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Feds’ budget deal may bite state schools

Automatic federal budget cuts scheduled to hit Jan. 2 could cost Colorado school districts $37.5 million in 2013-14, according to estimates presented to a U.S. Senate hearing.

And depending on how events play out in Washington by the end of the year, the cuts, which primarily would affect federal grants for high-risk and special education students, could be even larger.

The situation is fluid, making predictions difficult. “Right now it’s very up in the air,” said Leanne Emm, assistant commissioner for finance at the Colorado Department of Education, who has been advising school districts on the situation. “It’s all based on a lot of assumptions.”

U.S. Education Secretary Arne Duncan is urging Congress to stop the automatic cuts, known as “sequestration” in federal budget jargon.

“Essentially, we’re playing chicken with the lives of the American people – our schools, communities, small businesses, farms, public safety, infrastructure and national security” if the automatic cuts are allowed to take place, Duncan said during a recent Senate hearing.

The possible cuts in a dozen federal education programs could equal an 8.8 percent reduction in what districts currently receive, according to “Under Threat,” a document prepared for Sen. Tom Harkin, D-Iowa, by the majority staff of the Senate Appropriations Committee.

A June 18 memo from Emm to school districts estimated a 9 percent reduction and said, “We urge districts to be cautious in their planning.” The memo also suggested that districts “develop different scenarios – one with no cuts and one that factors in potential reductions.”

The largest federal grant programs that could be affected are Title I, which provides funds to schools with significant numbers of at-risk students, and federal support for special education.

Because the state’s budget year starts on July 1 and the federal fiscal year begins Oct. 1, there’s been confusion about whether the cuts would hit in the middle of the current 2012-13 state and school district budget year.

But according to a July 20 federal letter to state education departments, the cuts – if they happen – would hit in the 2013-14 school year.

The clock on the cuts started ticking last year when President Obama and congressional leaders cut a deal on raising the government’s debt ceiling. Part of that tradeoff was that if congressional leaders didn’t subsequently agree on federal spending cuts – they didn’t – then nine years of automatic cuts would start next January.

Targeted programs include both defense spending and domestic programs such as education and human services. The Obama administration hasn’t yet released any detailed plans on how the cuts would be made, so estimates made in the Senate report and elsewhere are calculated using flat percentages.

Congress can stop the automatic cuts if it chooses, but whether the cuts happen – and how large they might be – depend on election year politics and lobbying.

And two factors could create larger budget problems for Colorado schools.

First, defense interests have been lobbying to cancel the automatic cuts for military spending. If that happens, Harkin said last week, the required cuts for domestic programs could rise to as much as 17.6 percent.

Second, automatic cuts to various federal health and human services programs could put pressure on the overall state budget and force the 2013 legislature to either eat those cuts or try to make them up by shifting funds from other parts of the budget. Because K-12 education consumes more than 40 percent of the state general fund budget, any shifts could threaten school spending.

Analysts from the Legislative Council and the Office of State Planning and Budget, based on the assumption that automated cuts would start hitting the state budget in January, estimated Colorado could lose $63 million to $68 million in funds for the rest of the federal fiscal year, which ends Sept. 30, 2013.

In a statement, Duncan predicted the cuts would have these effects on two major federal programs:

  • Title I funding would be cut by $1.1 billion, cutting off more than 4,000 schools serving an estimated 1.8 million students. The jobs of more than 15,000 teachers and aides could be at risk.
  • Special education funding would drop by by $900 million. That could mean layoffs of more than 10,000 teachers, aides, and other staff.

Here’s a list of possible cuts to Colorado’s share of various federal education programs, as estimated by the Senate staff report. The report also estimates that state Head Start spending could be cut $6.3 million. Colorado currently receives about $81 million in Head Start funding.

Estimated cuts to Colorado’s share of federal education programs

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