GDP

CBO estimates that the deficit for this fiscal year will amount to $468 billion, slightly less than the deficit in 2014 (see the table below). At 2.6 percent of GDP, this year’s deficit is projected to be the smallest relative to the nation’s output since 2007 but close to the 2.7 percent that deficits have averaged over the past 50 years.

CBO's Baseline Budget Projections

Although the deficits in CBO’s baseline projections remain roughly stable as a percentage of GDP through 2018, they rise after that. The deficit in 2025 is projected to be $1.1 trillion, or 4.0 percent of GDP, and cumulative deficits over the 2016–2025 period are projected to total $7.6 trillion. CBO expects that federal debt held by the public will amount to 74 percent of GDP at the end of this fiscal year—more than twice what it was at the end of 2007 and higher than in any year since 1950 (see figure below). By 2025, in CBO’s baseline projections, federal debt rises to nearly 79 percent of GDP.

Federal Debt Held by the Public


In CBO’s projections, outlays rise from a little more than 20 percent of GDP this year (which is about what federal spending has averaged over the past 50 years) to a little more than 22 percent in 2025 (see figure below). Four key factors underlie that increase:

  • The retirement of the baby-boom generation,
  • The expansion of federal subsidies for health insurance,
  • Increasing health care costs per beneficiary, and
  • Rising interest rates on federal debt.

Total Revenues and Outlays

Consequently, under current law, spending will grow faster than the economy for Social Security; the major health care programs, including Medicare, Medicaid, and subsidies offered through insurance exchanges; and net interest costs. In contrast, mandatory spending other than that for Social Security and health care, as well as both defense and nondefense discretionary spending, will shrink relative to the size of the economy. By 2019, outlays in those three categories taken together will fall below the percentage of GDP they were from 1998 through 2001, when such spending was the lowest since at least 1940 (the earliest year for which comparable data have been reported).


Revenues are projected to rise significantly by 2016, buoyed by the expiration of several provisions of law that reduced tax liabilities and by the ongoing economic expansion. In CBO’s projections, based on current law, revenues equal about 18½ percent of GDP in 2016 and remain between 18 percent and 18½ percent through 2025. Revenues at that level would represent a greater share of the economy than their 50-year average of about 17½ percent of GDP but would still be less than outlays by growing amounts over the course of the decade. Revenues from the individual income tax are expected to rise relative to GDP—mostly because people’s income will move into higher tax brackets as income gains outpace inflation, to which those brackets are indexed. But those increases are expected to be offset by reductions relative to GDP in revenues from the corporate income tax and other sources.

Changes From CBO’s Previous Budget Projections

The deficit that CBO now estimates for 2015 is essentially the same as what the agency projected in August. CBO’s estimate of outlays this year has declined by $94 billion, or about 3 percent, from the August projection because of a number of developments, including higher-than-expected receipts from auctions of licenses to use the electromagnetic spectrum for commercial purposes. But CBO’s estimate of revenues has dropped almost as much—by $93 billion, also about 3 percent—mostly because of the enactment of legislation that retroactively extended a host of expired tax provisions through December 2014.

Over the 2015–2024 period, deficits are now projected to total about $175 billion less than CBO’s August estimate for that period. The current projections of revenues and outlays for those years are both lower than previously estimated, outlays a little more so.

The Longer-Term Outlook

When CBO last issued long-term budget projections (in July 2014), it projected that, under current law, debt would exceed 100 percent of GDP 25 years from now and would continue on an upward trajectory thereafter—a trend that could not be sustained. (The 10-year projections presented here do not materially change that outlook.) Such large and growing federal debt would have serious negative consequences, including increasing federal spending for interest payments; restraining economic growth in the long term; giving policymakers less flexibility to respond to unexpected challenges; and eventually heightening the risk of a fiscal crisis.

The Economy Will Grow at a Solid Pace Over the Next Few Years

CBO anticipates that, under current law, economic activity will expand at a solid pace in 2015 and over the next few years—reducing the amount of underused resources, or “slack,” in the economy.

Economic Growth Over the Next Few Years

In CBO’s estimation, increases in consumer spending, business investment, and residential investment will drive the economic expansion this year and over the next few years. The growth in those categories of spending will derive mainly from increases in hourly compensation, rising wealth, the recent decline in crude oil prices, and a step-up in the rate of household formation (as people are more willing and able to set up new homes). As measured by the change from the fourth quarter of the previous year, real GDP will grow by about 3 percent in 2015 and 2016 and by 2½ percent in 2017, CBO expects (see figure below).

Actual Values and CBO's Projections of Key Economic Indicators

The Degree of Slack in the Economy Over the Next Few Years

The difference between actual GDP and CBO’s estimate of potential GDP—which is a measure of slack for the whole economy—was about 2 percent of potential GDP at the end of 2014. During the next few years, CBO expects, actual GDP will rise more rapidly than its potential, gradually eliminating that slack. For the labor market in particular, CBO anticipates that slack will dissipate by the end of 2017. By CBO’s projections, increased hiring will reduce the unemployment rate from 5.7 percent in the fourth quarter of 2014 to 5.3 percent in the fourth quarter of 2017, which is close to the expected natural rate of unemployment (that is, the rate arising from all sources except fluctuations in the overall demand for goods and services). That increased hiring will also encourage more people to enter or stay in the labor force, boosting the labor force participation rate (which is the percentage of people who are working or actively looking for work).

Economic Growth in Later Years

The agency’s projections beyond the next few years are not based on estimates of cyclical developments in the economy, because the agency does not attempt to predict economic fluctuations that far into the future; instead, those projections are based on estimates of underlying factors that affect the economy’s productive capacity.

