Budget Control Act of 2011

On August 2, 2011, the President signed the Budget Control Act of 2011 into law after the Senate passed the bill by a vote of 74 to 26. The House of Representatives passed the debt limit/deficit reduction bill (S. 365) on August 1, 2011 by a vote of 269 to 161. 

The Budget Control Act of 2011 provides for an immediate increase of $400 billion in the nation’s debt ceiling. According to the Congressional Budget Office (CBO), the law would yield a savings of $917 billion over the next ten years (2012-2021). The law also calls for the establishment of a 12-member committee, the Congressional Joint Select Committee on Deficit Reduction that is tasked with developing a plan for an additional $1.5 trillion in savings over the next 10 years. The joint committee’s first meeting is to be held in mid-September. If the joint committee’s plan is not approved by Congress, or if the plan does not reduce the federal deficit by $1.2 trillion, the law sets automatic triggers that would reduce overall spending by $1.2 trillion, “spread evenly over the fiscal years 2013 through 2021,” according to CBO. Half of the targeted $1.2 trillion would come from defense spending and half from non-defense programs through a process called budget sequestration.

Appropriations for Pre-K-12 programs
While the Budget Control Act of 2011 does make changes to higher education student loan programs by directly appropriating funds for PELL grants for the next two fiscal years and eliminating interest subsidies on loans to almost all graduate students, the law provides greater budget authority for non-defense programs than the House-passed budget resolution for Fiscal Year 2012. The major concern for FY2012 funding is that the overall budget authority in the House-passed budget resolution provided for the Appropriations Subcommittee for the Departments of Labor, Health & Human Services, and Education represents a decrease of more than $18 billion from this fiscal year.

However, the Budget Control Act of 2011 establishes a new congressional budget resolution for FY2012 that would decrease overall budget authority for non-defense programs by $3 billion, rather than the higher amount that was passed by the House in April. Essentially, the budget cuts that will be initially imposed by the new Budget Control Act are not as significant as earlier proposals. The law’s specific impact on PreK-12 education programs will become clearer as the FY2012 appropriations process continues. The House Appropriations Subcommittee on Labor, Health & Human Services, and Education recently postponed its consideration of a draft funding bill for FY2012 until September.

Future concerns lie ahead with the additional savings that will be targeted by the Congressional Joint Select Committee on Deficit Reduction and/or the budget sequestration process that could reportedly cut funding for education programs by an estimated $3 billion over 10 years.

NSBA will keep you apprised of further developments and necessary action steps as the appropriations process continues.