A first look at sequestration’s impact on Minnesota

It’s April in Minnesota, which means many of us are caught up in the budget discussions brewing at the state Capitol. However, at the federal level, policymakers’ inability to reach a deficit-reduction deal has triggered a series of across-the-board federal spending reductions. These automatic cuts, known as sequestration, started to take effect on March 1.

What does that mean for Minnesota? Minnesota Management and Budget estimates that federal funding that goes to the state and other entities like schools and local governments could be reduced by $90 million annually. Some of these reductions might be offset by increases in other federal funding.

Funds that are subject to cuts include many services that make a real difference in the well-being of vulnerable Minnesotans like Title I education; special education; Head Start; a number of human services block grants; the Low-Income Home Energy Assistance Program (LiHEAP); and Women, Infants and Children (WIC), which provides nutrition education and supplemental food.

According to a House and Senate fiscal staff memo, WIC funding in Minnesota will lose $1.2 million (federal FY 2013). Title I grants for education will see a loss of $12.8 million in funding, and special education will lose $9.5 million.

Federal funds account for about 30 percent of the roughly $65 billion total state budget for FY 2014-15. The largest areas of federal funding in Minnesota are for Medicaid, highway planning and construction, cash and food assistance, and education. Fortunately, several of these sources of federal funding are not subject to the automatic cuts, including Medicaid, some highway grants, cash assistance for low-income families and foster care.

Much is still unclear. The timing and final amounts of some of the cuts have yet to be determined by federal decisionmakers. State agencies like Minnesota Management and Budget are keeping in close contact with the federal government to get details as they become available.

It will then be up to policymakers to decide how to respond.

-Caitlin Biegler

About Clark Biegler

Clark Biegler is the Minnesota Budget Project's policy analyst.
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