For 2020 through 2025, CBO projects that real GDP will grow by an average of 2.2 percent per year—a rate that matches the agency’s estimate of the potential growth of the economy in those years. Potential output is expected to grow much more slowly than it did during the 1980s and 1990s primarily because the labor force is anticipated to expand more slowly than it did then. Growth in the potential labor force will be held down by the ongoing retirement of the baby boomers; by a relatively stable labor force participation rate among working-age women, after sharp increases from the 1960s to the mid-1990s; and by federal tax and spending policies set in current law.

Inflation and Interest Rates

The elimination of slack in the economy will eventually remove the downward pressure on the rate of inflation and on interest rates that has existed for the past several years. By CBO’s estimates, the rate of inflation as measured by the price index for personal consumption expenditures will move up gradually to the Federal Reserve’s goal of 2 percent, hitting that mark in 2017 and beyond. Interest rates on Treasury securities, which have been exceptionally low since the recession, will rise considerably in the next few years, CBO expects, but remain lower than they were, on average, in previous decades. Between 2020 and 2025, the projected interest rates on 3-month Treasury bills and 10-year Treasury notes are 3.4 percent and 4.6 percent, respectively.

Changes From CBO’s Previous Economic Projections

Last August, CBO projected real GDP growth averaging 2.7 percent per year for 2014 through 2018; CBO now anticipates that real GDP growth will average 2.5 percent annually over that period. The revision mainly reflects a reduction in CBO’s estimate of potential output and therefore of the current amount of slack in the economy. On the basis of the current projection of potential output, CBO now forecasts that real GDP in 2024 will be roughly 1 percent lower than the level estimated in August. In addition, the sharper-than-anticipated drop in the unemployment rate in the second half of last year caused CBO to lower its projection of that rate for the next few years.

Yearly Budget Authority funding levels between Fiscal Year (FY) 2002 and FY 2015

December 15, 2014  |  No Comments  |  by Broddy  |  Charts and Factsheets

The following charts provide yearly Budget Authority funding levels between Fiscal Year (FY) 2002 and FY 2015 for the U.S. Department of Education discretionary funded programs and Head Start in the Department of Health and Human Services.


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Items of note:

The final FY 13 levels reflect an across-the-board cut of 0.2% from the levels set in the Consolidated and Further Continuing Appropriations Act. These levels were then reduced by the 5.0% sequester cuts. The final FY 13 levels generally represent a cut of 5.23% below FY 12 (except for programs such as Head Start which received a specific pre-sequester increase in the FY 13 CR).

Under sequestration, FY 13 total discretionary funding for the Department of Education (excluding Pell grants) was at its lowest level since FY 2004.

The FY 2014 omnibus appropriations bill only partially restored the sequester cuts, leaving total discretionary funding for the Department of Education (excluding Pell grants) below the FY 2006 level.

The FY 2015 CRomnibus increased total discretionary funding for the Department of Education (excluding Pell grants) by $137 million, but that still leaves that level below FY 2006.


FY 15 Labor-HHS-ED CRomnibus Senate

December 15, 2014  |  No Comments  |  by Broddy  |  Letters to Congress

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December 12, 2014

Dear Senator:

The Committee for Education Funding (CEF), a coalition of 115 national education associations and institutions representing early learning to postgraduate education, is writing to express views on H.R. 83, the Consolidated and Further Continuing Appropriations Act, 2015.

This bill makes clear the critical need to raise the sequester cap for nondefense discretionary (NDD) spending.  The Fiscal Year (FY) 2015 NDD cap froze aggregate funding at last year’s level.  Since the FY 2016 cap is essentially a freeze at this year’s level, it will continue to make it extremely difficult for Congress to provide needed investments in education that will help our country prosper.

While we recognize the very difficult funding constraints the Appropriations Committee was operating under, we are deeply disappointed that the bill cuts aggregate discretionary funding for the Department of Education (ED) by $166 million. Excluding Pell grants, discretionary spending is increased by only 0.3 percent. Indeed, Fiscal Year 2015 ED discretionary spending would be almost $1 billion below the pre-sequester level.

While we appreciate the modest increases provided for such programs as Title I, Striving Readers, IDEA Part B State Grants, English Language Acquisition grants, Federal Work-study, Developing Institutions, and TRIO, many education programs will still be below their pre-sequester levels. Most other programs are frozen, with a few, such as School leadership and the High School Graduation Initiative, subject to additional cuts.

Education funding, though only 2 percent of the federal budget, has been a target of deep cuts since January 2011.  On the discretionary side of the budget, funding for programs exclusive of Pell grants was cut by a total of $3.714 billion between FY 2010 and FY 2013. Included among those cuts was the elimination of more than 50 education programs.

While the FY 2014 Consolidated Appropriations Act was a positive step forward in undoing the majority of the FY 2013 sequester cuts, it only restored two-thirds of the cuts in the Department of Education. Indeed, several important programs, including School Improvement Grants, Rural education, Promise Neighborhoods, elementary and secondary school counseling, Indian Education, Teacher Quality Partnerships, Magnet Schools Assistance, IDEA Preschool grants, Graduate assistance, research, development, and dissemination, and the Regional Educational Laboratories will remain frozen at their sequester cut level for the third year.

However, the alternative to passing this bill will be a three-month Continuing Resolution for the Department of Education and the rest of the government.  That would create continued uncertainty for states, schools, students and colleges. This is particularly the case for current-year funded programs like Impact Aid and Head Start. In addition, delaying decisions on final FY 2015 appropriations until March 2015 may well result in additional reductions in funding for education programs. Thus, we recommend that you vote for passage of the bill and on related procedural motions to advance its passage.

When our students succeed, our nation succeeds.


Kimberly Jones                                   Joel Packer

President                                             Executive Director