Federal Funding Outlook

1. Federal Funding Outlook NGMA Annual Grants Training Conference April 24, 2012 Federal Funds Information for States

2. It All Began…. • FY 2012 appropriations completed in late December 2011. • Major discretionary programs: -2.7% versus FY 2011, -7.2% versus FY 2010. • Major mandatory programs : +5.5% versus FY 2011, +8.5% versus FY 2010. • BCA baseline would allow +$2 billion for each of security, nonsecurity discretionary spending in FY 2013 (+0.4%). • FFIS estimates about 18% of total state funding would be subject to sequester in January 2013.

3. FY 2012 Appropriations: At What Cost to States?

4. FY 2012 Appropriations: Major Themes • Continuing Resolutions, “megabus” replaced “omnibus” • Continued program eliminations (Even Start, Education Technology State Grants, homeland security) • Adjustments in allocation methodology (LIHEAP) • Across-the-board cuts (Labor/HHS/Ed – 0.189%, Interior/Environment – 0.16%) • Rescission of unobligated balances (SNAP Employment and Training, Sec. 8 housing)

5. FY 2012 Appropriations: Major Themes • Additional reporting requirements for federal agencies. • Centers for Disease Control and Prevention (CDC) • Substance and Mental Health Services Administration (SAMHSA) • Prevention and Public Health Fund • Using Affordable Care Act funds to supplant existing appropriations.

6. Discretionary Spending Caps

7. What We Can Say About a Sequester?

8. What We Can Guess About a Sequester?

9. And Then…. • President’s FY 2013 budget would replace the BCA sequester with other tax and spending policies to reduce the long-term deficit. • FY 2013 discretionary spending would increase about 2.7%; mandatory would increase 7%. • House budget resolution would change everything, but its adoption mainly signals that the process is broken: • It deviates significantly from the BCA. • The Senate intends to adhere to BCA spending levels. • Hence, no concurrent budget resolution for FY 2013.

10. President’s FY 2013 Budget: Major Themes • Many repeat proposals from previous budgets and American Jobs Act of 2011. • Major restructuring of programs, program consolidations. • 38 K-12 programs consolidated into 11 new programs • 55 highway programs consolidated into 5 new core programs • A few new programs (SAMHSA, higher ed., Infrastructure Bank, American Jobs Act).

11. President’s FY 2013 Budget: Major Themes • Restructures funding with emphasis on competitive grants (public health, child care, ed.). • Increased focus on program integrity, performance, incentive payments (TANF, LIHEAP, CSBG, SSBG, Head Start, Foster Care, UI). • Reliance on program set-asides/transfers to fund new initiatives (Title I Rewards, teacher quality, workforce innovation fund, UI).

12. House Budget Resolution, FY 2013

13. House Budget Resolution, FY 2013 • Suspends sequester provisions for FY 2013. • This results in more defense spending and less nondefense spending in FY 2013. • Calls for reconciliation. • Affects agriculture, energy and commerce, financial services, judiciary, oversight and government reform, ways and means. • Generates $18 billion in savings in FYs 2012-13, $261 billion over 10 years. • Combined with lower discretionary caps, this would generate more deficit reduction than BCA. • If unsuccessful, sequester would occur in FY 2013.

14. House FY 2013 Discretionary Budget Authority

15. House FY 2013 – Mandatory Proposals • Medicaid becomes a block grant. (-$810 billion/10 years). • Indexed to CPI-U and population • Eliminate federal program requirements, enrollment criteria • Premium support in lieu of current Medicare. • SNAP becomes a block grant. • Based on low-income population indexed for inflation • Requires time limits and work requirements • Consolidate workforce/job training programs. • Reorganize/consolidate K-12 programs. • Deficit-neutral tax reform. • Repeal ACA.

16. Which Leaves us Where? • No concurrent budget resolution. • No full-year appropriations bills completed prior to November elections. • Likely lame-duck session to get things in order between elections and January sequester. • In short, another year of muddling through.

17. While Nero Fiddles… • Major programs needing long-term reauthorizations: • TANF • ESEA • WIA • SAFETEA-LU • Absent reauthorizations, more short-term extensions, more inability for states to plan ahead.

18. Contemplating a Lame Duck Session • Looming sequestration • Need to raise the debt limit • Expiration of Bush-era tax cuts • Expiration of payroll tax cut, other tax provisions • FY 2013 budget • Uncompleted reauthorizations (TANF, highways) • The kitchen sink?

19. Are There Any Common Themes, Any Areas of Agreement? • Yes. Everyone references GAO report on duplication and overlap. What does this mean? • Consolidate grant programs • Homeland Security as example • Reauthorizations for ESEA, WIA, and transportation all consolidate programs • Less funding, more flexibility. At least in theory.

20. Comprehensive Approach • General agreement on need to reduce federal budget deficit. • Comprehensive deficit reduction. • Could serve as alternative to sequestration • Could address numerous issues including the federal debt limit, federal spending levels, and taxation • Or not (may prove too difficult)

21. The End: Questions? Contact information: Trinity Tomsic: ttomsic@ffis.org Melissa Loeb: mloeb@ffis.org Steven Pennington: spennington@ffis.org www.ffis.org