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"Sequestration" is a process of automatic, largely across-the-board
spending reductions under which budgetary resources are permanently
canceled to enforce certain budget policy goals. It was first
authorized by the Balanced Budget and Emergency Deficit Control Act
of 1985 (BBEDCA, Title II of P.L. 99-177, commonly known as the
Gramm-Rudman-Hollings Act). Sequestration is of current interest
because it was included as an enforcement tool in the Budget
Control Act of 2011 (BCA, P.L. 112-25). Sequestration can also
occur under the Statutory Pay-As-You-Go Act of 2010 (Statutory
PAYGO, Title I of P.L. 111-139). In either case, certain programs
are exempt from sequestration, and special rules govern the effects
of sequestration on others. Most of these provisions are found in
Sections 255 and 256 of BBEDCA, as amended. Two provisions were
included in the BCA that could result in automatic sequestration:
Establishment of discretionary spending limits, or caps, for each
of FY2012-FY2021. If Congress appropriates more than allowed under
these limits in any given year, sequestration would cancel the
excess amount; and Failure of Congress to enact legislation
developed by a Joint Select Committee on Deficit Reduction, by
January 15, 2012, to reduce the deficit by at least $1.2 trillion.
The BCA provided that such failure would trigger a series of
automatic spending reductions, including sequestration of mandatory
spending in each of FY2013-FY2021, a one-year sequestration of
discretionary spending for FY2013, and lower discretionary spending
limits for each of FY2014-FY2021. In fact, the Joint Committee did
not develop the necessary legislation and Congress did not meet the
January 15, 2012, deadline. Thus, the first automatic spending cuts
under the BCA are now scheduled to take effect on January 2, 2013.
Pursuant to the Sequestration Transparency Act (P.L.112-155), the
Administration issued a report on September 14 that previews the
estimated impact of that sequestration on discretionary and
mandatory spending. Under the Statutory PAYGO Act, sequestration is
part of a budget enforcement mechanism that is intended to prevent
enactment of mandatory spending and revenue legislation that would
increase the federal deficit. This act requires the Office of
Management and Budget (OMB) to track costs and savings associated
with enacted legislation and to determine at the end of each
congressional session if net total costs exceed net total savings.
If so, a sequestration will be triggered. If sequestration is
triggered-either under the BCA or Statutory PAYGO Act-the
exemptions and special rules of Sections 255 and 256 of BBEDCA
apply. Most exempt programs are mandatory, and include Social
Security and Medicaid; refundable tax credits to individuals; and
low-income programs such as the Children's Health Insurance
Program, Supplemental Nutrition Assistance Program, Temporary
Assistance for Needy Families, and Supplemental Security Income.
Some discretionary programs also are exempt, notably all programs
administered by the Department of Veterans Affairs. Also, subject
to notification of Congress by the President, military personnel
accounts may either be exempt or reduced by a lower percentage.
Special rules also apply to several, primarily mandatory, programs.
For example, under Section 256 of BBEDCA, Medicare may not be
sequestered by more than 4%. However, under a sequester triggered
by the BCA, reduction of Medicare is further limited to no more
than 2%.
Community Services Block Grants (CSBG) provide federal funds to
states, territories, and tribes for distribution to local agencies
to support a wide range of community-based activities to reduce
poverty. Smaller related programs-Community Economic Development
(CED), Rural Community Facilities (RCF), and Individual Development
Accounts (IDAs)-also support antipoverty efforts. CSBG and some of
these related activities trace their roots to the War on Poverty,
launched in the 1960s. Today, they are administered at the federal
level by the Department of Health and Human Services (HHS). CSBG
and related activities are funded in FY2012 under the Consolidated
Appropriations Act (P.L. 112-74), at a combined level of $732
million. This includes $677 million for CSBG, $30 million for CED
(of which up to $10 million may be used for the Administration's
Healthy Foods Financing Initiative), $5 million for RCF, and $20
million for IDAs. President Obama submitted his FY2013 budget to
Congress in February, requesting total funding of $400 million for
CSBG and related activities. This includes a sharp drop in funding
for the block grant from its FY2012 level of $677 million to $350
million in FY2013. Budget documents characterize this proposal as
one of several "tough cuts to worthy programs" necessary to offset
other spending increases in HHS. The Administration offered a
similar request last year, which Congress rejected. In last year's
budget, the Administration signaled its intent to move CSBG toward
a competitive program, in which states would award block grant
funds among local agencies competitively, rather than via the
mandatory pass-through to designated "eligible entities" contained
in current law. The Administration's latest budget documents
clarify this intent. The FY2013 budget states that HHS will work
with Congress to develop "core" federal standards, to be augmented
by the states, which would be used to measure performance of local
agencies. If an existing eligible entity failed to meet the
standards, the state would immediately conduct an open competition
to replace that entity in serving the affected community. No action
has occurred on this proposal. The Senate Appropriations Committee
on June 14 reported a FY2013 appropriations bill for HHS (S. 3295),
which would maintain CSBG at its current level of $677 million. The
bill also would provide level funding for CED ($30 million, with up
to $10 million available for the Healthy Foods Financing
Initiative), increase RCF to $6 million, and provide level funding
for IDAs ($20 million). The National Association for State
Community Services Programs conducts an annual survey of states on
the activities and expenditures of the nationwide network of more
than 1,000 CSBG grantees. According to the most recent survey, the
network served more than 20 million people in more than 8 million
low-income families in FY2010. States reported that the network
spent $16.2 billion of federal, state, local, and private
resources, of which $653 million were regular federal CSBG funds
and $811 million came from a one-time appropriation to CSBG under
the American Recovery and Reinvestment Act (ARRA). In FY2010, the
network spent almost $9.1 billion from other federal programs, plus
$2.1 billion provided to other federal programs by ARRA. The
Community Services Block Grant Act was last reauthorized in 1998 by
P.L. 105-285. The authorization of appropriations for CSBG and most
related programs expired in FY2003, although Congress has continued
to fund these programs through the annual appropriations process.
No legislation to reauthorize CSBG has been introduced since the
109th Congress.
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