Wednesday, January 11, 2012

Budget Series #3: A Look at the FY 2012 Budget Process

In our final post on the federal budget, we would like to reflect on the FY 2012 budget process and highlight key funding decisions that impact communities throughout the nation. Using the steps outlined in our recent Federal Budget Basics post, we’ve summarized the important events of the FY 2012 budget process and key funding decisions.

  1. President Obama Submits FY 2012 Budget
The FY 2012 budget process began when President Obama submitted his budget to Congress in February 2011. As the President’s opportunity to highlight funding priorities in the midst of economic uncertainty, President Obama’s proposed budget called for cuts to discretionary spending, as well as a five-year freeze on “non-security discretionary spending.” However, the proposed budget did highlight significant investments in education, workforce development and community-based programs. For example, President Obama requested $77.4 billion for the Department of Education, which included $150 million for the Promise Neighborhoods Initiative, and $380 million for the Workforce Innovation Fund. The President’s budget did not include spending changes for entitlement programs, such as Social Security, Medicare and Medicaid.

  1. Congressional Budget Resolution
In the midst of economic hardship and concern about the federal government’s spending limits, the House and Senate were unable to pass a FY 2012 budget resolution by the April 15 deadline. Instead, Congress focused its efforts on the Budget Control Act, which was enacted in August 2011 and allowed the government to continue functioning by raising the amount of debt the government can accrue, known as “the debt ceiling.” In addition to raising the debt ceiling, the Budget Control Act established the Joint Select Committee on Deficit Reduction – known as the “Super Committee” – which was charged with developing legislation that would reduce the federal deficit by $1.2 trillion. The committee was unable to identify potential spending cuts, which triggered automatic “sequestration,” meaning that $1.2 trillion in cuts will be made over the next ten years across all discretionary programs beginning in FY 2013. Essentially, $109.3 billion in cuts will be made each year beginning in FY 2013.

With FY 2012 quickly approaching in the fall, congressional subcommittees were unable to agree on appropriations by October 1, 2011 – the beginning of FY 2012 - leaving the government without a budget and at risk of a potential shutdown. As a result,Continuing Resolutions were passed on September 30 and October 5, providing funding for the government at FY 2011 levels.

After several months of debate on discretionary programs, congressional subcommittees were able to agree on the spending levels that align with the Budget Control Act. On November 18, 2011,Congress passed funding appropriations for the Departments of Agriculture,Commerce, Justice, Transportation and Housing and Urban Development. The remaining agencies – including the Departments of Education, Labor and Health and Human Services – were funded in appropriations that were passed on December 16, 2011.

Below you will a find a description of how a few of the federal programs that are of interest to communities fared during the FY 2012 budget process.

Community Programs
  • Choice Neighborhoods will receive $120 million in funding – an increase of $100 million from FY 2011– to continue transforming high-poverty communities into mixed-income neighborhoods. Unfortunately, the Sustainable Communities program was not funded for FY 2012 after receiving $99 million in FY 2011.
  • 21stCentury Community Learning Centers will receive $1.15 billion in funding –a decrease of roughly $2 million – to continue providing academic enrichment and other after-school programs to students in high-poverty, low-performing schools.
  • Promise Neighborhoods will receive $60 million in funding– double the amount received in 2011 – to continue creating cradle-to-career pipelines of support designed to improve outcomes for students in low-income communities.
  • Pell Grants will receive $22.8 billion in funding, allowing low-income college students to receive up to $5,550 in grants during the 2012-2013 academic year. While the maximum grant award available remains the same as FY 2011, fewer students will remain eligible for the award as the qualifying income level and the number of semesters a student may receive the award were both decreased.
  • The Striving Readers Program will receive $183 million in funding after being entirely unfunded in FY 2011. This program will support local literacy and educational development programs.
  • Community Health Centers will maintain their $2.72 billion in funding to continue providing necessary health care to more than 60 million Americans. In addition, this funding may be used by the Department of Health and Human Services to build new or expand existing health centers.
  • Healthy Food Financing Initiative will receive $32 million in joint funding from the Departments of the Treasury and Health and Human Services to ensure that low-income communities have access to healthy food.
Workforce Development
  • YouthBuild will receive $79.6 million in funding to continue providing essential education and job training to at-risk youth.

2012 Federal Budget Resources

We understand that the federal budget process is confusing and welcome your questions! Post your questions in the comments section.

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