In the summer, we always have two tasks to complete with regards to federal funding: 1) the Compliance Report for the school year just ended; and, 2) the application for the upcoming school year. EISD has already submitted both of these items to TEA.
In the process of completing our 12-13 application for federal funding, I was introduced to a new word: “sequestration”. Until recently, I had never heard that word. Now, it is part of everyone’s vocabulary that deals with federal funding. Sequestration, by definition, is the cancellation of budgetary resources. The sequester was written into the Budget Control Act of 2011. A budgetary super committee had until November 2011 to develop a plan to reduce federal spending. The super committee failed to meet this deadline. So, unless the congress and president act to rescind the Budget Control Act, automatic budget cuts will start in January 2013.
One of the areas that will be impacted by these automatic budget cuts is education. It is anticipated that if the automatic cuts take place, federal funding for education will be reduced by approximately $4.1 billion. The major issue is that school districts start their new fiscal year in either July or September. So, if the budget cuts happen, they would occur in the middle of a school district’s fiscal year.
In order to account for this possibility, TEA is withholding 10% of federal funds to school districts for the 2012-2013 school year. It is anticipated that this 10% reduction would cover the funds lost if sequestration occurs. So, the planning amounts for districts throughout the state for federal programs will be approximately 10% less than anticipated. For EISD, this will amount to about $25,000 being held out of our federal funds. I fully support TEA’s reasoning in holding out the funds upfront. It is easier to build a budget with $25,000 less in the beginning then to have to amend the budget in the middle of the school year.
If the federal government comes to a resolution on the funding, it is possible that sequestration will be avoided and that states and school districts will receive their entire amount of federal funds. If that happens, TEA will release these funds in January 2013. Until then, EISD will be building a budget for 2012-2013 that will show a reduction in federal funding of about $25,000. As always, as soon as further information is available, I will pass it on to you.