OM: Sequestration Budget Cuts SAMHSA by 5%

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Sequestration Budget Cuts Slice 9% From Federal Human Service Programs For Fiscal Year 2013

Open Minds March 18, 2013

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On March 1, 2013, all departments of the federal government began making mandatory across-the-board cuts required by the sequestration process, with a reduction of five percent or more to the federal fiscal year 2013 (FFY13) budgets of most federal human service programs. Although the federal fiscal year has only seven months remaining, the cuts affect the full fiscal year allocation, meaning that non-exempt human service programs will need to cut spending for the rest of the year by nine percent. Government-wide, the cuts reduce planned budget allocations by $85 billion for FFY13; the Department of Health and Human Services lost $15.5 billion, or 1.6% of its total $941 billion budget proposed for FFY13.

The mandatory cuts are required because federal legislators failed to meet a deadline set by the Budget Control Act of 2011 for reaching an agreement on how to reduce the federal deficit. The 2011 law included a provision that would trigger mandatory cuts to all federal spending for federal fiscal year 2013-a process called sequestration-if legislators reached no agreement by March 1, 2013.

The sequestration affects discretionary and mandatory spending for defense and non-defense programs, as follows:

• Defense-7.8% reduction in non-exempt defense discretionary funding and 7.9% reduction to non-exempt defense mandatory programs
• Non-defense-5.0% reduction in non-exempt, non-defense discretionary funding; a 2.0% reduction to Medicare; and 5.1% reduction to other non-exempt, non-defense mandatory programs

The exempt programs 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, including 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.

The federal departments have started releasing guidance to states and grantees on how implementing the sequester will take place. These notices identify targeted programs and the date the cuts will actually begin.

• The Substance Abuse and Mental Health Services Administration (SAMHSA) is losing $168 million of its $3.3 billion budget for non-exempt programs, or five percent. Assuming that SAMHSA uses its budget at the same amount each month, during the first five months of FFY13, SAMHSA spent $1.3 billion. The $168 million to be cut represents about eight percent of the remaining $2 billion in SAMHSA’s budget. SAMHSA advised states that both the substance abuse and mental health grants are scheduled to be reduced by five percent. To meet the target, some state grants or cooperative agreement awards may be affected. SAMHSA may decline to issue a continuation award, or may reduce the scope of an award. Plans for new grants or cooperative agreements may be re-scoped, delayed, or canceled depending on the nature of the work and the availability of resources.
• The Administration for Children and Families (ACF) is losing five percent, or $115 million of its $2.2 billion budget for the non-exempt Payments to States for the Child Care and Development Block Grant which funds Head Start programs. ACF has issued instructions to its Head Start grantees advising them that grants will be reduced by approximately five percent and that all state, regional and national activities will also be reduced by at least 5%. ACF estimates that approximately 70,000 children will lose access to Head Start services because of this reduction. ACF said it would grant as much flexibility and assistance as possible to maintain high-quality services, ensure the health and safety of children and families, and minimize disruptions to children enrolled during this program year. ACF noted that grantees should take steps to reduce enrollments and program workforce for this program year and the upcoming program year.
• The Administration for Community Living is losing about five percent, or $75 million, of its $1.5 billion budget affecting state formula grant programs under the Older Americans Act. These programs include Home and Community-Based Supportive Services and Home Delivered Nutrition Services, Vulnerable Elder Rights Protection Activities, and the Nutrition Services Incentive Program. The guidance explains that statutory factors used to determine funding allocations that vary across programs and will thus result in varied magnitudes of the reductions among states.
• The Department of Labor (DOL) Employment and Training Administration (ETA) is losing about five percent, or $2.6 billion of its $51 billion non-exempt budget for FFY 13 unemployment insurance programs. DOL advised state workforce agencies that reductions to unemployment programs funded through ETA will start on or after March 31, 2013, to provide states time to plan for the budget cuts. DOL will not apply the percentage reductions to benefits that have already been paid.

The impact on federal fiscal year spending for 2013 was outlined by the Office of Management and Budget in a letter to the House of Representatives, released March 1, 2013. In the letter, the OMB noted that because the cuts must be achieved over seven months, not the full fiscal year, the effective percentage reductions will be higher than stated in the original 2011 legislation. Non-exempt non-defense programs will sustain cuts averaging nine percent to remaining fiscal year budgets. Non-exempt defense programs will sustain a 13% average cut. The report describes the sequestration calculations.

Impact Of Sequestration To HHS Non-Exempt Program Budgets, Federal Fiscal Year (FFY) 2013
Agency Within HHS	Program	Type Of Spending	Budget Allocation Affected By Sequestration (in millions)	Full Year Sequester Percentage	Lost Funding For Remainder Of FFY 13 (in millions)
Health Resources & Services Administration	Maternal, Infant, and Early Childhood Visiting Programs	Mandatory	$400	5.1%	$20
Substance Abuse & Mental Health Services Administration	All	Discretionary	$3,368	5.0%	$168
Centers For Medicare & Medicaid Services	Affordable Insurance Exchange Grants	Mandatory	$868	5.1%	$44
Centers For Medicare & Medicaid Services	State Grants and Demonstrations	Mandatory	$530	5.1%	$27
Administration For Children & Families	Payments To States For Child Support Enforcement & Family Support Programs	Mandatory	$1	5.1%	Less than $500,000
Administration For Children & Families	Supporting Healthy Families & Adolescent Development	Discretionary	$63	5.0%	$3
Administration For Children & Families	Supporting Healthy Families & Adolescent Development	Mandatory	$485	5.1%	$25
Administration For Children & Families	Payments To States For Child Care & Development Block Grant	Discretionary	$2,292	5.0%	$115
Administration For Children & Families	Social Services Block Grant	Mandatory	$2,285	5.1%	$117
Administration For Children & Families	Children & Families Services Programs	Discretionary	$10,069	5.0%	$503
Administration For Children & Families	Temporary Assistance For Needy Families	Mandatory	$26	5.1%	$1
Administration For Community Living	Aging & Disability Service Programs	Discretionary	$1,480	5.0%	$74
Administration For Community Living	Aging & Disability Service Programs	Mandatory	$28	5.1%	$1
Office Of The National Coordinator For Health Information Technology	All	Discretionary	$17	5.0%	$1
Department of Labor	Employment and Training Administration,	Discretionary & Mandatory	$51,306	5.0% for discretionary and 5.1% for mandatory	$2,612
Department of Housing & Urban Development	Housing for Persons with Disabilities	Discretionary	$166	5.0%	$8
Department of Housing & Urban Development	Housing for the Elderly	Discretionary	$377	5.0%	$19
Department of Justice, Office of Justice Programs	Juvenile Justice Programs	Discretionary	$255	5.0%	$13

A link to the full text of “Office of Management & Budget Report To Congress On Sequestration For Fiscal Year 2013” may be found inThe OPEN MINDS Circle Libraryatwww.openminds.com/library/030113ombjcseqrpt.htm.

For more information, contact: The Office of Management and Budget, 725 17th Street, NW, Washington, District of Columbia 20503; 202-395-3080; Fax: 202-395-3888; Website:www.whitehouse.gov/omb/organization.

Sequestration Budget Cuts Slice 9% From Federal Human Service Programs For Fiscal Year 2013. (2013, March 18). OPEN MINDS Weekly News Wire.

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