A Look at the New Federal Spending Bill: How Does It Affect Key Programs for Low-Income Children, Youth, Families, and Individuals?

Jan 15, 2014

By: Elizabeth Lower-Basch, Hannah Matthews and Neil Ridley

As the result of bi-partisan negotiations, Congress will consider by the end of the week a $1.1 trillion federal omnibus appropriations bill for federal fiscal year (FY) 2014 (October 1, 2013 – September 30, 2014).  This bill sets spending levels for each federal program, fleshing out the framework set by the October deal that ended the 16-day partial federal government shutdown.  As we wrote then, agreement on the deal represented an important step towards a more stable budget process, enabling programs to plan and operate more smoothly, and partially repealing the sequester for 2014.  Passage of the omnibus legislation is the next step in the process.

Under the terms of this week’s deal, overall federal discretionary spending for FY 2014 will be 2.6% over the post-sequester budget for FY 2013.  The fiscal relief is not evenly spread, with some programs receiving significant increases, while others continue at lower levels. 

Among programs for low-income people, the most significant increases are for child care and early learning programs, with a focus on young children from birth to age 4.  This increase is significant because of the amount (more than $1.4 billion) and because young children are the poorest Americans.

However, funding is still constrained — and will be even tighter next year. Even after restoring the majority of the sequestration cuts, most programs are funded at slightly lower levels for FY 2014 than FY 2012.

Beyond the omnibus, there remains crucial unfinished business for Congress from the perspective of low-income people. The omnibus bill does not address several areas of particular importance to low-income people.  In particular, the bill overlooks the restoration of federal extended unemployment compensation benefits for the long-term unemployed that expired at the end of December.  Congress is also still considering a Farm Bill that may include significant cuts to SNAP.


Here’s a summary of how this spending bill affects a number of programs important to helping poor and low-income families and individuals attain economic security:

  • Child care and early learning receives a boost of $1.4 billion, which includes a $154 million increase for the Child Care and Development Block Grant (CCDBG), $1.025 billion increase for Head Start and Early Head Start, and $250 million for a new round of Race to the Top grants to develop, expand, and enhance state preschool programs for low-income children. The Head Start and Early Head Start increase includes $500 million for partnerships between Early Head Start programs and child care, intended to expand the availability of quality care for low-income young children from birth to age 4.  While smaller than the President’s Strong Start proposal, the increase is consistent with the directions laid out in that proposal and reflects a bi-partisan interest in early childhood investment.
  • Most workforce programs are restored to just under their FY 2012 funding levels.  However, the Employment Service is continued at its FY 2013 post-sequester level of $664 million, while state grants under the Adult Education and Family Literacy Act will be at the FY 2013 post-sequester level of $563.6 million.  This comes a few months after the release of new data showing that nearly one in five Americans has low basic skills.
  • Programs that impact low-income college students are largely spared any funding cuts, with varied levels of restoration from pre-sequester levels. In addition, aid programs will see increases.  Pell Grant maximum awards will get an automatic inflationary increase to $5,730 for the 2014-15 award year from the current level of $5,645. And funding for two major campus-based programs that support low-income students, Federal Work-Study and Supplemental Education Opportunity Grants, is nearly restored to pre-sequester levels with an increase of more than $49 million and nearly $37 million, respectively, over last year.
  • The legislation also reflects an increasing focus on completion in higher education. It provides $75 million for President Obama’s new “First in the World” grant program for higher education institutions to spur the adoption of innovative, effective strategies that improve affordability and completion for students.  The bill also includes language requiring the Department of Education to report on the graduation outcomes of students receiving Pell Grants.

One of the benefits of the October budget agreement and this omnibus bill is simply that they avoid another government shutdown and provide programs with stability in funding – an opportunity that advocates, practitioners, and state and federal policymakers should seize to make improvements in the quality and effectiveness of services.  Similarly, the bill provides a clean extension through the end of the fiscal year for the Temporary Assistance for Needy Families (TANF block grant).  It also provides funding for the Supplemental Nutrition Assistance Program (SNAP), ensuring that crucial program will continue without interruption this year regardless of whether Congress reauthorizes it as part of the Farm Bill. 

As we applaud the increased funding provided to many vital programs supporting low-income children, families and individuals in FY 2014, however, it is important to remember that  the budget agreement provides only temporary relief from the  sequester.  Perhaps the biggest bit of unfinished business is the need for Congress to repeal the sequester, which continues to set arbitrary targets for discretionary spending.  These caps force Congress to choose between programs no matter how effective or how well-targeted they are to the real needs of America’s people.  This is no way to make progress.


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