Following intense negotiations, Congress passed legislation earlier this month to raise the debt ceiling and avoid a default on the nation’s debt. The legislation was billed as a compromise between the President and conservatives in the House, with wide-ranging policy riders that impact past spending as well as future appropriations.
Among the provisions of the deal are recissions of funds. Those include stimulus funds from the American Rescue Plan (ARP) that the federal government has yet to spend (or has not plans to spend). According to reports, the ARP education funds that will be rescinded are primarily higher education funds that institutions turned down, or other funds that States returned to the federal treasury. The legislation also calls for the rescission of some renewable energy tax credits and funding for the Internal Revenue Service.
Changes to federal benefits include expanding the age range for work requirements in the Supplemental Nutrition Assistance Program (SNAP), which will now include individuals aged 50-54 – with exceptions for veterans, those experiencing homelessness, and youth under age 24 aging out of foster care.
The changes with the most immediate impact, however, will be those that affect the appropriations process. The deal imposes hard caps on spending for the next two years, with spending for federal fiscal year 2024 (funds that go out to States starting in July of 2024 for the 2024-25 school year) frozen at current levels, and funding for fiscal year 2025 seeing a 1% increase. These caps spell an end to hopes that the President’s significant proposed increases for formula programs like Title I of the Elementary and Secondary Education Act would be adopted by Congress. Instead, any increases to funding will have to come from other programs, setting up competition between advocacy groups and lawmakers.
Finally, the deal imposes an additional 1% cut on spending across the board if appropriations bills for all 12 federal appropriations accounts (including the Labor-Health and Human Services-Education account) are not passed by January 1 of that fiscal year. Congress has not passed all 12 appropriations bills by that date – instead relying on temporary continuing resolutions or omnibus spending bills – since the mid-1990’s. Given the additional procedural requirements on appropriations bills imposed by the House of Representatives in its adopted rules this year, it is very possible that funding this year will see that across-the-board cut imposed.