Sequestration Impacts on Charter Schools
-
Upload
charter-school-capital -
Category
Education
-
view
215 -
download
1
Transcript of Sequestration Impacts on Charter Schools
2 Copyright © 2013 Charter School Capital, Inc.
WELCOME
• Panelists – John Helgeson, Charter School Capital – Frank Yanez, FMY Consultants – John Palmer, Orrick, Herrigton & Sutcliffe LLP
• What is sequestration? • What are the impacts? • How will it impact my charter school? • What should I plan for?
Agenda
4 Copyright © 2013 Charter School Capital, Inc.
WHAT IS SEQUESTRATION?
• Budget Control Act of 2011 – Creates a mechanism to encourage a “give and take” in budget
negotiations known as sequester – Implementation is sequestration
• Definition = – “Sequestration is a mechanism to enforce deficit reduction by motivating
Congress to compromise on budget negotiations or face mandatory cuts of $85B.”
– Forces federal budget cuts – Budget cuts like this are bad policy
Definition
5 Copyright © 2013 Charter School Capital, Inc.
WHAT IS SEQUESTRATION?
Federal Deficit – FY 2008 - 2015
0
200
400
600
800
1000
1200
1400
1600
2008 2009 2010 2011 2012 2013 2014 2015
US Federal Deficit - FY 2008 - 2014
6 Copyright © 2013 Charter School Capital, Inc.
WHAT IS SEQUESTRATION?
• Legislators in DC not able to create a budget with appropriate cuts to reduce the federal budget deficit
• What is the budget deficit? – Deficit versus debt
• No compromise made • $85B of mandatory cuts go in to effect and will impact every federal program
Politics
7 Copyright © 2013 Charter School Capital, Inc.
WHAT IS SEQUESTRATION?
• Began March 1 of this year • Continue through end of Federal Fiscal Year (Sept 30) • This year cuts will be implemented over 7 months instead of 12 months • Feel more painful because of reduced timeframe this calendar year
When?
8 Copyright © 2013 Charter School Capital, Inc.
WHAT IS SEQUESTRATION?
• Unknown • If Congress does not agree to a compromise, then the sequester will continue • Next year it would start in September, so cuts implemented across 12 months
rather than 7 months this year
Is this one time?
Copyright © 2013 Charter School Capital, Inc.
9 Copyright © 2013 Charter School Capital, Inc.
What Are The Impacts?
10 Copyright © 2013 Charter School Capital, Inc.
SEQUESTRATION IMPACTS
Non-exempt defense
discretionary 28%
Non-exempt nondefense discretionary
funding 18%
Medicare 7%
Non-exempt nondefense mandatory programs
18%
Non-exempt defense
mandatory programs
29%
Overall $85B in Cuts
What is being cut?
11 Copyright © 2013 Charter School Capital, Inc.
SEQUESTRATION IMPACTS
Federal spending on elementary/secondary ed
School Lunch (Dept. of Ag)
23%
Title 1 (Ed) 20%
Special Ed (Ed) 16%
Head Start (HHS) 9%
Other 21%
School Improvements
(Ed) 9%
Impact Aid (Ed) 2%
Total = $78B
12 Copyright © 2013 Charter School Capital, Inc.
SEQUESTRATION IMPACTS
Title 1, $740
Impact Aid, $58
Special Ed, $644
Head Start, $406
Teacher Quality State Grants, $126
21st Century Community
Learning Ctrs, $59
Rural Ed, $9
Federal cuts in $ millions
$2 Billion in total cuts across programs
13 Copyright © 2013 Charter School Capital, Inc.
SEQUESTRATION IMPACTS
• Effects are not universal because states and individuals benefit from programs differently
• Impact timing depends on program and local delivery system • Federal funding for education cut 5.1% • It appears students most impacted will be those from disadvantaged areas
and those with special needs – Title 1 and Special Ed being hit hardest – Many Federal programs help those from disadvantaged areas and with
cuts, these areas will be hit the most
What are the impacts?
14 Copyright © 2013 Charter School Capital, Inc.
SEQUESTRATION IMPACTS
• Charters will be particularly hard hit – Facility costs won’t be reduced to account for less funding, so entirety of
budget cuts will be forced to come from smaller classroom budgets – Nationally on average, charter school students received $4,000 less each
year than peers in traditional public schools – In Arizona, disparity is $1,900 – Cuts in spending or significant delays in payment for key programs and
services such as Special Education, Title 1 and Impact Aid
General impacts to charter schools
16 Copyright © 2013 Charter School Capital, Inc.
HOW WILL CUTS IMPACT YOU?
• Teachers and schools – $17.7M primary and secondary education – 240 teacher and aide jobs at risk – 19,000 fewer students would be served – 70 fewer schools would receive funding
• Education for Children with Disabilities – $10M cut – 120 fewer teachers, aides, and staff who help children with disabilities
• National Education Association puts loss higher suggesting more than 1,000 teachers could be laid off hurting more than 100,000 students
Impacts to Arizona schools
17 Copyright © 2013 Charter School Capital, Inc.
HOW WILL CUTS IMPACT YOU?
• School districts likely to see the greatest cuts in Title 1 funding – Tucson Unified District
o 8.8% cut = $2.4M – Phoenix Union High School District
o 8.7% cut = $1.5M – Mesa Unified District
o 1.9% cut = $454,077
Impacts to Arizona schools
19 Copyright © 2013 Charter School Capital, Inc.
WHAT CAN YOU DO?
• Do math so you know how much less you have to spend • Build in the potential for significant delays in payments • Plan for the worst case scenario • If you have questions…ask. We’re happy to help.
Plan
Copyright © 2013 Charter School Capital, Inc.
21 Copyright © 2013 Charter School Capital, Inc.
Thank You.