FY10 Ed Jobs Supplemental (HR 1586) |
Tuesday, 10 August 2010 13:49 |
The House passed H.R. 1586, the Education Jobs and Medicaid Assistance Act, by a vote of 247 to 161 on August 10, 2010. The Senate passed the bill on August 5, 2010. This bill provides a total of $26.1 billion in funding: $10 billion for an Education Jobs Fund to save an estimated 160,000 education jobs, and $16.1 billion in additional Medicaid assistance to the states. The bill is fully offset. According to CBO, the bill will actually reduce the deficit by $1.4 billion over 10 years. The bill contains $27.5 billion in offsets, including $9.8 billion from closing tax loopholes that encourage corporations to ship jobs overseas, $11.9 billion from achieving savings in the Food Stamp program beginning on March 31, 2014, $2.8 billion from outlay savings through numerous rescissions, $2.0 billion from the addition of treatment of certain drugs for the computation of the Medicaid AMP, and $1.0 billion from eliminating the advanced EITC. Following is an overview of the provisions of the bill.
The bill provides $10 billion for additional support to local school districts to prevent imminent layoffs. The latest estimates from the Department of Education are that this fund will help keep 161,000 educators employed this coming school year. The bill language is virtually identical to the language that has previously passed the House. The fund will be administered by the Department of Education. After reviewing state applications, the Department will make formula allocations to states based on total population and school age population. States will then distribute the funds to school districts through their respective funding formulas or based on each district’s share of Title I funds. In the case that a Governor does not submit an approvable application for funds to the Department of Education, the bill directs the Secretary of Education to bypass the state government and make awards directly to other entities within the state. The bill includes provisions to ensure that states use these funds for preservation of jobs serving elementary and secondary education. Amounts from the Education Jobs Fund may not be used for purposes such as equipment, utilities, renovation, or transportation. The bill also prohibits states from using any of these funds to add to “Rainy-Day Funds” or to pay off state debt.
Under the Recovery Act, enacted in February 2009, the federal Medicaid matching rate was increased by 6.2 percentage points for all states, and by additional percentage points for states with high unemployment. These temporary provisions were enacted in response the state fiscal crisis -- with the increased Medicaid caseloads and decreasing state revenues resulting from the deep recession. The provisions are scheduled to expire on December 31, 2010. This bill would continue the additional federal assistance for six months (from January 1, 2011 through June 30, 2011), but would phase the level of assistance down. For January-March 2011, the federal Medicaid matching rate would be increased by 3.2 percentage points for all states, and for April-June 2011, the federal matching rate would be increased by 1.2 percentage points for all states. For this six-month period, states with high unemployment would continue to receive the additional percentage points, as they do under current law. These provisions will ensure that states continue to receive increases throughout state fiscal year 2011 (which runs from July 1, 2010 through June 30, 2011.) According to an analysis by the Economic Policy Institute, the Medicaid funds will save and create 158,000 jobs, including preventing the layoff of police officers and firefighters. More than half these jobs saved and created will be in the private sector, including workers who contract for or supply services to state and local governments.
OFFSETS (Totaling $27.5 Billion)
Closing Loopholes That Encourage Corporations to Ship Jobs Overseas (Offset of $9.8 Billion)
Food Stamps (Offset of $11.9 Billion, Beginning March 31, 2014) Under the bill, effective March 31, 2014, food stamp benefits will return to the levels that individuals would have received under pre-Recovery Act law. This modification is estimated to save $11.9 billion over ten years.
Rescissions (Offset of $2.8 Billion in Outlay Savings) Rescissions include nearly $2.25 billion in budget authority from Recovery Act programs, over $2.3 billion in budget authority in Defense Department funds unrelated to current military efforts, and about $2.15 billion in budget authority from other agencies. The Department of Education’s Race to the Top, charter school fund, and the Teacher Incentive Fund are not included among these rescissions. Rescissions include:
Adjustment of Calculation of Medicaid Average Manufacturing Price for Certain Drugs (Offset of $2.0 Billion) Under current law, the calculation of the Medicaid average manufacturing price (AMP) excludes certain payments and rebates if received from or provided to entities other than retail community pharmacies. The bill provides an exception to that exclusion for inhalation, infusion, or injectable drugs that are not generally dispensed through retail community pharmacies. This will ensure an accurate calculation of AMP for these types of drugs. The provision is estimated to save $2 billion over 10 years.
Elimination of Advanced EITC (Offset of $1.0 Billion) Presently, low- and moderate-income individuals may qualify for a refundable earned income tax credit (EITC). Individuals have the option of requesting advanced payments of the EITC throughout the year by having their payments of withheld income reduced by their employer. The President’s FY 2011 budget proposes to eliminate the advanced EITC payment option, and the bill incorporates that proposal. The provision is estimated to save $1.0 billion over 10 years. |