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The Budget Control Act of 2011: Knowns and Unknowns

The Budget Control Act of 2011: Knowns and Unknowns. NASBO Annual Meeting St. George, UT August 9, 2011. Federal Funds Information for States. Overview: BCA of 2011. Three components with potential to affect future funding for state grant programs: Discretionary spending caps w/adjustments

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The Budget Control Act of 2011: Knowns and Unknowns

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  1. The Budget Control Act of 2011: Knowns and Unknowns NASBO Annual Meeting St. George, UT August 9, 2011 Federal Funds Information for States

  2. Overview: BCA of 2011 Three components with potential to affect future funding for state grant programs: • Discretionary spending caps w/adjustments • Joint Select Committee on Deficit Reduction • Sequestration process Other components of interest: • Debt limit, program integrity, higher education programs, balanced budget amendment.

  3. Discretionary Spending Caps

  4. Joint Select Committee on Deficit Reduction • 12 members: 3 from each chamber, party • Identify 10-year deficit reduction of at least $1.2 trillion through any means. • November 23, 2011 deadline for recommendations, December 23 for congressional vote. • Approval would permit dollar-for-dollar increase in debt limit, up to $1.5 trillion.

  5. Sequestration Automatic ATB cuts if joint committee process fails to produce at least $1.2 trillion in deficit reduction. • Split evenly between defense, nondefense. • Includes mandatory spending with several exceptions. • Effective in January 2013 for FY 2013 and beyond. • Medicare cuts capped at 2%. • Different application of ATB cuts in FY 2013 versus future years.

  6. Increases in the Federal Debt Limit • President can request $900 billion now, of which $400 billion is immediately available and remainder becomes available absent a joint resolution of disapproval. • With adoption of $1.5 trillion in deficit reduction or a balanced budget amendment, president can request an additional $1.5 trillion. • Absent those benchmarks, president can request $1.2 trillion, also subject to disapproval.

  7. Program Integrity • Spending for program integrity efforts in Social Security, health care are outside discretionary caps. • Goal is to reduce net federal spending by targeting overpayments for benefits. • Applies to SSA for SSI, DI and to HCFRA for Medicare, Medicaid, CHIP.

  8. Changes to Education Program • Increases funding for Pell Grants. • Eliminates subsidized loan program for graduate students. • Eliminates loan repayment incentives.

  9. Balanced Budget Amendment • After September 30, 2011, and before December 31, 2011, House and Senate required to vote on joint resolution proposing a balanced budget amendment. • Adoption would allow increase in debt limit to $1.5 trillion.

  10. Impact on States • FY 2012 looks relatively benign from a technical/budget perspective, but politics can be tricky. • FY 2013+ hinges on joint committee • If it succeeds, what will it recommend? • If it fails, how will ATB cuts be applied to individual programs?

  11. The End • Questions? • Check for updates at www.ffis.org • Almost all states subscribe to FFIS, please contact us for your password and to be added to the distribution list: mhoward@ffis.org, 202-624-5848

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