EDUCATION

Caps, Cuts, Freezes and SequestersFEDERAL EDUCATION FUNDINGJoel Packer, Executive Director, The Committee for Education FundingJpacker@cef.org

Committee For Education FundingThe Committee for Education Funding (CEF) is the oldest and largest education coalition.We represent 114 national organizations and institutions from PreK through graduate education.For more information: www.cef.orgFollow us on Twitter: www.twitter.com/edfunding 2Todays PresentationWhat is the CEF Budget Response?Why Invest in Education?What happened in Fiscal Years 2011 and 2012?Sequestrations Impact on Education in FY 2013The FY 14 OmnibusSummary of President Obama's FY 15 Budget for EducationK12 ProgramsCareer, Technical and Adult EducationHigher EducationEducation ResearchChildren's Programs

3CEF Budget Response230-page analysis of the President's FY 2015 Budget includes:CEF's position on the budgetSummary/analysis of the President's BudgetEducation budget cuts since FY 2010Funding table for FY 12, FY 13, FY 14 and Presidents FY 15 budgetThe Need To Invest In EducationAnalysis of 80 education and children's programs:Impact of the President's budgetImpact of sequestration4CEF Membership DirectoryListing of information about our members:Organization name/address/web address/key contacts/emails/phone numbers.

Both publications are available on the CEF website: www.cef.org 5THE NEED TO INVEST IN EDUCATION6

6MORE STUDENTS AND MORE STUDENTS IN POVERTY7

Rising K-12 Enrollments

8Source: CEF based on NCES Projections of Education Statistics to 2022

8Rising Higher Education Enrollments

9Source: CEF based on NCES Projections of Education Statistics to 20229More Children in Poverty

1010More Students in High-Poverty Schools

11Percentage distribution of public school students, by school poverty level: School years 1999-2000 and 2010-11 Source: NCES: Condition of Education 201311More Hispanic Students

12STATE AND LOCAL BUDGET CUTS13

Source: CEF based on BLS seasonally adjusted employment dataFewer Local Education Employees14thousands345,000 fewer jobs1414

Per Student Public Education Spending Decreased in 2011 1515State Funding for PreK Has Declined16Source: The State of Preschool 2012: State Preschool Yearbook The National Institute for Early Education Research

16

State Funding for Higher Education Has Declined

1717EARNINGS LINKED TO LEARNING18

Unemployment Linked to Educational AttainmentSource: CEF based on BLS; The Employment Situation -- February 2014Table A-4.

1919Earnings Based on Learning20

Source: Georgetown University Center on Education and the Workforce; The College Payoff

Estimated Cumulative Full-Time Earnings (in 2011 Dollars) Net of Loan Repayment for Tuition and Fees, by Education Level SOURCES: U.S. Census Bureau, 2012, Table PINC-03; Baum and Ma, 2012; calculations by the authors.

Education Pays 2013 For detailed data, see: trends.collegeboard.org.FIGURE 1.3Page 13

21THE PUBLIC OPPOSES EDUCATION CUTS22

The Public Opposes Education Cuts

23Source: Pew Research Center for the People & the Press, October, 2012Would you approve or disapprove of reducing federal funding for education as a way to reduce the size of the national debt?23Two-thirds Want To Protect Education From Sequester Cuts

24Source: CEF/FEI Poll, December 2012THE FEDERAL BUDGET AND EDUCATION25

Fiscal Year 2014 Outlays

26Source: CEF based on OMB data2626FY 14 Department of Education Discretionary Funding

27Source: CEF based on Education Department data27$80 BILLION IN CUTS SINCE FY 201028

$1.5 BILLION IN NON-PELL CUTSFISCAL YEARS 2011/201229Final FY 11 and 12 AppropriationsFY 11 cut ED (other than Pell) by $1.2 billion.Teacher Quality grants cut 16%, Career/Tech grants cut 11%, ED tech eliminated, LEAP eliminated

FY 12 total ED funding cut by $233 million.All programs cut by 0.189% across-the-board cut.

