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LAST CUT IS THE DEEPEST: Final FY 2011 Spending Agreement Cuts Spending by Nearly $40 Billion, Includes More Cuts for Education Programs

After months of negotiations, House Republicans, Senate Democrats, and the White House finally came to an agreement on a long-term continuing resolution (CR) that establishes final spending levels for Fiscal Year (FY) 2011, which officially began more than six months ago. Under the CR, named the Department of Defense and Full-Year Continuing Appropriations Act, which the president signed into law on April 15, federal spending was cut by nearly $40 billion, compared to FY 2010.[1]

The CR gives agencies wide authority over the final spending levels for programs within their jurisdiction, unless those programs were specifically mentioned in the text of the CR. Agencies will also be bound by the top-level dollar figures in their program accounts. Because the U.S. Department of Education and other federal agencies have thirty days after April 15th to submit their spending plans to Congress, the true extent of cuts made to federal education programs not specifically mentioned in the CR will be unknown until spending plans are released.

Based on the text of the CR, funding was eliminated for Striving Readers ($200 million), Educational Technology State Grants ($100 million), and Smaller Learning Communities ($88 million). Because the agreement included a 0.2 percent across-the-board cut, nearly every education program was affected in some way. Programs targeted for additional cuts beyond the across-the-board cut include the School Improvement Grants program, which targets the nation’s lowest-performing schools, and Grants for State Assessments program, which provides funding to states to implement their assessment systems.

Title I and special education received the same funding total as last year, but, after adjusting for the 0.2 percent across-the-board cut, the programs will receive slightly less-$14.46 billion and $11.48 billion, respectively. The agreement left the maximum Pell Grant award unchanged at $5,550.

Programs receiving an increase under the agreement were Race to the Top, which received $700 million and Investing in Innovation (I3), which received $150 million. Only states will be able to apply for this new Race to the Top funding. Additionally, the CR added an assurance directing states that apply for Race to the Top funding to take actions to improve access to early childhood care and education as a condition of receiving Race to the Top funds.

In a statement of administration policy issued on April 14, the Obama administration said it “would not have agreed to many of these cuts under better fiscal circumstances,” but stated that the agreement “reflects a compromise that will help the Federal Government live within its means … .”

Republicans were quick to cast the agreement as the first step of many to reduce government spending. “We’ve taken a small but crucial step in getting Washington to live within its means without disrupting people’s lives,” said Senate Minority Leader Mitch McConnell (R-KY). “And while no one would argue that these cuts come close to achieving balance in government spending, neither would anyone deny the dramatic shift they represent. … This debate will soon move from a debate about billions in savings to a discussion about how we save trillions … .”

[1] Per the Congressional Budget Office (CBO), the final spending agreement’s “budget authority” for FY 2011 is $1,049.8 billion compared to $1,087.5 billion for FY 2010, a difference of $37.7 billion. However, because “many of the reductions in budget authority for mandatory programs would have little or no effect on outlays in 2011 or future years,” CBO estimates that the change in cumulative outlays under the agreement is closer to between $20 billion and $25 billion than the $37.7 billion reduction in 2011 budget authority. For additional information, read the layman’s explanation by Washington Post reporter Ezra Klein.

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