Back to work as government shutdown ends.

October 18, 2013

Avoiding a default on the nation’s debt and ending the 16-day old government shutdown, Congress passed and the President signed legislation Wednesday night funding the federal government through the middle of January 2014 and extending the debt ceiling through the beginning of February 2014.

The deal reached by the House and Senate includes three important provisions:

• A continuing resolution (CR) that funds regular government operations through January 15, 2014 at the current sequester levels of $986 billion, well below the $1.058 trillion sought by the Senate. This means that the lower overall funding levels sought by the House will stay in place at least through the end of the current calendar year. Should Congress fail to undo the sequester between now and when the CR expires, the second year of sequester cuts will kick in and further lower the overall funding levels available for fiscal year (FY) 2014.

• An extension of the debt ceiling until February 7, 2014. Importantly, the bill does not include any offsets or other funding cuts in exchange for an increase in the debt ceiling and avoids setting a precedent for the so-called “Boehner Rule” (which argues that for every dollar the debt ceiling is increased federal spending must be cut by an equivalent dollar).

• Although not included in the legislation, as part of the overall deal Congress agreed to convene a conference committee on the budget resolution (the House and Senate passed wildly different versions of a budget resolution back in April). The conference committee is tasked with coming up with a long-term spending plan—which could include entitlement reform, tax reform and/or an alternative to sequestration—by December 13. 

The bottom line: While it is extremely good news that Congress reached an agreement to reopen the federal government and avert defaulting on our debt, mostly they just kicked the can down the road by a few months. Right now it is hard to see how the House and Senate will come up with any kind of workable long-term spending plan by December 13, and the damaging sequester will remain in place until Congress finds a balanced alternative. Realistically, this deal simply sets a timeline for the next stage of the same debt and deficit debate Congress has been having, now with a set of key mile-markers: December 13, January 15 and February 7. 

The shutdown had a significant impact on workforce development programs, and we’ve had reports from a number of states and local communities that services have been reduced, staff have been furloughed, training has been delayed and American Job Centers were even closed in some instances. The double-impact of absorbing the full sequester cut in July followed by the delay in the October 1 allocation for the Workforce Investment Act (WIA) Adult and Dislocated Worker programs had a particularly severe impact in many locations. 

All federal employees were recalled to work as of October 17, and agency staff are moving as quickly as they can to ramp operations back up. The Department of Labor (DOL) has already issued guidance clarifying that state or local workforce areas may use their October allocation once they receive it to cover allowable expenses incurred prior to receiving the allocation. The Training and Employment Notice (TEN) also explains that state or local workforce areas may use non-federal funds to operate WIA services and then repay those funds once their October allocation is received (similarly, if a local area was advanced state, city or county funds to operate WIA services during the shutdown, those funds may be repaid back to October 1 once the October allocation is received).

National Skills Coalition expects additional guidance from DOL and other federal agencies as staff return to work and begin untangling the effects of the shutdown. We will provide additional information and materials as they become available.