30$75 BILLION IN STUDENT AID CUTSFISCAL YEARS 2011/201231Pell/Student Aid Cuts EnactedBoth FY 11 and FY 12 maintained the Pell maximum award of $5,550.Maintaining Pell maximum was paid for with a variety of restrictions and limitations on student loans and Pell.Pell grants have been cut by $53 billion.145,000 students have lost their Pell grant.Interest subsidies on graduate loans eliminated = $18.1 billion cut.

32LARGEST EDUCATION CUTS EVER!FISCAL YEAR 201333

Sequestration = Largest Education Cuts Ever!FY 13 = fixed percentage across-the-board (ATB) cuts.NDD cut was 5% = $2.5 billion from ED.Pell grants exempt from across-the-board cuts.Head Start in HHS cut $401 million.Final ED non-Pell grant funding now lower than in FY 04.

FY 14-21 no longer ATB cut; further lowers discretionary caps.Squeezes education $; Pell no longer exempt.

34FY 13 Impact of Sequestration

3535PARTIAL SEQUESTER REPLACEMENTFISCAL YEAR 201436Budget DealHouse Budget Chair Ryan and Senate Budget Chair Murray in December agreed to the Bipartisan Budget Act: Partially replaced the sequester cuts to discretionary programs for FY 2014 and FY 2015.Paid for by extending mandatory sequester cuts into FY 2022 and FY 2023 and other small mandatory cuts and user fees.

37

FY 2014 OmnibusBased on BBA, in January Congress passed Consolidated Appropriations Act of 2014.In aggregate only restores 2/3rds of ED sequester cuts.Big winner was preschool:Head Start: sequester cut fully restored plus $100 millionEarly Head Start-Child Care Partnerships: $500 million New preschool Race To The Top: $250 million.

3838FY 2014 OmnibusPrograms frozen at sequester levels:SIGHigh School Graduation InitiativeRural EducationIndian EducationPromise NeighborhoodsInvesting in InnovationIDEA Preschool grants

3939FY 2014 Omnibus: IncreasesTitle I (+4.5%)Teacher Quality Grants (+0.5%)After school (+5.3%)ELL Grants (+4.3%)IDEA State Grants (+4.5%)IDEA infants and families (+4.5%)Career/technical ED state grants (+5.0%)GEAR UP (+5.3%)TRIO (+5.3%)SEOG (+5.3%)Work-Study (+5.3%)First in the WorldNew $75 million

40Education Department Funding41In billionsFREEZE OR LESS

FISCAL YEAR 1542

NDD Cap LevelsBudget Authority in Billions

Source: CEF Calculations based on CBO and OMB data43

43

Ryan FY 2015 Budget Slashes Non Defense DiscretionarySource: CEF Calculations based on CBO and OMB data and Ryan BudgetIn billions of $4444Cumulative Deficit Reduction FY 2015-2024

Sources: CEF Calculations based on President's FY 2015 Budget Summary tables, Table S3.

4545Fiscal Year 2015 Budget RequestPresented by the US Department of Education. More information at www.ed.gov. 4647

The Presidents FY 2015 BudgetPresident's Budget adheres to Ryan-Murray cap of $1.014 trillion.Proposes $56 billion Opportunity, Growth and Security initiative.50% defense/50% NDD; paid for with $28 billion in mandatory cuts and $28 billion in revenues.Includes funds for Early Head Start-Child Care partnerships ($800 million), Preschool Development Grants ($250 million), ConnectEDucators ($300 million), Promise Neighborhoods ($200 million)Replaces the sequester long-term.

48The Presidents FY 2015 BudgetED receives $1.3 billion (+1.9%) increase - largest of any nonsecurity agency.Excluding Pell, EDs total is $45.8 billion, a 3% increase.Increases mostly for new programs - most current programs are frozen (Title I, IDEA, SIG, after school, English Language Acquisition grants, Rural Ed, Indian Ed, charters, magnets, CTE state grants, Adult Ed state grants, SEOG, Work-Study, TRIO, GEAR UP, aid to HBCUs and other MSIs).

