"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.