Obama Budget Calls for More Competitive Grants

  • April 10, 2013
  • By Jake Grovum (2)
President Barack Obama, with acting Budget Director Jeffrey Zients, discusses his proposed fiscal 2014 federal budget Wednesday in the White House Rose Garden. He includes more competitive grants for states. (AP)

President Barack Obama's budget, released Wednesday, envisions a revamped relationship between the federal government and the states, calling for principles from the competitive Race to the Top education program to be applied to more federal grant programs.

Throughout the White House budget, there are hopeful references to trimming wasteful and inefficient spending, and one path touted toward those ends is a proposal to expand the ideas inherent in Race to the Top to other programs.

The original Race to the Top, referred to as RTT, is a $4 billion federal effort designed to entice states to enact reforms and overhaul their education systems in return for competitive grants from Washington. According to the White House, 19 states have received funding, a group that comprises 22 million students — nearly half of all students in the country — and 1.5 million teachers in 42,000 schools.

“By setting out clear standards that needed to be met to receive funds, RTT instigated change in States all across the Nation, including even those that ultimately did not receive RTT funds,” the budget says. “By doing so, RTT has driven taxpayer dollars to be used more effectively. The RTT approach is being expanded to transform and improve lifelong learning from early childhood education through college and beyond; to allocate grants for transportation; to bring innovation to workforce training; and to accelerate advanced vehicle deployment.”

Common Ground

The White House budget, all together, is expected to land with a thud on Capitol Hill, where Republicans have attacked its tax hikes and some liberals have chafed at cuts to Medicare and Social Security. But the competitive grant proposal could offer some common ground, and builds on models that the federal government has used for health care, disability and other programs in recent years.

What's more, congressional and state Republicans have often called for more flexibility when it comes to federal grants for states, ideas that could be incorporated into the latest White House proposal. At the same time, those Republicans have also been skeptical of how the administration would enforce standards and enact that flexibility, as was the case when the White House proposed waiving welfare-to-work requirements for states under certain circumstances.

One specific proposal would create so-called “Performance Partnership pilots” that would allow states and local government to propose new ways to use the myriad federal community, housing and other safety net grants that flow from Washington in new ways. The Office of Management and Budget would vet the proposals before they would go into place.

Similarly, the budget calls for a Race to the Top-type program for energy, offering states incentives to promote cleaner natural gas production, electrical grid modernization and reduced waste. A $1 billion competitive grant program for higher education would also be established, with an eye toward driving states to enact higher education reforms, cut tuition and contain ever-increasing costs.

The energy program could be the most significant and get the most administrative backing, as President Obama mentioned it in his State of the Union address earlier this year and specifically in his budget message releasing his plan. The proposal comes as concerns have been mounting around the country about dwindling federal support for renewable energy and efficiency efforts, as Stateline has reported.

Also Relevant to States

The White House budget includes a number of other provisions relevant to states.

An effort dubbed “SelectUSA” would give the Department of Commerce authority and resources to facilitate business investment, both from domestic and foreign companies. As the budget notes, that's a function typically left to states.

The administration is also proposing to help states deal with the crushing debt of their unemployment insurance trust funds that, as Stateline has also reported, are facing deep deficits thanks to the Great Recession. The proposal would offer tax relief for employers with an eye toward boosting employment and also increase the level of wages subject to unemployment taxes. That increase would be offset by corresponding rate cuts, to offset any potential tax hike, the budget says.

For health care, the president proposes $3.9 billion in discretionary spending above the 2012 enacted level. Much of the increase would go toward continued implementation of the Affordable Care Act, mental health services and Head Start.  

But the budget also proposes cuts, including elimination of the Preventive Health and Health Services Block Grant and reductions in the Low Income Home Energy Assistance Program and the Community Services Block Grant. 

Some of the president's new spending in health reflects priorities arising out of the Sandy Hook tragedy. He proposes a $130 million initiative to help teachers recognize signs of mental illness in young people. That funding includes $55 million to provide mental health "first aid" training for schools and communities to improve referrals for students in need of mental health services and $50 million to train 5,000 new mental health professionals to serve students and young adults.  

Transportation Spending

While making cuts elsewhere in the budget, the president wants to boost spending on transportation and infrastructure, including $50 billion right away on infrastructure improvements, as he first announced in his State of the Union address. The vast majority of that — $40 billion — would help shore up deteriorating roads, bridges, airports and railways. The rest would be awarded through competitive grants.

After the initial wave of spending, Obama wants to ramp up transportation spending by 25 percent once the current surface transportation law expires next year.

Obama doubled down on past ideas that have stalled on Capitol Hill.

He made yet another pitch for a national infrastructure bank, which would let private investors pool their money with government bodies to build new projects. The president said the bank's decisions would be based on objective criteria, not politics.

The president asked lawmakers to create an America Fast Forward Bonds program, similar to the Build America Bonds from the president's 2009 stimulus package. The federally subsidized bonds offer a higher rate of return than traditional municipal bonds, because they are not tax-exempt like normal municipal bonds. They are designed to appeal to large investors, such as pension funds and non-profit groups that are already tax-exempt.

And Obama asked for $40 billion to improve city-to-city passenger rail, including the types of high-speed rail projects that several Republican governors spurned early in Obama's administration.

The president would pay for the improvements by redirecting money that had been spent on military operations in Iraq and Afghanistan.

Stateline staff writers Maggie Clark, Jim Malewitz, Melissa Maynard, Mike Ollove and Daniel C. Vock contributed to this report.