WASHINGTON, D.C.—President Obama on Tuesday proposed a federal budget for fiscal year 2017 (FY2017) that affirms the central importance of supporting economic opportunity for all by calling for a comprehensive series of investments in child care and early education, low-income and out-of-school youth, postsecondary education, workforce development, safety-net programs, and worker protections.  The proposals reflect knowledge from research and experience about what works.  And they are well-targeted to tear down barriers that hold back America’s young people, families, and individuals—particularly people of color—from achieving economic stability.   

The President’s budget stays within the 2017 discretionary spending levels agreed to with Congress last fall, while proposing additional “mandatory” spending and sequester relief in later years.  The new spending would be offset by new revenue measures for high-income individuals and corporations.

The next step is for Congress to develop its own budget proposals, a process that will likely move ahead in the next few weeks but is not likely to conclude until late in the calendar year.

Highlights of the President’s budget proposal include:

Child Care and Early Education

Over many years, President Obama has called for significant investments in child care and early education – in response to research evidence that continues to underline the importance of these programs and data showing a large and, in many cases, growing gap between services and need. The FY2017 budget proposes major support for:

• Child Care. A $200 million increase in discretionary funding to help states implement changes required by the 2014 Child Care and Development Block Grant (CCDBG) reauthorization, including a $40 million competitive pilot to build the supply of high-quality child care in rural areas and during non-traditional hours. $3.7 billion in additional mandatory dollars in FY2017, as a first installment of investments totaling $82 billion over 10 years, to ensure high-quality child care access for low- and moderate-income families with children under age four.

• Head Start. An increase of $434 million in discretionary dollars for Head Start that would boost the number of full-day, full-year slots, maintain children served through Early Head Start-Child Care partnerships, and provide a cost-of-living increase for Head  Start programs.

• Preschool for All and Home Visiting.  $75 billion—to be funded with an increased tobacco tax—to support access to high-quality preschool for all four-year-olds from low-income families and evidence-based home visiting.

Workforce Development

The President’s FY2017 budget recommends key investments in workforce development, recognizing how critical it is for workers to have the skills and training needed to succeed in their careers.

• Workforce Innovation and Opportunity Act (WIOA). $3.08 billion for the WIOA Adult, Dislocated Worker, and Youth funding streams, which is an increase of $150 million over the FY2016 enacted level of $2.93 billion, representing the full authorized level for the first time since the law’s enactment.
• Adult Education. WIOA Title II adult education state grants are proposed to be level funded at the FY2016 amount of $582 million. The budget requests an increase of $11 million for adult education national leadership activities to support the data infrastructure and improved assessments needed to realize the objective of WIOA Title I and II integration.
• Reintegration of Ex-Offenders (RExO). A $7 million increase for the RExO program, which helps prepare adults and youth for reentry into the job market, for a total request of $95 million.  
• Apprenticeships. Continued discretionary funding of $90 million for expanding apprenticeships, a portion of which will be used for increased access to apprenticeship opportunities for under-represented populations through pre-apprenticeships and career pathways. In addition, $2 billion in mandatory spending over five years for a new Apprenticeship Training Fund to double the number of apprentices across the country.
• American Technical Training Fund (ATTF). A new investment of $75 million to support tuition-free, short-term job training in high-demand fields.

Postsecondary Education

Economic opportunity today depends on access to postsecondary education for low-income youth and adults, including so-called “non-traditional students”—working and often raising a family while also going to school—who are now in fact the majority of students. The President’s budget recommends continued investment in higher education.

• America’s College Promise. A $61 billion investment over 10 years for America’s College Promise, a federal grant program to states to provide up to two tuition-free years of community college, or two years of zero or significantly reduced tuition at Historically Black Colleges or Universities (HBCU) or Minority Serving Institutions (MSI).
• Pell Grant Reforms. An increase of the Pell maximum award to $5,935, incentives for accelerated degree completion through additional Pell dollars, and a proposal to make the Second Chance Pell program permanent. In addition, the budget proposes exempting Pell funds from being taxed and from being considered in the calculation of the American Opportunity Tax Credit (AOTC).
• College Completion Strategies. $548 million for the College Opportunity and Graduation Bonus program to reward colleges that successfully enroll and graduate low-income students; $100 million for the First in the World grant program to develop and scale best practices for college affordability and completion, particularly for low-income and non-traditional students; and $30 million for an HBCU/MSI Innovation for Completion Fund.
• Work-Study and Supplemental Education Opportunity Grant (SEOG) and Child Care Access Means Parents in School (CCAMPIS) The budget request level-funds the Work-Study and SEOG programs at $989.7 million and $733.1 million respectively. It also level-funds the CCAMPIS program at $15 million.
• Pay As You Earn (PAYE). A proposal to make the PAYE repayment plan the only income-driven repayment plan choice for new borrowers going forward.
• Community College Partnership Tax Credit program. $500 million annually from 2017-2021 to create a Community College Partnership Tax Credit program that would incentivize employers to invest in community college curricula, equipment, and offer job opportunities to trained graduates from these programs.
• Perkins Loan program. A proposal to retool the Perkins Loan program, beginning in the 2017-2018 academic year, into a new, unsubsidized Perkins Loan program that would provide $8.5 billion in loans annually. Loans would be serviced through the Department of Education and be offered at the same interest rate as unsubsidized Stafford Loans.

