What Does The Shutdown Mean For You?

October 3, 2013

On October 1, the federal government went into a partial shutdown due to the inability of Congress and the Administration to pass legislation—known as the continuing resolution—to fund the government. At this point, it is unclear whether a compromise can be reached and how long the shutdown will last. The following information has been developed to assist audiologists and speech-language pathologists with questions they may have related to health care and education funding.

Health Care

What would happen to Medicare and Medicaid payments to providers?

There are two types of funding in the federal government: mandatory and discretionary. Medicare and Medicaid are both mandatory programs and are not affected by a lack of appropriations during a government shutdown. Medicare and Medicaid providers should expect all claims to be paid on time-as long as the shutdown is brief. If the shutdown continues for longer than a few days, claims processing could begin to slow down. This is because the federal employees and contractors who process Medicare and Medicaid claims are paid through annual appropriations; many would be furloughed, which would lead to delays in claims processing.

It is not yet known what level of appropriations Congress will approve under a short-term extension of the continuing resolution to avoid a shutdown of the federal government. Unless Congress acts and makes a change to the sequestration trigger that was put in place by the Budget Control Act of 2011, another round of across-the-board cuts will occur. It's important to note that the 2% Medicare cuts to providers last year will remain in place, but are not cumulative-there will be no additional 2% cuts.

How would veterans' benefits be affected?

Congress approves money for the Department of Veterans Affairs (VA) health programs 1 year in advance, which means that those programs will likely continue on a business-as-usual basis. All VA medical facilities and clinics, including outpatient rehabilitation centers, will remain fully operational. Claims workers would still process payments to cover disability and pension benefits.


What's the bottom line for schools and school districts? How would a government shutdown affect daily operations?

Most schools and school districts are unlikely to feel immediate effects of the shutdown, because the advanced funding nature of federal education spending means that states and districts have already received much of their federal funding for the school year. In addition, the vast majority of school funding (about 90%) comes from state and local sources. Moreover, the U.S. Department of Education (ED) has awarded dozens of competitive grants over the past several days, so that grant funding is not held up by the shutdown.

Will any education programs be affected in the short term?

Head Start (which provides early childhood education to low-income families) and Impact Aid (which helps fund school districts—such as those on military bases or tribal lands—that cannot fully rely on local tax revenue). These programs depend heavily on federal dollars that are not necessarily distributed at the beginning of the school year; thus, they could experience more acute and immediate shutdown consequences.

This situation is especially concerning because Head Start and Impact Aid have already deeply felt the effects of sequestration. More than 50,000 children have lost access to Head Start and many Impact Aid districts have been forced to eliminate positions and programming because of sequestration.

What effect will the furloughs at ED have on local schools and school districts?

Ninety percent of the department's more than 4,000 employees will be furloughed during the government shutdown, leaving a skeleton crew to address schools' and districts' questions and concerns. Grant processing will lapse, and questions will probably go unresolved for the duration of the shutdown. In addition, contract approvals will likely be delayed. See the department's shutdown plan, which outlines its strategies for minimizing the effects of a shutdown. 

How will the shutdown affect the flow of funding for the Individuals with Disabilities Education Act (IDEA) and other federal education programs?

Authorized funding would include the $22 billion in advance appropriations for formula grants to states under Titles I and II of the Elementary and Secondary Education Act (ESEA), IDEA Part B State Grants, and Career and Technical Education. These funds, which were included in the 2013 appropriation, are normally distributed on October 1 and provide the second installment of critical funding under annual allocations for the school year that began July 1. These funds are already appropriated and do not require further Congressional action.

ED believes that any delay in obligating these funds could damage, in some cases significantly, state and local program operations. Particularly in light of recent federal and state funding reductions, ED considers the October distribution of advance appropriations for formula grants to states under Titles I and II of ESEA, IDEA Part B State Grants, and Career and Technical Education to be a necessary exception to the shutdown, requiring a limited number of employees to work in the absence of fiscal year 2014 funding. 

How will the shutdown affect ESEA reauthorization?

With few congressional staff at work during the shutdown, no progress on ESEA reauthorization will be made. Moreover, all discussions and negotiations among members of Congress will focus on fiscal issues, instead of education. Meanwhile, the minimal staff at ED will result in delayed decisions on pending ESEA waivers.

What does it mean for schools when the government reopens?

ED staff will face a backlog of work once the shutdown ends, so schools should expect delays in responses to their questions or requests for information. Any short-term spending bill approved by Congress is likely to fund education programs at current fiscal year 2013 levels, which already reflect a 5% cut because of sequestration. Schools and districts should prepare for another round of across-the-board sequestration cuts, which are slated to take effect in January if Congress doesn't intervene. A mid-October congressional showdown over the federal debt ceiling only adds to the uncertainty.

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