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What if the BCA Sequester is Implemented Next January?

What if the BCA Sequester is Implemented Next January?. HSFO Annual Conference September 12, 2012. Federal Funds Information for States. Overview: Budget Control Act (BCA) of 2011. Three components with potential to affect future funding for state grant programs:

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What if the BCA Sequester is Implemented Next January?

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  1. What if the BCA Sequester is Implemented Next January? HSFO Annual Conference September 12, 2012 Federal Funds Information for States

  2. Overview: Budget Control Act (BCA) of 2011 Three components with potential to affect future funding for state grant programs: • Discretionary spending caps w/adjustments (done) • Joint Select Committee on Deficit Reduction (failed) • Sequestration process (January 2, 2013)

  3. The BCA and Looming Sequester • Absent a legislated alternative, a sequester will occur in January 2013 • $984 billion in cuts required over FYs 2013-2021 (roughly $109 billion per year, half from defense and half from nondefense) • Many mandatory and a few discretionary programs are exempt • ATB cuts in FY 2013, different process for FY 2014+

  4. Sequester: What We Don’t Know What is the ATB percentage cut? • CBO estimates 7.8% for nondefense discretionary and mandatory, 10% for defense • OMB estimates 8.2% for nondefense discretionary, 7.6% for nondefense mandatory, 9.4% for defense discretionary • Exact percentage won’t be known until January 2013 (will depend on base subject to sequester)

  5. Sequester: What We Don’t Know How will individual programs be affected? • Percentage reduction applied to FY 2013 funding (annualized level in CR) • OMB has authority to apply exemptions and special rules • Federal law lists programs and activities exempt from sequester (each item identified by budget account) • Federal law establishes special rules for certain programs

  6. Examples: Major Exemptions and Special Rules

  7. Examples: Major Exemptions and Special Rules

  8. Examples: Major Exemptions and Special Rules

  9. Sequester: What We Don’t Know How much discretion do agencies have in implementing sequester? • Virtually none • Some influence over timing (recent ED guidance) Will Congress and the president modify the BCA? • Various proposals, no agreement (explicit legislation required)

  10. Sequester Coverage Status of FFIS-Tracked Programs

  11. Sequester Coverage Status of FFIS-Tracked Funding

  12. Program Areas Most Affected

  13. What We Can Guess About a Sequester

  14. Will Sequester Happen? • Conventional Wisdom: agreeing to postpone the day of reckoning, BUT… • Many other issues at play • May depend on outcome of election • Waiting too long to act could have a major negative impact on economy

  15. The End: Questions? Contact information: Trinity Tomsic 202-624-8577, ttomsic@ffis.org

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