Policy Priorities

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A New Commitment to Our Nation’s Future

An Analysis of the President's FY2010 Federal Budget Request

The FY2010 budget request submitted by the Obama Administration signals a new national commitment to children, families and America's future. The policies and funding changes proposed make clear that the President understands that investing in children now will ensure a more stable economy and a healthier, more competitive workforce for the future.

The budget makes a substantial down payment to ensure that everyone in America has access to comprehensive, affordable health care. It also takes important steps to better the lives of children and families by continuing some of the investments included in the American Recovery and Reinvestment Act (Recovery Act) such as expansions of the Earned Income Tax Credit (EITC) and the Child Tax Credit, and increased funding to improve the nation’s schools. 

The budget also closes corporate tax loopholes and takes steps to ensure that taxpayers and corporations at all ends of the income spectrum pay their fair share for American prosperity. It ends unfair tax subsidies to oil and gas corporations, hedge fund managers, companies with offshore tax havens, and agribusinesses. 

Our work has just begun, but we have clearly turned a page for a brighter future for children. Our challenge now is to translate these increased investments into real change for children and their families. We must ensure that Congress passes health reform for all Americans this year, and that every child in America gets comprehensive health and mental health coverage. We must ensure that Recovery Act dollars for Early Head Start, Head Start and child care are well spent so we can build on them in the coming years to secure for all children the quality early childhood experiences they need and deserve. Below is an overview of what the budget proposes for children and some areas where more attention is needed.

New Commitment to Health Reform for All
Continuation of Tax Credits for Low-Income Working Families
Early Childhood Development
New and Increased Investments in Education
New Investments in Prevention
Promoting Permanence for Children
Increasing Help for Youths and Families Challenged by Substance Abuse and Mental Health Problems
Responding to Child Abuse and Neglect and Family Violence
Investments in Job Training Programs to Help Low-Income Youth and Families
Juvenile Justice Funding
Investments to Strengthen the Safety Net
Ensuring That Everyone Pays Their Fair Share for a Prosperous Country

New Commitment to Health Reform for All

  • The Administration proposes to set aside a reserve fund of $634 billion over 10 years to finance health care reform, a major agenda item for both the House and Senate. Additional funding will be needed as health reform is estimated to cost between $1 and $1.5 trillion. However, this amount advances the effort to lower costs and expand coverage this year. The reserve fund is financed almost equally through savings from Medicare and Medicaid ($309 billion) and new revenue generated by tax code changes ($325 billion). The budget does not provide specific details on health reform legislation, which Congress will decide. During his campaign, President Obama promised to cover all children, and we must hold him to that pledge.
  • The Maternal and Child Health Block Grant, which assists states in providing health services for mothers and children and helps reduce the infant mortality rate, is flat funded at $662 million. Since 2005, there has been a gradual decrease in funding. In inflation-adjusted dollars, the current federal investment is a 17 percent decrease from FY2005. 
  • The Vaccines for Children (VFC) Program is reduced by $54 million to $3.3 billion. Currently, almost a quarter of two-year-olds are not fully immunized. Millions of children have obtained vaccines through this program and in 2006 about half of all children under 19 were eligible for it. The federal VFC program is a critical public health intervention. Every $1 spent on vaccinations for children saves $16 in costs to the community.

Read more about CDF's work on children's health.

Continuation of Tax Credits for Low-Income Working Families

  • The Administration proposes making permanent after 2010 the new and expanded tax credits from the Recovery Act. These include the expansion of the Earned Income Tax Credit for workers with three or more children and the elimination of the marriage penalty. It also makes permanent the Child Tax Credit’s $3,000 minimum earnings threshold―a vast improvement in that credit. The budget would make the new refundable Making Work Pay Credit permanent and adjust the rate at which it is phased out, so more families can benefit from it; however, funding to make the credit permanent was not included in the Congressional budget resolution. The Center on Budget and Policy Priorities estimates that these temporary tax credit provisions in the Recovery Act will keep an estimated 1 million children—and more than 2.3 million Americans of all ages—from falling into poverty and will reduce the depth of poverty for millions more children.

Read more about CDF's work on tax and benefits outreach.

