Budget Sequestration: Tougher Times Ahead for Rural Schools?

Last Updated: August 28, 2012

This article appeared in the August 2012 Rural Policy Matters.

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Nearly $5 billion dollars will be cut from federal education programs if Congress and the Administration don’t reach a budget agreement by the end of this year. The cuts will disproportionately affect funds distributed through formula grants — grants for which districts do not have to compete — for programs for low-income students and students with disabilities.

Mandatory budget cuts = sequestration

The potential $4.8 billion in cuts to federal education programs are part of a larger $1.2 trillion cut to federal spending that will begin going into effect January 2, 2013 failing a budget agreement prior to that date.

These mandatory across-the-board cuts to federal spending (some programs are exempted) are termed sequestration. Sequestration of $1.2 trillion was written into the Budget Control Act of 2011. Its threat, sometimes referred to as the “fiscal cliff,” was intended to force Republicans and Democrats, Congress and the President, to reach a balanced budget after having failed to do so as part of the regular budgetary process.

The budget impasse is part of a larger political fight over how to address the federal budget deficit. Republicans have so far refused to consider any measures to raise taxes and insisted on renewing tax breaks, including those for the very wealthy, set to expire at the end of this year. Democrats have insisted on a combination of spending cuts and tax increases and on allowing tax breaks for the wealthiest to sunset as scheduled in current law.

When no budget was reached, Congress passed the Budget Control Act, which authorized the bi-partisan Joint Select Committee, aka the “Congressional Super Committee,” to work out a budget. If the Committee failed to reach a budget agreement, the law mandated $1.2 trillion in cuts (sequestration), split equally between defense and non-defense programs. Sequestration was widely viewed as a catastrophic threat to incentivize an agreement.

However, the Super Committee adjourned without reaching a budget agreement, punting the issue back to Congress and the President to come up with a budget by January 2.

Many Capitol Hill watchers have expected that much of the budget debate is political maneuvering in advance of the Presidential election and that little will happen until the election outcomes are clear.

Potential Defense Cuts Dominating Media Attention

Much media coverage of sequestration has been focused on potential cuts to military spending. This attention to Defense cuts has to do with a variety of factors, including the many D.C. area jobs that are connected to the military; the possibility that sequestration would affect some $200 billion in private contracts; the reality that politicians in both parties want to seem strong on defense, especially in an election year; and a partisan fight over whether a law requiring a 60-day notice for layoffs for certain federal employees applies to the sequester or to employees of defense contractors. That 60-day notice falls on November 2, four days before the election.

Education cuts disproportionately affect low-income students

Relatively less attention has been given to the potential impact of sequestration on non-defense programs. Nevertheless, in July, the U.S. Senate held hearings on the impact of sequestration on federal education spending. Also in July, the National Education Association (NEA) released analysis detailing how much various education programs would be cut by sequestration.

The $4.8 billion in federal education cuts, should sequestration occur, will affect four programs: Title I of the Elementary and Secondary Education Act (ESEA), which provides funding for very low-income students; Title II of ESEA (teacher quality); IDEA, Part B, which provides funding for students with disabilities (Special Education); and Career, Tech, and Adult Education programs.

These programs also include Head Start, Before and After School programs, Impact Aid, Education for Homeless Children programs, Rural Education Achievement Program (REAP), federal work study, and grants for School Improvement (SIGs), English Language Learners, and TRIO (services to support disadvantaged students from middle school through college) among others.

The cuts would go into effect in July, 2013 and apply to the 2013–14 school year. They would take spending back to 2002 levels in several programs, despite an increase in both the number of students served and the costs of implementation.

According to the NEA analysis, these cuts would affect 9.35 million students and eliminate upwards of 80,000 jobs.

The problem with cuts to formula programs

One of the most significant, yet under-reported aspects of the potential education budget cuts is that they so heavily affect formula programs.

Formula programs are those that provide funding to districts based on the number of students who qualify for the services the program provides. They are designed to ensure extra support for students with significant educational challenges. The exact amount of funding is determined through formulas that consider a variety of factors. In formula grants, districts are not forced to compete against each other for funding.

For these reasons formula grants are especially important to districts that are small, high-poverty, low-wealth, and/or rural because these districts are the least likely to have the existing funds and staffing capacity to write competitive grants, and their smaller student numbers, more scattered locations, and widely diverse circumstances also make them less able to “win” in a competitive context. Formula grants provide access to federal education support for all students, regardless of where they happen to live.

It is important to note that many of the Department’s competitive grant programs, including Race to the Top and Investing in Innovation (i3), are not part of the Discretionary Budget and, therefore, not subject to sequestration.

It is also important to note that many federal formula grants, including Title I, use formulas that discriminate against smaller, higher-poverty school districts. You can read more about problems with Title I funding at the Formula Fairness Campaign.

For these reasons, sequestration could mean especially dire consequences for the poorest children in the poorest school districts, those with the fewest resources and the least access to educational opportunity.

Read more:

General coverage

NEA analysis

State breakdown of potential cuts:

Senate Hearings on Impact of Sequestration on Education


Read more from the August 2012 Rural Policy Matters.