Respite on Ed. Issues Unlikely for Election Winners

From the White House to Capitol Hill, the winners in this week’s elections won’t have much time to savor their victories.

Even as federal policymakers sort out the political landscape, the remainder of 2012 and the early months of 2013 are likely to be dominated by divisive, unresolved issues with broad consequences for K-12 and higher education—some of which require immediate action.

Chief among them: sequestration, a series of planned, across-the-board budget cuts that are set to hit almost every federal agency Jan. 2, including the U.S. Department of Education, unless the president and a lame-duck Congress act to stop them.

And when lawmakers in the 113th Congress take office in early January, they also will confront a yawning shortfall in the Pell Grant program, which helps low-income students attend college; grapple with a planned rise in student-loan interest rates; and pass a spending bill financing the federal government for the remainder of the 2013 fiscal year.

On top of that, federal policymakers must cope with thorny implementation questions on major policy initiatives, including dozens of waivers that eased states’ obligations under the No Child Left Behind Act. And they must find a way to renew a laundry list of long-stalled K-12 legislation—most notably, renewal of the Elementary and Secondary Education Act, whose current version is the NCLB law—in what will likely remain a politically polarized Washington.

The work will begin well before Jan. 21—Inauguration Day. As of last week, neither Barack Obama nor Mitt Romney had sketched out a detailed plan for how to handle sequestration, which would result in an 8.2 percent reduction to most programs in the U.S. Department of Education. While some spending would remain untouched—such as federal student loans—the key formula-funded programs on which school districts depend would be cut.

“That is going to be a huge mess” for the occupant of the White House in the coming year, James W. Kohlmoos, the executive director of the National Association of State Boards of Education, in Arlington, Va., said in an interview before the Nov. 6 election.

A lame-duck Congress is “the most difficult and challenging and confusing time” to solve long-simmering problems related to taxes, spending, and entitlement programs, such as Medicare and Social Security, said Mr. Kohlmoos, who served in the Education Department under President Bill Clinton.

Looming Fiscal Issues

If sequestration “trigger cuts” are not averted, programs aimed at equity, including those for disadvantaged students, now funded at $15.75 billion, would be cut by almost $1.3 billion, according to an analysis by the White House Office of Management and Budget. And special education programs, now funded at $12.64 billion, would be cut by about $1.03 billion.

Still, most of the reductions to education spending wouldn’t hit in the middle of the 2012-13 school year, giving schools until next fall to figure out how to absorb them.

The one glaring exception: the $1.2 billion Impact Aid program, which provides money to 1,200 school districts, including those that are home to a high number of American Indian students living on reservations or students whose parents work at a military base in the district. It also helps districts that have lost tax revenue because they include big plots of federal land. Districts in the program would lose their aid Jan. 2.

The uncertainty has been hard on school systems that are heavily dependent on the impact funding, such as the 2,600-student Douglas district in Box Elder, S.D., which is located near Ellsworth Air Force Base. Thirty-eight percent of its students are connected to the military.

The district stands to lose about $500,000 to $600,000 on a $21 million overall budget if sequestration goes through, estimated Loren Scheer, the superintendent.

“The unnerving part for all of us is that we just don’t know,” Mr. Scheer said. “The sooner [lawmakers] make up their minds, the better off everyone is going to be.”

“It shouldn’t take an election” to force action, he said.

Mr. Scheer said he hopes Congress won’t “kick the can down the road again” by coming up with a temporary solution, which, in his view, could spell larger cuts later.

But Joel Packer, the executive director of the Committee for Education Funding, a lobbying coalition in Washington, said a short-term fix during a lame-duck session of Congress appears to be the most likely outcome.

“Even under a scenario that there’s some bipartisan agreement in the lame-duck, the best-case option is that they agree on a framework and we spend the next six months” sorting out the details, he said. That would “push off the real decisions until next year.”

And sequestration isn’t the only postelection spending challenge lawmakers are facing. Congress still needs to pass a final budget for the fiscal year that began Oct. 1. Since lawmakers were unable to agree on a spending plan in time, the federal government has been operating on a massive extension bill since then that expires in March of next year.

In spending bills drafted earlier this year, House Republicans sought to eliminate major Obama administration priorities, such as the Race to the Top and Investing in Innovation competitions. Senate Democrats sought to keep funding for most programs at current levels.

Higher Ed. Headaches

Policymakers will also have to grapple with a roughly $7 billion shortfall in the Pell Grant program. The White House and Congress will be under significant pressure not to cut the maximum Pell Grant of $5,500, analysts say.

