Sequestration and the NEA; Arts Caucus Cochair

On the evening of March 1, President Barack Obama issued an order triggering the $85 billion spending reduction known as sequestration. The order, which was legally required under the Budget Control Act of 2011, is the first installment of a $1.2 trillion deficit reduction measure that must be undertaken over the next nine years under the statute.

The order came after a last-minute meeting with congressional leaders at the White House on Friday failed to yield an agreement on repealing or mitigating the cuts. In a memo from the White House Office of Management and Budget (OMB) that accompanied the order, Deputy Director for Management Jeffrey D. Zients said the order would require a 7.8% cut in discretionary defense spending, a 5% cut in discretionary domestic spending, a 2% cut to Medicare and a 5.1% cut to certain domestic mandatory programs. (Social Security and Medicaid are among the mandatory spending programs exempt from sequestration.)

In a letter to state arts agency and regional arts organization directors, National Endowment for the Arts (NEA) Director of State and Regional Partnerships Laura Scanlan confirmed that overall funding for the NEA will be reduced by 5% ($7.3 million). The NEA plans to implement the sequestration cuts in the following ways:

Direct grant allocations will be reduced by 3.2%.
Partnership funds to state arts agencies and regional arts organizations will be reduced by 2.7%.

In a presentation in the last week of February, NEA White House and Congressional Liaison Mike Griffin said that the NEA is able to mitigate the effect of sequestration on states by applying funds that were de-obligated in the prior year. Scanlan confirmed that sequestration reductions will apply only to state arts agency grants awarded in the federal fiscal year 2013 funding cycle. Cuts will not be applied retroactively. This means that state arts agencies should expect reductions to their NEA FY2013 Partnership Agreements, used by most states to support their FY2014 activities. Current (NEA FY2012/state FY2013) Partnership Agreements will not be affected.

With sequestration now the law of the land, Congress is once again approaching a significant fiscal deadline, as funding for the federal government is set to expire on March 27 unless Congress passes legislation providing funds for the remainder of the year. Fortunately, in interviews following the implementation of sequestration, both President Obama and Speaker of the House John Boehner (R-OH) expressed a strong desire to avoid a government shutdown by passing legislation funding the government for the remainder of FY2013.

The question of course is, How will Congress choose to continue to funding the government and what, if anything, will it do about sequestration, as a budget deal could repeal or reduce the spending cuts? On March 6, the House of Representatives approved legislation that would fund the federal government at current levels for the remainder of FY2013. While the legislation does maintain the reductions in spending levels created through sequestration, the House bill would provide the Department of Defense added flexibility in how it reduces spending. The bill does not provide such flexibility for domestic discretionary programs, including the National Endowment for the Arts. That bill now goes to the Senate, where it must be passed before it can become law.

Beyond this year, it is important to remember that unless Congress and the president reach some sort of agreement, sequestration will continue to require that the federal government reduce overall spending by about $109 billion a year for the remaining eight years of the sequester (through 2021). However, beginning next year the mechanism through which the cuts are achieved will change: instead of the across-the-board cuts required this year, the reductions will be achieved through lower discretionary spending caps.

New Congressional Arts Caucus Cochair

NASAA has learned that Rep. Leonard Lance (R-NJ) has agreed to become the next Republican cochair of the Congressional Arts Caucus, where he will serve with cochair Rep. Louise Slaughter (D-NY). Lance was first elected to Congress in 2008 and represents the 7th district of New Jersey. Though only in his third term, he has risen quickly through the ranks of the Republican Caucus and sits on the influential Energy and Commerce Committee.

Representative Lance is considered supportive of the arts, and voted against both amendments offered by Representative Tim Walberg (R-MN) in 2011 that would have substantially reduced funding to the NEA.

We look forward to working with Representative Lance as he assumes this new role.