Low-Income and Out-of-School Youth

CLASP is extremely supportive of these proposals that build on the progress Congress made through the reauthorization of WIOA and its increased emphasis on serving out-of-school youth. Long-term advocates for the creation of dropout recovery systems at the local level for out-of-school youth, we strongly support these proposals because they set the stage for what is possible and what our youth deserve.   

In addition to fully funding the WIOA Youth program at its authorized level (as noted above), the Obama budget also underwrites an innovative program to support low-income and out-of-school youth.

Open Doors for Disconnected Youth. $5.5 billion to connect low-income and out-of-school youth with education and employment pathways through the Open Doors for Disconnected Youth program.

• Paid Work Experience. $1.5 billion to support summer job opportunities, and $2 billion to create year-round first jobs for out-of-school youth.
• Re-engaging Youth. $2 billion to help local governments struggling with high rates of youth disengagement and youth unemployment and high school dropout rates to reengage youth, create local dropout recovery systems, and connect them to education, employment and social supports. 

Safety Net Programs

While America’s safety net programs are generally highly effective at reducing poverty and preventing hardship, the growth of low-wage, unsteady work has created an enormous headwind for many workers struggling for economic security for themselves and their families.  Gaps in programs include insufficient funding, excessive variation across states, and limited support for some populations, such as workers without children.  The budget proposal outlines a strong path for strengthening the safety net, with evidence-based proposals to improve a wide range of programs, including:

• Temporary Assistance for Needy Families (TANF). An additional $8 billion over five years for the TANF block grant, with corresponding increases to the requirement that states invest their own funds in programs for low-income families, as well as a new Economic Response Fund to provide additional assistance to states with high unemployment.
• Crisis Support. A new $2 billion fund for competitive grants to assist families in times of crisis, with the goal of averting the downward spiral into poverty.
• Earned Income Tax Credit (EITC).  Expansion of the EITC for workers without children, and a new tax credit to encourage employment by second earners and reduce marriage penalties.
• Medicaid. Allowing states that adopt the Medicaid expansion to receive three years of full federal funding for newly eligible individuals.  This would encourage all states to expand Medicaid, providing millions more poor individuals with access to health insurance
• Housing. A goal of eliminating family homelessness by 2020, backed up by $11 billion in additional housing subsidies and support for rapid rehousing programs.
• Summer Nutrition Assistance. Building on a successful pilot, an expanded program to provide low-income children with supplemental food benefits during the summer, when they are not able to receive free- or reduced-price meals from school
• Unemployment Insurance. A cost-neutral suite of improvements designed to modernize the unemployment insurance program by making benefits available to more workers who need them, such as part-time workers, newer labor market entrants, certain low-income and intermittent earners, and workers who leave work for compelling family reasons (e.g., to escape domestic violence).

Paid Leave and Worker Protections

Through this budget, President Obama reiterates a fundamental commitment to workers through investments in paid family leave and enforcement of worker protections.  These commitments are crucial to ensuring that low-wage workers can keep their jobs, support their families, and move up at work through a variety of programs and actions including:

• Paid leave. $2.2 billion (over four years) for the Paid Leave Partnership Initiative to assist up to five states in launching paid leave programs.  $1 million for grants to help states and localities conduct analyses to inform the development of paid family and medical leave programs. And, legislation that would offer Federal employees six weeks of paid administrative leave for the birth, adoption, or foster placement of a child.
• Enforcement. $1.9 billion in discretionary resources to ensure the U.S. Department of Labor’s worker protection agencies are able to meet their enforcement responsibilities.

What Happens Next

The House and Senate Budget Committees are developing their own budget proposals on a parallel track.  The House Budget Committee is expected to discuss its budget resolution at the end of February, and the Senate Budget Committee will likely take up its resolution in early- to mid-March.   However, if they cannot come to agreement, the appropriations committees can move forward with funding the discretionary portion of the budget at spending levels for next year set by last fall’s budget deal.

President Obama is affirming key American values including support for work, opportunity for all, and learning from success with these initiatives to support poor and low-income children, families, and individuals as they seek economic security. The ball is now in the court of Congressional leaders to make their own values statements with their budget proposals. We encourage Congress to invest in programs that support low-income children and families and help provide economic opportunity for all.  

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CLASP is a national, nonpartisan, anti-poverty organization advancing policy solutions that work for low-income people. With nearly 50 years of trusted expertise, a deeply knowledgeable staff, and a commitment to practical yet visionary approaches to opportunity for all, CLASP lifts up the voices of poor and low-income children, families, and individuals, equips advocates with strategies that work, and helps public officials put good ideas into practice. The organization’s solutions directly address the barriers that individuals and families face because of race, ethnicity, and immigration status, in addition to low income. For more information, visit clasp2022.tealmedia.dev and follow @CLASP_DC.