Hello NCL Members, Happy New Year! Here’s the latest federal budget info to chew on. As you’ll recall, Congress has still not finalized federal spending for Fiscal Year 2018, which technically began October 1. Right before they skipped left town for the holiday recess, Congress passed another short-term continuing resolution (CR) that extended FY 2017 funding levels (with a few not-relevant-to-us exceptions) until January 19. (Also, just to mention since I raised the PAYGO issue a while back, they also passed a waiver for the PAYGO sequester that would have been triggered by the $1.5 trillion tax cut.) In a surprise to exactly no one, Democrats backed off their earlier threat to refuse to vote for the CR or leave town without a DACA fix. So that is still up in the air. In meetings with house appropriations staff just before the break, the advice I got was to hold off on any final advocacy pushes for specific program funding increases until *after* they finally make a cap deal (see below) and the committees know what their allocations are. (And I think at that point members of the Labor-HHS-Education subcommittee would be the only useful target of any such advocacy.) If money is still tight in the overall Labor-HHS-Education allocation then there is not much point in asking for a billion dollars of new money for adult ed. In other words, we’d want our advocacy message to reflect a realistic understanding of the limitations the they will be under…. I think the best advice I have is to keep expectations low. Unlikely there will be much more money in the Labor-HHS-Education allocation even assuming the caps are raised bit — Labor-HHS-Education also seems to get the least in terms of a bump when the caps are raised. (I think it’s also reasonable to conclude that Labor-HHS-Education appropriators have already have sketched out what they are going to do based on a best guesstimate of what an increase might look like.) Important dates coming up: Current CR expires January 19 State of the Union address will be on Tuesday, January 30th. The *FY 2019* budget request is due from the White House on February 5th. Although it will probably be delayed... Below is a summary of funding levels, key decisions, and sticking points in the path towards enacting funding for the remaining nine months of FY 2018, courtesy of Sheryl Cohen of CEF: > o Status of FY 2018 funding in the House and Senate - In September, the House passed an FY 2018 omnibus appropriations bill that included all 12 government funding bills that cut non-defense discretionary (NDD) funding by $5 billion below the FY 2018 cap while providing $72 billion above the cap for defense. As a reminder, the House bill cut funding for the Department of Education by $4.2 billion below the FY 2017 level when factoring in rescissions of Pell grant funding in both years; if you exclude all Pell grant funding, the rest of the Department of Education is cut by $2.2 billion. The Senate has not yet voted on any FY 2018 bills other than the three CRs. The Senate Appropriations Committee marked up 8 bills and posted the 4 others that together provide the total of the FY 2017 funding caps, not the lower FY 2018 levels. The Senate Labor-HHS-Education bill cut discretionary funding for the Department of Education by $1.3 billion below the FY 2017 level when factoring in rescissions of Pell grant funding in both years; if you exclude all Pell grant funding, the rest of the Department of Education receives a $29 million (0.1%) increase. > > o Choosing new levels for defense and NDD spending for FY 2018 and maybe 2019 – The sequester-level caps for FY 2018 are slightly below the levels for 2017, and are widely held to be too low. Debate on a budget deal – when it has occurred - is behind closed doors, but reportedly sticking points are the size of the increase, whether the cost is offset with savings elsewhere, and whether defense and NDD are raised by the same amount – the parity principle that all previous deals have maintained. To give you a sense of the scope, eliminating the discretionary sequester would raise defense spending by $54 billion and raise NDD by $37 billion (the sequester cuts equally from defense and non-defense programs, but there are additional non-defense savings from mandatory programs). > > o Who wants what spending level - Defense hawks want to increase the defense cap but not the NDD cap. A deal to fund defense at the level in the National Defense Authorization Act would raise defense spending even more - by $77 billion above the FY 2018 cap. Democrats continue to push for parity in raising NDD caps by the same amount as defense caps. Some Republicans want a deal that eliminates the discretionary sequester for both categories for two years, which provides a far greater increase for defense than for NDD spending – increasing defense by $54 billion and NDD by only $37 billion, as shown in the table below. That is because one third of the non-defense sequester cuts are from mandatory programs, and the mandatory sequester would continue (there is virtually no eligible mandatory defense spending to sequester, so 99% of the defense sequester comes from the discretionary side <https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/sequestration_reports/2018_jc_sequestration_report_may2017_potus.pdf>). > > > > o Non-budget-related sticking points – Other issues will affect agreement on a budget deal and further funding bills. These unrelated issues include addressing DREAMers immigration status, funding for a border wall, extending the Children’s Health Insurance Program, stabilizing the Obamacare health insurance market, disaster relief, and more. House Democrats, for example, maintain their opposition to a spending deal unless it helps DREAMers stay in this country. > > o Next steps: leadership/White House meeting today yesterday – This afternoon Wednesday the House and Senate leaders of both parties are meeting met with Office of Management and Budget Director Mick Mulvaney and the White House Legislative Affairs director to talk about the budget caps, among other topics. The House is not in session this week, so no official action will occur there until next week at the earliest, leaving only two weeks before the CR expires on January 19. Even if leadership can quickly reach an agreement on higher spending caps, there will need to be another CR to provide time to craft and negotiate an omnibus bill funding all government programs for the full year. > > o White House budget dates – The President will make his State of the Union address on Tuesday, January 30, which usually provides a sneak peek into key budget priorities, even if without many specifics. The FY 2019 budget request is due on Monday, February 5, but it would not be surprising if it is delayed. The Administration may want to wait until Congress finalizes FY 2018 funding before proposing FY 2019 levels, and it may want to incorporate underlying changes to the economic forecast resulting from the tax bill enacted last month. We should know by mid-January whether the President’s budget request will be delayed. Jeff Jeff Carter Cell: (202) 374-4387 | @jeffcrtr Senior Policy Advisor National Coalition for Literacy www.national-coalition-literacy.org <http://www.national-coalition-literacy.org/> jcarter@literacypolicy.org <mailto:jcarter@literacypolicy.org> El Presidente, Committee for Education Funding Executive Director Physicians for Social Responsibility 1111 14th St, NW, Suite 700 Washington, DC 20005 www.psr.org <http://www.psr.org/> | jcarter@psr.org <mailto:jcarter@psr.org>