49Proposed Mandatory Spending

In billions (FY 15 - FY 24)5050Proposed Tax Changes

Positive amounts increase the deficit; negative amounts reduce the deficit5151Presidents Budget - DiscretionaryESEA/K-12 = +$437 million (+1.9%)Excludes FY 14 RTTT since all funding was for preschoolPreschool =+$250 million (+100.0%)Special Ed = +$103.3 million (+0.8%)Career/Technical/Adult Ed = +$20 million (+1.2%)Student Financial Aid = FreezeHigher Education = +$140.6 million (+6.1%)IES = +$58.2 million (+12.9%)Departmental management = +$305.0 million (+17.5%)

52302(b) AllocationsHouse: Labor-HHS-ED allocation cut by $1.08 billion (-0.7%)Within reduced total:$1.1 billion more needed for Unaccompanied Alien Childrens program in HHS$269 million more needed for non-profit loan servicersSenate: 302(b)s will be approved on May 22

53The Foundation for Success Early Childhood, Elementary, and Secondary Education54

Elementary/Secondary EducationProgram Increases: Promise Neighborhoods = +$43 million (+76%)Race to the Top Equity and Opportunity (new) = $300 milliondesigned to drive meaningful changes in how States and LEAs identify and close persistent educational opportunity and achievement gaps Investing in Innovation = +$23.4 million (+16.5%)STEM Innovation = +$170 million (+114%)High School Redesign (new) = $150 millionpromote the whole school transformation of the high school experience in order to provide students with challenging and relevant academic and career-related learning experiences that prepare them to transition to postsecondary education and careers

55Elementary/Secondary EducationProgram Increases: ConnectEDucators (new) = $200 millioncompetitive funds to LEAs and LEA consortia to support educators use of technology and data to personalize learning and to provide better CCR-aligned instruction.Teacher Incentive Fund = +$31.2 million (+10.8%)School Leadership = +$9.2 million (+35.9%)

56Elementary/Secondary EducationPrograms Cut:Impact Aid Payments for Federal property =-$67 million (eliminated)Teacher Quality State grants = -$350 million (-14.9%)Proposed for consolidation

57Elementary/Secondary EducationFor ESEA, the Budget proposes to restructure programs based on the Administrations ESEA blueprint. It would consolidate/restructure 14 currently funded programs into eight new funding streams. In total, funding for the consolidated ESEA programs would decrease by $202.9 million (-5.7%). Biggest increase ($170 million) is for STEM Innovation.

58Elementary/Secondary EducationAll other discretionary ESEA programs are frozen at their FY 14 appropriated level: Title I, SIG, migrant education, neglected/delinquent, HEP/CAMP, homeless education, Impact Aid Basic Support, grants for state assessments, rural education, comprehensive centers, Native Hawaiian and Alaska Native education, Indian Education, Magnet Schools, English Language Acquisition grants. 59Special Education - IDEAIDEA Part B State Grants frozenFederal share of average per pupil expenditure (APPE) in FY 2014 is 15.8%.Under Presidents budget Federal share = 15.6%

IDEA Results Driven Accountability Incentive Grants (new) = $100 millioncompetitive grants to States to implement State Systemic Implementation Plans to improve results for children with disabilities ages birth through 21.60Special Education - IDEAIDEA Grants for infants and families = +$3.3 million (+0.8%)

Preschool State Grants are frozen.

National activities are frozen.61

62Education, Careers, and Lifelong Learning63

Career, Technical and Adult EducationPerkins Act Career/Technical Ed State grants are frozen at FY 12 Level.$100 million carved out for a new competitive CTE innovation fund.Funding is based on the Administrations Blueprint for Transforming Career and Technical Education. CTE National programs also frozen.

64Career, Technical and Adult Education Adult Ed State grants are frozen.Of the $595 million, $74.7 million is set-aside for English Literacy/Civics Education State Grants.Adult Ed National Leadership Activities are frozen.Proposed new $20 million for Skills Challenge grants.Library Services and Technology Act funding is cut by $2.3 million (-1.3%).Office of Museum Services is increased $0.9 million (+3.1%).