Early Childhood Development

  • The Administration requests $7.2 billion for Head Start and Early Head Start, a modest increase of $122 million from the FY09 omnibus bill. However, this small proposed increase will combine with the major investment made in the Recovery Act, which provided $2.1 billion for Head Start and Early Head Start, in order to enable Head Start to sustain the FY2009 increase in enrollment of 70,000 children through FY2010. The Head Start and Early Head Start programs provide children from low-income families with a comprehensive early childhood education experience so they can be ready to learn when they arrive at school. Prior to the addition of the Recovery Act funds, Early Head Start served only three percent of eligible children. The investment in Head Start will help make up for the 11 percent drop in funding in the program between 2002 and 2008, after adjusting for inflation. The Child Care and Development Block Grant (CCDBG), which received an additional $2.0 billion in the Recovery Act, is proposed to be flat funded at $2.1 billion. CCDBG is widely recognized as an important funding stream used to access quality child care, promote healthy child development and help families access and succeed at work.
  • The Administration’s budget funds new early care and education initiatives. The Early Learning Challenge Grants initiative includes $300 million for competitive grants to state educational agencies to develop a statewide infrastructure to integrate early learning programs and services for children.

Read more about CDF's work on early childhood education and child care.

New and Increased Investments in Education

The Administration proposes $46.7 billion in discretionary funding for the Department of Education, an increase of $1.3 billion over the FY09 omnibus. However, the Department received substantial additional funding through the Recovery Act to be used largely in FY09 and FY10. More than $44 billion was provided for various Department of Education programs, and more than $53 billion was provided for State Fiscal Stabilization funds, which are directed largely towards education programs.

K–12 Education

  • The budget includes a proposed $13.0 billion for Elementary and Secondary Education Act (ESEA) Title I, Part A grants. This is $1.5 billion less than the regular 2009 allocation, presumably in part because the Recovery Act provided $10.0 billion in supplemental 2009 funding. The $1.5 billion reduction in regular funding would occur in Title I funds distributed through the Basic Grant formula.
  • The President’s budget makes major investments in efforts to prepare and reward effective teachers and principals. The FY2010 budget proposal increases funding for the Teacher Incentive Fund to $517 million from $97 million in fiscal year 2009. This includes $487 million for traditional Teacher Incentive Fund activities and an additional $30 million for a new National Teacher Recruitment Campaign. These funds seek to support state and local education agency efforts to recruit new teachers and implement performance-based compensation systems in hard-to-staff schools and subject areas.
  • The Administration proposes a major expansion in the Striving Readers program, increasing funding to $370 million from $35 million in 2009. This proposal would double funding for the existing Adolescent Literacy Grants and create a new $300 million program called Early Literacy Grants. These grants would provide funding to local education agencies to engage in activities that improve student reading skills and comprehension.
  • The Administration also requested an additional $100 million in funding for the What Works and Innovation Fund created by the Recovery Act. These funds are intended to supplement the $650 million in competitive grants already provided to support local education agencies and partnerships that have demonstrated progress in improving student achievement. Funds can be used to study, expand or scale up current innovative efforts.
  • The budget request would fund a new program called the High School Graduation Initiative with $50 million. This initiative would support local activities to improve high school graduation rates through dropout prevention and other coordinated activities.
  • The budget proposes to eliminate 11 education programs that collectively received $482 million in FY2009. The justification is program duplication or failure to achieve intended objectives. Some of them include: Charter Education Program, Even Start, the National Institute for Literacy, Ready to Teach, Safe and Drug Free Schools and Communities Act State Grants, and student mentoring programs.

New and Expanded Alternative School Options

  • The Administration’s FY2010 budget request includes $10 million for a new Promise Neighborhoods program. It would provide competitive grants to non-profit organizations to open comprehensive education programs like the Harlem Children's Zone in New York City.
  • The Administration proposes a $52 million expansion of the Charter School Grants program, bringing the total request to $260 million. The funds will support the planning, design, implementation and dissemination of information regarding charter schools and state efforts to assist charter schools to obtain facilities.
  • The Administration flat funds the Voluntary Public School Choice program and the Magnet School Assistance program at the prior year levels of $26 million and $105 million, respectively.


Higher Education

  • The Administration requests major improvements to the Pell Grant program and puts it on solid financial ground in future years. The grants become an entitlement for low-income students and $28.7 billion in funding is requested―an increase from $25.4 billion. The maximum Federal Pell Grant for award year 2010–2011 will increase to $5,550 (up from $5,350 for 2009–2010) and increase annually to equal the change in the consumer price index plus one percentage point. The new Pell Grant entitlement would be funded partly by savings from the proposal to eliminate subsidies to private lenders in the Federal Family Education Loan Program, resulting in an estimated $21.5 billion in savings over the next five years. Students pursuing a higher education will instead receive loans through the Direct Loan program, financed directly by the federal government on nearly identical terms as private lenders.
  • The budget request proposes to modernize and expand the Perkins Loan program by significantly increasing funding from $1.1 billion to $5.8 billion in FY2010. The Perkins Loan program currently awards low-interest loans to institutions of higher education to be offered to students with the greatest financial needs. Under the Administration’s budget, the federal government would make loans directly to students instead of funding loan pools at individual schools. The program’s expansion would allow more colleges to participate and more students to receive aid.
  • The Administration requests that the new "American Opportunity" tax credit―a partially refundable $2,500 credit to help students and their families pay for college―be made permanent. It is included in the Recovery Act for 2009 and 2010.

