Government Shutdown Strands Departments of Education, HHS with Few Staff, No Money

Congress spent the final moments of fiscal year 2013 last night in the throes of a debate over funding the government. Unable to reach agreement despite days of back-and-forth between the House and Senate, however, the government officially shut down at midnight on September 30.

Federal agencies were ordered just before midnight to begin implementing plans for a federal shutdown absent funding for fiscal year 2014, which began on October 1. Skeleton crews will remain in place at the Departments of Education and Health and Human Services (HHS) for the length of the shutdown, but most employees will be furloughed.

The first few days of the shutdown likely won’t be very severe. Education programs funded with mandatory spending—including Pell Grants and federal student loans—will continue to operate as normal. And most of the big K-12 programs, namely Title I grants to low-income students and IDEA special education grants to states, have already seen a substantial portion of their funding disbursed. Those and other programs that have already been awarded will be okay in the short term.

Some other programs won’t be so lucky. About 20 Head Start programs, enrolling nearly 19,000 children, have grants that expire on October 1 and won’t receive new funding to continue operating until the shutdown is resolved. Other federal programs, including work-study aid for college students, will also be delayed.

If the shutdown wears on, though, it could start to impact school districts, institutions of higher education, and postsecondary students more severely. Some staffers for the Departments of Education and Health and Human Services will return to the agencies to ensure operations function as normally as possible. But with no funding appropriated yet for fiscal year 2014, school districts and students are sure to pay the cost.

The dispute that led to the first federal shutdown in 17 years centered around the implementation of the Affordable Care Act, the healthcare law passed in 2010 for which some provisions also went into effect on October 1. Some Republican members of the U.S. House of Representatives insisted on defunding and/or delaying for one year the law’s implementation, while Democrats in Congress, as well as President Obama, demanded a clean funding bill with no alterations to the healthcare law.

The debate over the Affordable Care Act is masking another divide in Congress that needs to be resolved before an annual appropriations bill is finalized, though: how and whether to fund domestic programs within a shrunken budget.

The 2011 Budget Control Act sets an overall limit on funding for domestic programs, and to avoid finding the required spending cuts in fiscal year 2013, Congress and the president enacted a law in late 2012 to reduce the 2014 levels further. That means this year, lawmakers will have to find another $18 billion in cuts to fiscal year 2014 appropriations to avert mandatory and automatic across-the-board sequesters applied to most federal programs.

But Senate Democrats have said they won’t support a bill within those limits, and House Republicans now have cold feet having realized they’d have to cut a big chunk of domestic funding back to fiscal year 2002 levels. So neither the House nor Senate has voted to approve its own spending bill for the Departments of Labor, HHS, and Education. Assuming lawmakers don’t manage to find the cuts themselves, many federal programs, including most education ones, will be sequestered again. The continuing resolutions debated over the past week have appropriated well above the 2014 rate, at prior-year levels. That means lawmakers have likely set up federal programs for another round of blunt cuts down the line.

All in all, the shutdown leaves policymakers in D.C. and recipients of federal dollars around the country with a great deal of uncertainty. Congress could choose to end this shutdown quickly, before many serious side-effects occur. Or the shutdown could drag on, with neither side willing to cave. There could even be a short-term temporary funding bill—as short as one week, some lawmakers have argued—that would precipitate another round of the same debates almost immediately.

Finally, in just a few weeks, on October 17, the U.S. is projected to reach the nation’s debt ceiling. A bill to raise the debt ceiling could be seen as a prime legislative vehicle to pass a 2014 spending bill – but some members of Congress are considering yet another showdown when the debt ceiling debate rolls around.

Check back with Early Ed Watch over the coming weeks for more details, and for information on the 2013 and 2014 appropriations process, we’ve got the details in our April 2013 issue brief, Federal Education Budget Update: Fiscal Year 2013 Recap and Fiscal Year 2014 Early Analysis."