65The Gateway to Opportunity Higher Education66

Pell GrantsMaintains the FY 14 discretionary level of $22.824 billion. Coupled with automatic mandatory funding, the Pell maximum award increases by $100 to $5,830. Budget proposes to reinstate the Ability to Benefit provision for students enrolled in eligible career pathways programs.67Pell Grants: Long-Term ShortfallCBO projects that if FY 15 appropriation is maintained at FY 14 level, produces a surplus of $4.375 billion which would be carried over into FY 16.If FY 16 appropriations level maintained at FY 14, CBO projects a $400 million surplus.FY 17-FY 24 projected cumulative Pell shortfall of $38.1 billion.68Student LoansInterest rates on new Federal Direct student loans will increase by 0.8% on July 1, 2014 based on 2013 Bipartisan Student Loan Certainty Act.

69

Student LoansCBO projects that in FY 2015 the net cost of federal student loans will return $15.745 billion to the federal government. Budget proposes to expand Pay As You Earn (PAYE) income-based repayment to all borrowers.Caps payments at 10% of discretionary income and forgives any remaining loan balance after 20 years.CBO scores that as costing $8.2 billion over ten years.Budget also proposes to exclude the forgiven loan balance from taxable income. 70Perkins LoansMandatory savings in Budget proposed to be used for Pell grants:Revise Perkins loans expand loan volume, eliminate in-school interest subsidy, make interest rate variable.CBO projects that raises $3.435 billion over ten years.

71Campus-Based AidFederal College work-study is frozenSEOG is frozen.Budget proposes to revise campus-based aid formula to target those institutions that enroll and graduate higher numbers of Pell-eligible students, and offer an affordable and quality education.

72Higher Education - Aid to StudentsTRIO and GEAR-UP both frozen.

Graduate Assistance is frozen.

73Higher EducationAid to HBCUs, HSIs, other Minority-Serving Institutions frozen.Under the Fund for the Improvement of Postsecondary Education:First in the World = +$25 million (+33.3%) for a total of $100 million.$75 million dedicated to college success grants for minority-serving institutions (HBCUs, HSIs, et al)competitive grant programs to support innovations that reduce costs and improve outcomes for studentsCollege Ratings: $10 million to support further development and refinement of new college rating system.International Education = +$4 million (+5.5%)Teacher Quality Partnerships consolidated into ESEA.

74Higher EducationMandatory Funds:College Opportunity and Graduation Bonus Program = $7 billion over ten yearsto reward colleges that enroll and graduate low-income students and encourage all colleges to improveState Higher Education Performance Fund = $4 billioncompetitive grant program for states to support, reform, and improve the performance of their public higher education systems

75Forging Success Educational Research, Statistics and Improvement76Institute for Education SciencesProgram Increases: Research, development, and dissemination = +$10.4 million (+5.8 %)Statistics = +$19.7 million (+19.1%)Statewide data systems = +$35.5 million (+102.7%)Special Education Studies = +$2.6 million (+24.0%)ED proposes to use a portion of i3 funds to support the proposed Advanced Research Projects Agency-Education (ARPA-ED).

77Institute for Education SciencesProgram Decreases: National assessment (NAEP) = -$7.4 million (-5.6%)National Assessment Governing Board (NAGB) = -$530 thousand (-6.4%)

Programs Frozen: Regional Educational labsResearch in Special Education

78Education-Related Programs Meeting the Human Needs of Americas Children79

High Quality Preschool $75 billion over 10 years in mandatory funds to states to provide high-quality preschool to all children from low and moderate income families. Paid for with tobacco tax increaseStrong Start for Americas Children Act (HR 3461/S. 1697) based on president's plan.Preschool Development Grants = +$250 million (+100%)In FY 14 funded under Race To The Top$3.3 million increase for IDEA Infants and Toddlers grants (+0.8%).

808080Early Learning Programs Head Start (in HHS) = +$270.3 million (+3.1%)$150 million of this increase is for Early Head Start Child Care Partnerships.

