1. Discretionary Spending Baseline Analysis
Suppose that the Congress is considering the creation of a new education grant program aimed at addressing learning disability issues at the state and local level. The program would be funded through annual appropriations, with the money transferred to states through a population-based formula by the Department of Education. The proposal is to appropriate $650 million for fiscal year 2021.
Your boss on the Senate Budget Committee has asked you to create a hypothetical 10-year baseline projection for the program, covering estimated costs for fiscal years 2021 through 2030. (Note: Since this is a brand-new program and 2021 will be the first year of appropriation, there are no “outlay priors” to worry about.)
There is no history to rely on since this will be a brand-new program. However, the proposed grant program seems similar to a few other education programs that you are familiar with, so you think you can use historical spending patterns for those similar programs to help create the baseline projection. You have identified historical average spendout rates to use for estimating outlays from new funding for the grants:
· 24 percent in the first year,
· 71 percent in the second year,
· 4 percent in the third year, and
· 1 percent remaining unspent (and eventually lapsing)
To inflate appropriations, assume that the baseline will reflect anticipated inflation of 2% per year.
(1) Create a “waterfall table” for fiscal years of 2021 through 2030 using the above information. Create your spreadsheet table in an Excel worksheet that clearly shows all your work for each year, including showing the formulas—in other words, don’t create a table with just the end-product numbers.
(2) How much appropriation would be required in total under the 10-year baseline for the grants program? That is, what is the 10-year total of baseline budget authority? (Respond in your Word document.)
(3) What are the first-year (2021) outlays and the subtotal of the first three years (2021-2023) outlays? (Respond in your Word document.)