February 8, 2018

In an effort to avert a second government shutdown, Senate leaders on February 7 announced a major bipartisan budget agreement that would, among other things, provide nearly $300 billion in additional federal funding over the next two years.  The multi-year deal, the first since 2015, would lift the strict spending caps that are mandated by the Budget Control Act (PL 112-25).  The agreement calls for a boost in spending for the military, a top goal of Republicans in both chambers, as well as more funding for domestic discretionary programs sought by Democrats.

The legislation – dubbed the Bipartisan Budget Act of 2018 – would increase defense spending by $80 billion in the current fiscal year and $85 billion in fiscal year 2019.  At the same time, the bill would raise the cap on domestic discretionary spending by $63 billion and $68 billion in fiscal years 2018 and 2019, respectively.

Lawmakers intend to combine the two-year budget accord with another stopgap spending measure that would keep the government operating at current levels through March 23.  The move would give congressional appropriators six weeks to draft line-by-line spending levels for programs under the purview of every federal department and agency.

At press time, the Senate was expected to clear the spending agreement on a wide margin.  Votes in the House, however, remain uncertain, as disagreements over spending priorities and immigration-related issues are threatening to derail the bill.  While House Speaker Paul Ryan (R-WI) has signaled his belief that there are sufficient votes to pass the legislation, a failure to do so would likely result in another government shutdown beginning at midnight on Thursday.

Below are additional key details of the Senate budget deal.

Disaster Aid

Aside from lifting the budget caps and providing a spending framework for the next two years, the Bipartisan Budget Act would provide emergency disaster relief funding for communities in California that were impacted by wildfires.  The bill also includes significant funding for hurricane recovery efforts.  All told, the bill would provide nearly $90 billion in disaster aid, including $23.5 billion for the Federal Emergency Management Agency’s fund for repairs and future mitigation and $28 billion in Community Development Block Grants (CDBG) for housing and infrastructure.

Debt Ceiling

The Senate agreement would suspend the federal debt ceiling until March 2019.  According to the Congressional Budget Office (CBO), the nation’s borrowing limit needs to be increased by early March in order to ensure that the Treasury Department does not default on its current debt obligations.

While CBO had previously projected that the debt limit would be reached by late March or early April, the latest projections take into account the recently implemented tax cuts, which translate into less revenue for the federal government.  It should be noted that House conservatives are unhappy that the Senate budget deal increases the debt ceiling without providing for corresponding spending cuts.  As a result, a number of House Republicans have indicated their intent to oppose the budget bill on the House floor.

Family First Prevention Services Act

Despite a glaring lack of stakeholder input and public hearings, the text of the Family First Prevention Services Act (FFPSA) was slipped into the final budget agreement.  The measure – which passed the House in 2016 and has been stalled ever since due to a series of concerns raised by California’s counties and other stakeholders – would require the State and counties to revamp key processes currently being implemented under California’s Continuum of Care Reforms.  The end result will be significant cost shifts to the State and counties.

Among other things, the FFPSA will place additional requirements on the assessment of youth for placement in congregate care programs, as well as new requirements for the programs to operate with licensed nursing staff on call at all hours of the day (even if the program is not serving children with significant medical needs).  In general, the FFPSA will restrict the number of youth who could be served in short-term residential treatment programs, as well as reduce the federal financial funding supporting them.

For its part, CSAC – in conjunction with the County Welfare Directors Association (CWDA), the California State Department of Social Services, and numerous other child advocacy organizations in the state – has been urging congressional leaders to amend the bill to allow the state to continue to advance its CCR reforms.  While some modest changes were included in the budget pact, the final product ultimately does not address California’s core concerns.

It should be noted that the final legislation allows states to request a two-year delay in FFPSA implementation – from October 2019 until October 2021.  However, the bill does not include a provision to extend the state’s child welfare waiver, which expires on October 1, 2019.

Children’s Health Insurance Program (CHIP)

The budget package further extends the Children’s Health Insurance Program (CHIP).  While Congress voted to reauthorize the CHIP program for six years as part of the latest Continuing Resolution, the Bipartisan Budget Act would tack on an additional four years, providing a total of 10 years of funding certainty for the program.

Other Health Priorities

The agreement includes an additional $200 million for the community health center program for the current fiscal year, as well as another $200 million for fiscal year 2019.  Additionally, the bill would delay the Medicaid Disproportionate Share Hospital (DSH) payment cuts for two years (through fiscal year 2019), as well as reauthorize the home visiting program.

Notably, two health and human services programs were tapped to fund the FFPSA and the community health center provisions.  Specifically, child support administrators will be required to increase from $25 to $35 the current annual fee assessed on services provided to participants that are not on CalWORKS.  In addition, funding for the Public Health and Prevention Fund was reduced by $1.35 billion over the next ten years.  The Fund is used by state and local health departments to meet community health needs.

Infrastructure

The final budget pact would provide a small down payment on President Trump’s forthcoming infrastructure proposal.  Specifically, the legislation would provide an additional $20 billion over the next two years (evenly split in fiscal years 2018 and 2019) to invest in programs related to surface transportation, water infrastructure, rural broadband, energy, and innovative capital projects.

DACA

While the budget agreement includes a number of priorities for both parties, it does not address a key Democratic concern: protections for Deferred Action for Childhood Arrivals (DACA) recipients.  As a result, House Minority Leader Nancy Pelosi (D-CA) took to the floor on February 7 to demand a commitment from Speaker Ryan to allow an open debate on immigration legislation, similar to the agreement that Senate Majority Leader Mitch McConnell (R-KY) made to Senate Democrats.  Notably, Pelosi set the record for longest House floor speech on record, speaking for just over eight hours.

Despite her efforts, Speaker Ryan made no such commitment to Democrats, and, as a result, Pelosi announced that she would withhold her support for the budget accord.  Further complicating matters, and as described above, House budget hawks have threatened to vote against the deal.  While House conservatives have lauded the Senate agreement for including additional military funding for fiscal years 2018 and 2019, they have raised serious objections to the increased spending levels for other non-defense programs.