Read more about CDF's work on elementary and high school education.

New Investments in Prevention

  • The Administration’s $8.6 billion 10-year investment in mandatory funding for quality evidence-based home visiting models is the first targeted funding stream focused solely on prevention for young children and their families. It will guarantee funds to states to expand the number of low-income children and parents served by tested program approaches that promote healthy child development, enhance school readiness and prevent child abuse and neglect. 
  • The Administration proposes $164 million for a new Teen Pregnancy Prevention Initiative that includes $110 million for competitive grants to faith- and community-based organizations, $4.5 million to support rigorous evaluation of programs, and $50 million in mandatory funding for states, tribes and territories. The majority of the competitive grant funding seeks to replicate effective program models that use age-appropriate and evidence-based approaches to reduce the risks of early pregnancy and identify new effective approaches. It replaces the same amount of funding previously directed to the Abstinence Education Program.
  • Funding for the discretionary portion of the Promoting Safe and Stable Families Program, which includes funding for family support and family preservation programs, remained at $63.3 million, where it has been since FY2008. The Mentoring Children of Prisoners Program, which helps promote positive experiences for these children and youth and prevent problems from occurring, was also level funded at $49.3 million.

Read more about CDF's work on the Cradle to Prison Pipeline® campaign.

Promoting Permanence for Children

  • $20 million is added to the small Child Welfare Research and Demonstration Program for a new Innovative Approaches to Foster Care pilot program, which will help to promote up-front service dollars and bonus funding for improved outcomes for children in long-term foster care. Too frequently youths grow up in foster care and leave with no permanent family or other adult connections to help them move successfully to adulthood.
  • While there was a small increase in the Adoption Incentives Grants that are used to reward states that increase the number of children adopted from foster care, funding was frozen for the Adoption Opportunities grants and the Infant Adoption Awareness and Special Needs Adoption Program under the Children’s Health Act.

Read more about CDF's work on child welfare.

Increasing Help for Youths and Families Challenged by Substance Abuse and Mental Health Problems

  • The Administration’s FY2010 Budget recommends a $16.9 million increase in the Children’s Mental Health Services Program, which supports the development of comprehensive, community-based systems of care for children and adolescents with serious emotional disorders and their families. The Administration cites national program evaluation data showing sustained mental health improvement for children benefitting from the program in clinical outcomes, improvements in school attendance and achievement, decreases in the use of inpatient care and significant reduction in contacts with law enforcement.
  • A $35 million increase is included for the Treatment Drug Courts with $5 million set aside for children impacted or at risk of being impacted by methamphetamine abuse across the country. 
  • Funding for the Community Mental Health Services Block Grant and the Substance Abuse Prevention and Treatment Block Grant remains at its FY2009 levels, which will be especially challenging to states given reductions in state funding for mental health and substance abuse services. Similarly, the mental health and substance abuse prevention programs of regional and national significance are also funded at the same level as in 2009, which will reduce opportunities for innovation and expansion in important areas. The Abandoned Infants Assistance Program, which offers assistance to children born drug-exposed and abandoned in hospitals, was also level funded at $11.6 million.

Responding to Child Abuse and Neglect and Family Violence

  • Despite the increased pressure on families as a result of the economic downturn, the Administration did not propose any increases for the cluster of programs that help promote the public child protection agency response to abused and neglected children and stimulate community-based and research initiatives. The Social Services Block Grant, for example, was funded at $1.7 billion where it has been since FY2002. More than one-third of this funding is used for services for abused and neglected children. The Child Welfare Services Program also was level funded at $281.7 million where it has been since FY2008. The three programs under the Child Abuse Prevention and Treatment Act, which must be reauthorized this year, are funded at a total of $107.6 million, just about at last year’s level. Education and Prevention Grants to reduce sexual abuse of runaway, homeless and street youth remained at $17.7 million.
  • Funding for battered women’s shelters under the Family Violence Prevention and Services Program was frozen at $127.8 million and the Domestic Violence Hotline was maintained at $3.2 million.