Still, policymakers may make changes to Pell Grant eligibility. A budget proposal that has already passed the U.S. House of Representatives would trim the overall cost of the grants by refocusing them on the neediest students.

“Pell is very popular politically,” said Kevin Carey, the director of the education policy program at the New America Foundation, a think tank in Washington, in a pre-election interview. “It’s one of 15 or 20 things that defines a budget publicly. Whoever is president is going to have to find room to maintain Pell’s funding.”

Indeed, during the campaign, both presidential candidates made it clear that Pell Grants were a priority. Mr. Obama continually reminded voters that funding for the program had doubled under his watch. And, despite pledges to trim government spending overall, Mr. Romney singled out Pell Grants as an area he would like to expand.

Lawmakers will also have to decide how to cope with a planned rise in interest rates on federally backed student loans; the rate is scheduled to double, to 6.8 percent, next summer. Earlier this year, Congress passed a one-year extension of the lower rate of 3.4 percent—but not before a protracted, partisan battle over how to pay for the change. The issue became part of the presidential contest: Both Mr. Obama and Mr. Romney pressed Congress to keep the rate at 3.4 percent.

With all the emphasis on cutting and trimming, it is unlikely that whoever is president will have much money left over to pay for new initiatives, said Eric A. Hanushek, a senior fellow at the Hoover Institution at Stanford University. Instead, any new policy initiatives will likely need to be financed with existing funds, he said.

Given the current, constrained fiscal situation, “the most you can do is take [an existing program] and redirect it to some other areas,” he said. “The possibility [is] of some internal reshuffling; [there’s] not much possibility of substantial new programs.”

Tackling Waivers

Also in the balance: the waivers offered to states seeking wiggle room on complying with pieces of the No Child Left Behind Act.

Thirty-four states and the District of Columbia have been approved for waivers. Some of those plans—including in Arizona, Georgia, and New Mexico—are based on teacher evaluation or accountability systems that haven’t yet been fully implemented.

That means “there are going to be lessons learned, tweaks needed,” said John Bailey, a co-founder of Whiteboard Advisors, a consulting firm in Washington, who served in the White House under President George W. Bush. (He also advised the Romney campaign, but spoke for this article only as an analyst.)

“There are going to be states that want to make changes to the waivers,” he said.

The waivers, which will only be in place for up to two years, will need to be renewed—or not—during the next presidential term, unless Congress is able to pass a reauthorization of the Elementary and Secondary Education Act.

The Education Department will also need to continue oversight of key Obama administration programs, including the dozen winners of the Race to the Top state grants, many of which have reworked their timelines when it comes to important pieces of their applications. Two states—Georgia and Hawaii—have had their grants, or parts of them, placed on high-risk status, jeopardizing their funding.

The reauthorization of the ESEA, which has been pending since 2007, remains on federal lawmakers’ to-do list. Neither party was thrilled with the process behind the waivers, which both Democrats and Republicans said stepped on congressional authority. But the partisan divisions in Congress have made it difficult for lawmakers to enact their own vision for renewal.

“The big sleeping giant is ESEA reauthorization,” said Mr. Bailey. “If the White House makes it clear that this is a priority, there could be a path forward in Congress.”

Lawmakers also must tackle a legislative logjam that’s held up renewal of laws dealing with higher education, special education, career and technical education, workforce development, and child-care and -development block grants.

Common Core Rolls On

The results of the federal elections are unlikely, however, to have major implications for the Common Core State Standards, which have been adopted by 46 states and the District of Columbia.

Although some conservatives have grumbled that the effort smacks of too much federal involvement, the standards appear to have support—or at least not a good deal of opposition—from leaders in both parties.

Mr. Obama took partial credit for the standards on the campaign trail. His administration made adoption of rigorous, uniform standards—including the common core—a condition for states seeking NCLB waivers. It also gave states that adopted the standards an edge in the Race to the Top grant competition and steered $360 million to the creation of assessments that align with the standards.

But key Republicans, including former Florida Gov. Jeb Bush, also support the effort. During the campaign, Mr. Romney said he would not require states to join the initiative and would not steer federal funding to bolster it, but he also made it clear that states should be able to adopt the standards if they wanted to. State elections are likely to have more influence on the future of the common core than the result of the presidential race will.

“It’s moved [so far] down the path that I think we would see the momentum carrying on,” said Mr. Kohlmoos of NASBE. “The key now is for states to feel a sense of ownership of common core.”