It’s never easy to figure out how the annual federal budget battle will shape up for children and families. But the signs in the early going are clear – in his budget proposal, the President has proposed unprecedented cuts in programs that serve low and moderate-income families with children.

The Big Picture
President Bush’s $2.5 trillion fiscal 2006 budget cuts non-defense, non-security spending next year by 3 percent in inflation-adjusted dollars (by 1 percent in unadjusted dollars). It doesn’t sound like much, but this is the first time in many years that a president’s proposal has called for real cuts in a major part of the budget. Some $20 billion in cuts would come from eliminating or cutting 150 federal programs, a third of them ($4.3 billion worth) related to education. An additional $137 billion would be cut from mandatory programs like Medicaid, food stamps and farm subsidies over the next decade.

According to Patrick Lester, a budget analyst for United Way of America, the spending restrictions proposed in the budget will freeze or cut federal spending for most programs that serve families and communities.

In general, education was hit hard, after several years of growing federal investment. Programs aimed at helping low-income students improve their job skills or pursue higher education would face particularly steep cuts. For example, Bush proposes eliminating state grants for the Safe and Drug-Free Schools programs. He would also do away with the $6 billion-dollar Perkins program that offers college loans to low and moderate-income students. Vocational and adult education funding would be cut by $1.7 billion, a massive 89 percent cut from FY2005.

Pay As You Go The administration is proposing two sets of “pay-as-you-go” rules that put spending cuts on the table but keep tax expenditures off it. The first would require increased entitlement spending to be offset by an equal decrease elsewhere in entitlement spending and prohibit offsets by increasing tax revenues. The second would prevent Congress from considering any entitlement change that would increase entitlement spending over the next 75 years.

The budget also asks Congress to adopt budget rules that will make it easier to cut spending, even for guaranteed programs, while making it even harder to stop further tax cuts.

In addition to cuts in programs that depend on yearly appropriations for funding, often referred to as discretionary programs, the president’s proposal also calls for cutting spending for programs – notably Medicaid, food stamps, and child care assistance – that have previously been protected from cuts by their status as so-called entitlement programs – programs which are designed to expand automatically when need for them expands in tough economic times.

The Fine Print
Here’s a round-up covering the items most closely related to children and families.

Health care. Over a third of hospital births are covered by Medicaid, the nation’s largest health insurance program for children. Twenty five million children get their health coverage through Medicaid. The budget plan would change the rules governing the federal contributions to Medicaid that would result in a $60 billion cut in federal Medicaid dollars to states over the next ten years.

States Concerned about Medicaid, High School Last week governors met with members of Congress to discuss fundamental changes in Medicaid. On February 26 to 28 the governors will gather for a “high school reform” summit to discuss improving high schools to better serve all students.

In 2003, 5.8 million children in low-wage families with incomes too high to qualify for Medicaid were covered by the State Children’s Health Insurance Program (SCHIP). Like Medicaid, SCHIP is paid for through a combination of federal and state funding. The Bush budget would raise the federal SCHIP allocation from $5.343 billion in FY2005 to $5.434 billion in FY2006.

The budget for Substance Abuse and Mental Health Services is cut by $53 million, to $3.215 million. The Bush budget proposal would eliminate funds for newborn hearing screening and eliminate the lead hazard control program.

The overall budget for community health centers would increase by $300 million over last year’s $1.734 billion, adding 1200 new or expanded centers.

Welfare-to-Work. Waiting lists for child care assistance and other work supports funded by the welfare-to-work program continue to grow, but, citing a drop in welfare caseloads, the Bush 2006 budget calls for an overall cut in funding to the Temporary Assistance to Needy Families program from $17.881 billion in FY2005 to $16.689 billion in FY2006.

Education. The President proposes a fiscal year 2006 discretionary budget for the Department of Education of $56 billion, a decrease of 1 percent from last year. The plan would eliminate 48 programs, including Vocational Education, state grants for Safe and Drug-Free Schools, Educational Technology State Grants, Even Start (a family literacy program), GEAR-UP (Graining Early Awareness and Readiness for Undergraduate Program) that helps low-income students get on a college-bound track early, and Leveraging Education Partnerships.

