FY11 talks break down; FY12 budget released.

The stopgap continuing resolution (CR) currently funding the federal government is set to expire this Friday, April 8, but negotiations between the White House and congressional leaders on a longer-term deal appear to have broken down—at least temporarily—increasing the possibility of a government shutdown beginning this weekend. The White House has issued a memo to agencies and departments asking them to prepare for a possible closure.

The two sides have been in discussions in recent days on a compromise bill that would finalize appropriations for the remainder of Fiscal Year (FY) 2011, which ends September 30. Democratic leaders announced last week that there was an agreement in principle on a top line cut of $33 billion below FY 2010 levels (including $10 billion in cuts already approved through previous CRs), which would be a little more than half of the $61 billion in cuts proposed under a long-term CR (HR 1) passed by the House in February. However, House Speaker John Boehner (R-OH), who has been leading negotiations for congressional Republicans, repeatedly stated that a final dollar figure was not agreed upon, and he rejected outright this morning the $33 billion figure as “not enough.” The two parties reportedly remain unable to reach agreement on the specific cuts to be included in a final bill; Republicans have been pushing to ensure that the bulk of cuts come out of so-called “discretionary” spending programs targeted under H.R. 1, such as job training and other social services, while Democrats have proposed that at least some of the savings come from “mandatory” programs such as farm subsidies and highway contract authority. While the outright elimination of WIA Title I programs seems unlikely at this point, it is clear from recent conversations with congressional staff that some (potentially significant) portion of the $3.8 billion in cuts to Department of Labor job training programs included in H.R. 1 remains on the table for inclusion in a final bill, though it is unclear which programs would be affected or how deeply programs would be cut.

Because House rules generally require that legislation be publicly available three days before a vote, in the absence of another short-term CR, the two sides must reach some form of agreement by Wednesday morning on a long-term CR in order to avoid a potential shutdown. Seeking to put pressure on the White House and Senate Democrats, House Republicans introduced a one-week CR on Monday night that would extend federal funding for the Department of Defense through the end of the fiscal year while extending most other programs through April 15. The proposed CR would cut about $12 billion in discretionary funding compared to last year’s funding levels, including about $18 million in cuts to training programs for ex-offenders under the Department of Labor. President Obama rejected the idea of another short-term CR, and he has publicly urged congressional leadership to return to the White House on Wednesday to continue negotiations if a long-term resolution is not reached by tonight.

Further complicating things is the release earlier today of the House Republicans' FY 2012 budget resolution, which will set overall spending levels for House appropriators as they begin next year’s appropriations process. Developed by House Budget Committee Chair Paul Ryan (R-WI), the resolution calls for cutting $5.8 trillion in federal spending over the next decade, including steep cuts in non-security discretionary spending in FY 2012 and a five-year freeze on funding for these programs going forward. The resolution also proposes significant structural changes to federal job training programs. According to the summary released by the Budget Committee:

“[T]his budget advances reforms to increase job-training outcomes across the board. It improves accountability by calling for the consolidation of duplicative federal job-training programs into more accountable, targeted career scholarship programs. Instead of wasting job-training money on duplicative administrative bureaucracy, this budget calls for job-training programs to be streamlined and better coordinated with each other and with the Pell program to maximize every dollar to those who need it.

This budget advances improved oversight and accountability for all job-training programs and the Pell program by tracking the type of training provided, the cost per student, employment after training, and whether or not trainees are working in the field for which they were trained. These programs should also track beneficiaries’ participation levels in federal support programs (e.g. welfare and SNAP) before and up to five years after training to determine if the training led to self-sufficiency. These common-sense measures will enable policymakers to determine whether the private and non-profit institutions that train beneficiaries of these programs are training them effectively.”

The budget resolution proposes a range of controversial changes to other key federal programs, including proposals to transform Medicaid into a block grant program; capping expenditures on the Supplemental Nutritional Assistance Program (SNAP, formerly known as Food Stamps) and imposing new time restrictions and work requirements on SNAP beneficiaries; and reducing funding for Pell Grants. The resolution will be marked up on Wednesday morning and may receive a vote in the House by the end of the week.

Overall, the Ryan proposal would cut non-defense discretionary spending by about $72 billion next year, and would reduce funding by about $6.2 trillion over the next decade, compared to President Obama’s FY 2012 budget proposal. Although Ryan’s budget has no chance of being adopted by the Democratically-controlled Senate, the resolution will serve as the Republican starting point for FY 2012 funding discussions. Just as in FY 2011, the depth and breadth of the proposed cuts significantly shifts the parameters of the funding conversation, making it far more likely that employment and training programs will remain vulnerable to deep cuts as Congress attempts to set funding priorities. 

The budget also sends clear signals about what to expect from House authorizing committees as they begin to look at legislation to reauthorize programs such as the Workforce Investment Act, Temporary Assistance for Needy Families (TANF), SNAP, and others.

Workforce advocates should continue to weigh in with policymakers about the importance of maintaining current funding levels for job training and education programs in FY 2011 negotiations, and urge them to oppose drastic legislative changes to these programs that would limit their effectiveness in helping all U.S. workers and businesses get the skills needed to sustain our fragile economic recovery. National Skills Coalition will continue to monitor developments relating to both the FY 2011 and 2012 funding debates and provide updates to the field as new information becomes available.