Child Care Development Block Grant (in HHS) = +$57 million (+2.4%)$200 million for quality improvements.There is also $3.667 billion for the mandatory portion (Child Care Entitlement (CCE)) = +$750 million (+24.7%)Serves an additional 74,000 children.81Childrens Programs Child Nutrition: mandatory funding increases by $1.25 billion (+6.4%). 30.4 million children served by School Lunch14 million served by School BreakfastCHIP mandatory funding increases by $672 millionserves 8.5 million children in 2013.funding runs out at the end of 2015.

Most low-income entitlements serving children were exempt from sequestration including CHIP, Child Nutrition, Child Tax Credit, Child Care Entitlement, Medicaid, SNAP.8283

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Public school enrollment (in thousands)

Sheet1199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022434654411144840456114612746539468574720447672481834854048795491134931649293492664936149484495224963649785500185032850654509995133651707521245253452952

Chart1143051427914262143681450214507148501531215928166121691117272174871775918248191032042821016209942096821216215752180522076223762269823025233092363023888

Enrollment in Degree-granting Institutions (in thousands)

Sheet1199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022143051427914262143681450214507148501531215928166121691117272174871775918248191032042821016209942096821216215752180522076223762269823025233092363023888

Chart10.098Less than H.S. diplomaLess than H.S. diplomaLess than H.S. diploma0.064H.S. graduateH.S. graduateH.S. graduate0.062Some college or Associate's DegreeSome college or Associate's DegreeSome college or Associate's Degree0.034Bachelor's Degree or higherBachelor's Degree or higherBachelor's Degree or higher

February 2014 unemployment rate

Sheet1Less than H.S. diplomaH.S. graduateSome college or Associate's DegreeBachelor's Degree or higher9.8%6.4%6.2%3.4%

Chart10.220.75

21%

Sheet1ApproveDisapproveColumn10.220.75To resize chart data range, drag lower right corner of range.

Chart10.340.210.45

Column1

Sheet1Column1Cut education the same as other programs34%Cut education, but less than other programs21%Dont cut education at all45%To resize chart data range, drag lower right corner of range.

Chart167612495852513309579223

Fiscal Year 12Department of Education 2%Defense17%Nondefense discretionary (minus education)14%

Sheet1Fiscal Year 12Education67Discretionary Defense612non-defense discretionary (other than education495Social Security852Medicare513Medicaid309Other Mandatory579Interest2233650

Chart1236191249016952448622924491745526

Column1

Sheet1Column1ESEA/other K12$23,619IDEA$12,490Career/Tech/Adult ED$1,695Student Aid$24,486Higher Education$2,292Research/Statistics$449Management$1,745Other$526$67,302

Chart1-2478-727-65-124-620-87-86-15-42-401

In millionsColumn1

Sheet1Column1Total Dep't. of ED-2478Title I-727Impact Aid-65Teacher Quality-124IDEA Grants-620Career, Tech, Adult-87Student Aid-86GEAR UP-15TRIO-42Head Start-401

Chart12.1550.2511.0990.723

SalesSpending cuts are more than 3 times revenue increases$2.155 trillion$251 billion$1.099 trillion$723 billion

Sheet1SalesDiscretionary Spending Cuts2.155Mandatory Spending Cuts0.251Interest Savings1.099Revenue Increases0.723To resize chart data range, drag lower right corner of range.

Chart10.6456.4723.375

Column1

Sheet1Column1Reauthorize Secure Rural Schools$0.6State Higher Education Performance Fund$4.0RESPECT (Teacher Quality)$5.0Expand Pay-As-You-Earn$6.4College Opportunity and Graduation Bonus$7.0Pell Grants$23.3Preschool for all$75.0

Chart18.967.30.17-0.6

Column1In billions FY 15- FY 24

Sheet1Column1Exclude Pell grants from income$8.9Permanently extend the American Opportunity Tax Credit$67.3Exclusion from income for student loan forgiveness and Indian Health Service Health Professions schoalrships$0.2Modify reporting of tuition expenses and scholarships on Form 1098-T$(0.6)