Fiscal Cliff Deal Delays Necessary Education Cuts

Published January 16, 2013

January’s fiscal cliff deal delayed major cuts to federal education spending—at least until March, when mandatory cuts are slated to decrease it by 8.2 percent, or $4 billion.

“While $4 billion is a fairly large number, there are a lot programs from which it can be taken,” said Michael Shires, an associate professor at Pepperdine University’s School of Public Policy. “Reducing the federal role in education spending may be one of those areas of opportunity where the federal government can more easily cut knowing the consequences will be mitigated by actors at the state and local level.”

Wasteful Spending Spike
Federal education spending has nearly quadrupled in the past 40 years without bringing any increase in student learning, says Neal McCluskey, associate director for the Cato Institute’s Center for Educational Freedom. He pointed to data showing student test scores have barely budged since the 1970s. And although federal efforts have focused on poor and minority students, their test scores have likewise not increased.

“From an educational standpoint, mainly what federal money does is to support broken, wasteful programs,” McCluskey said, so continuing federal programs unabated “encourages that wasteful spending.” The Government Accountability Office, he noted, has found vast waste and duplication in federal education spending.

Education spending advocates argue cuts hurt the economy. The American Association for the Advancement of Science (AAAS) wrote cutting science programs “would harm our nation’s global competitiveness and economic future by completely undermining progress on improving student achievement.”

But since studies have consistently shown increasing education spending does not improve student achievement, McCluskey says he finds that prediction implausible.

Because of the country’s out-of-control spending, “When Congress and President Obama tackle the spending cuts portion of the fiscal cliff solution in two months, they need to make sure education receives as much scrutiny as any other part of the budget,” said Lance Izumi, director of education studies at the Pacific Research Institute.

Education Incentives Expanded
The American Taxpayer Relief Act, or HR 8, also permanently extended the Coverdell Education Savings Account, through which parents can save money for education expenses such as online learning equipment, tax-free

The expansion could, “if consistently used, create some small savings for families,” Shires said. “Relative to the government’s expansive spending in education, this benefit is very small.”

The law also extended the New Markets Tax Credit (NMTC), which can encourage charter school growth. It gives investors a tax break if they put money into projects for poor communities.

“Clearly, a humongous problem is that we have a tax code that is absurdly complicated. So if we get one tax credit we like, that doesn’t make it okay to have a thousand that are terrible,” said McCluskey. The fact of the matter is the federal government has no constitutional authority to be involved in education.”

Any cuts would not take place until the 2013-14 school year. Schools have complained this still creates uncertainty for their budget planning. 


Image by Joe 13.