Investments in Job Training Programs to Help Low-Income Youth and Families

  • The Administration’s FY2010 budget requests increased funding for training and employment services, a priority investment in times of high unemployment when low-income youth and families urgently need to gain skills to be competitive in the labor market.  Overall, the budget proposes an increase in funding for job training programs from $3.6 billion in FY2009 to $3.8 billion in FY2010.
  • The 2010 budget proposes an increase of more than 63 percent for YouthBuild, a program designed to help disadvantaged youths gain high school credentials and skills training for employment while working on affordable housing for low-income or homeless families. The budget proposes $114.5 million for this program, in addition to the $50 million provided by the Recovery Act. According to the Department of Labor, the FY2009 appropriations and the Recovery Act funds will result in a total of 7,450 participants this year, with at least as many participants in FY2010.
  • The FY2010 budget requests an increase of funding for the Career Pathways Innovation Fund to $135 million, a $10 million increase from the $125 million in FY2009. Community colleges will receive grants to support career building programs.  
  • The FY2010 budget proposes a new Green Jobs Innovation Fund of $50 million to supplement funding through the Recovery Act. The program is to ensure that Workforce Investment Act (WIA) youth program participants take part in education and training programs in renewable energy infrastructure, energy efficiency and home retrofitting.

Juvenile Justice Funding

  • The Administration’s budget makes a significant down payment on Second Chance Act funding. This funding supports juvenile (and adult) re-entry programs that help put former offenders on the path to a productive and successful life. The budget proposal allocates $114 million to the program, a significant increase from FY2009 funding of $25 million. 
  • The Administration’s budget proposal maintains FY2009 level funding for key juvenile justice programs. Specifically:
    • $75 million to support delinquency prevention and intervention efforts and make important system improvements under Title II of the Juvenile Justice and Delinquency Prevention Act (JJDPA).
    • $62 million for JJDPA Title V prevention and intervention programs.
    • $55 million to fund a variety of juvenile justice initiatives, including community service and supervised probation, and establishing or expanding substance abuse programs under the Juvenile Accountability Block Grant.
    • $80 million for youth mentoring programs.
  • The Administration’s budget proposal reduces Juvenile Justice Demonstration Program grants from $80 million to $25 million and creates a new Community-Based Violence Prevention Initiative to focus on street-level outreach, conflict mediation and changing community norms to reduce violence.

Learn more about CDF's work on juvenile justice.

Investments to Strengthen the Safety Net

  • The Administration’s budget proposes increasing funding for child nutrition programs by $1 billion each year. This funding level supports a strong reauthorization package for the Child Nutrition program and advances the President’s goal of ending childhood hunger by 2015.
  • The Administration requests $3.2 billion in funding for the Low Income Home Energy Assistance Program (LIHEAP), which is lower than last year, due to expected lower energy costs, but still higher than any other previous year. It also includes a trigger to provide automatic funding increases whenever there is a spike in energy prices as we have seen recently.
  • The Temporary Assistance for Needy Families (TANF) block grant is flat funded at $17.1 billion. The Recovery Act provided an additional $5 billion in 2009 for a new Emergency Contingency Fund to assist low-income families during the economic downturn and also included $319 million to extend TANF supplemental grants through FY2010.
  • The FY2010 budget proposes to include $4.6 billion for Child Support Enforcement and Family Support, a $255 million increase over last year. The Recovery Act provided $426 million for child support enforcement in FY2009 and $590 million in FY2010.

Ensuring That Everyone Pays Their Fair Share for a Prosperous Country

  • The Administration proposes several eliminations and reductions in subsidies to corporations and individuals:
    • Eliminate several tax preferences to oil and gas companies to save more than $31 billion over the next 10 years.
    • Tax the compensation of hedge fund managers at ordinary income tax rates, rather than the reduced rates that many managers pay, to generate $23 billion over the next 10 years.
    • Reduce some subsidies and payments to agribusinesses resulting in $250 million in savings in 2010, an amount that would grow substantially in out-years.
    • Make substantial reforms to the U.S. international tax code, including closing some tax loopholes and changing several accounting rules to generate $2.5 billion in 2010 and $210 billion over the next 10 years.
  • The FY2010 budget request allows a portion of the 2001 and 2003 tax cuts to sunset on schedule. Top marginal income tax rates are reinstated to Clinton-era levels, capital gains taxes are increased, and other changes are made for married couples with income over $250,000 ($200,000 if single), raising $615 billion over the 2010–2019 period.