The budget would freeze after-school spending for 21st Century Community Learning Centers at $991 million. Title I (the major federal funding stream for schools serving primarily disadvantaged students), new high school reform efforts, the Individuals with Disabilities Education Act (IDEA) and Pell Grants for low-income students attending college would split an increase of $4.7 billion.

For state by state data on what cuts mean for your state: Medicaid Vocational and Job training Community development funding cuts No Child Left Behind funding A good summary of what’s in and what’s out in the FY2006 Bush budget Keep up with news on the budget

The proposal cuts $2.17 billion in high school programs, and replaces them with a $1.5 billion high school initiative, of which $250 million is for high school student assessments (similar to assessments called for in the Leave No Child Behind act for elementary school students). That leaves $1.25 billion for vocational and other high school programs previously funded at $2.17 billion - a $920 million cut.

The special education funds that help infants, toddlers and preschoolers with disabilities receive early intervention services before they begin school would be frozen at last year’s levels. Students with Pell Grants would see a $100 increase per year in their scholarships.

Food Stamps. The 2006 budget calls for $40.7 billion for the food stamp program that helps low-wage families stretch their food budgets, a $5.5 billion increase over 2005. However, according to the Center on Budget and Policy Priorities, the president’s proposal to tighten food stamp eligibility requirements for TANF families would make 200,000 to 300,000 low-income people – primarily low-wage working families with children -- ineligible for food stamps.

The Bush budget would eliminate federal funding for the Community Food and Nutrition Program, the primary source of federal support for local food pantries and anti-hunger groups. Last year CFNP was funded at $7.18 million.

Child Nutrition Programs. The budget would increase spending for school lunch and breakfast programs, summer food programs, and others, from $12.367 billion in FY2005 to $12.913 billion.

WIC. Nearly half of all newborn infants in the U.S. benefit from the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). The budget calls for an increase of $335 million to $5.576 billion, but WIC funding would face deep cuts in the later years of the President’s 5-year budget proposal.

Child Care. The Bush budget would impose a 5-year freeze on federal dollars that help low-wage families pay for child care. About 1.8 million children each month benefit from the federal subsidy. The Center on Budget and Policy Priorities points out that Bush budget’s flat funding for child care dollars over time would cut 300,000 children off of assistance by 2009, according to tables in the Administration’s budget [www.cbpp.org;2-7-05bud2.htm].

Community Development Block Grant. Many cities and towns use the flexibility of CDBG funds to make emergency school repairs or boost summer jobs for teens as well as making local investments to strengthen local economies. The Bush 2006 budget would cut $1.8 billion in CDBG funding (in FY2005 the program received $4.117 billion) and transfer the remaining programs to a newly established Strengthening America’s Communities Program in the Commerce Department.

Social Services Block Grant. These federal dollars help pay for child care, protecting children from abuse and neglect, and serving people with disabilities. The budget proposal for $1.762 billion represents a $2 million cut from FY2005 funding levels.

Head Start. The $45 million increase for Head Start programs is set aside to fund a block grant demonstration project in 9 states. Head Start is currently a mandatory spending program; block grants would make it easier to cut annual spending in years to come.

College aid. The $6 billion-dollar Perkins loan program that helps low- and moderate-income students pay for college would be eliminated. Pell grants to low-income students would be increased so that each student gets a $100 more each year. Current grants average about $2440 a year, per student, and over 5 million students are in the program. The President’s budget would also tighten eligibility for Pell grants to students with family incomes of $35,000 and below. Now, students from families with incomes of $45,000 and below are eligible.

What’s Next?
Now it is up to Congress to develop its own budget blueprint – establishing spending figures for broad categories in the budget. Republican leaders in Congress are considering setting new rules that could lock in tax cuts while requiring spending cuts across the board for years to come. Stay tuned.