President signs debt ceiling legislation

By Erika Hoffman 

On June 3, President Joe Biden signed into law House Resolution 3746, the Fiscal Responsibility Act of 2023, which suspends the U.S. government’s $31.4 trillion debt ceiling until 2025, thereby averting a default on the country’s debts.

The House passed the legislation on May 31 by a vote of 314-117 after the President and Congressional leaders reached a deal over Memorial Day weekend. The Senate approved the measure on June 1 by a vote of 63-36 after voting on several amendments — all of which failed.

The Fiscal Responsibility Act of 2023, suspends the debt ceiling until January 2025, after the next presidential election. It caps fiscal year 2024 spending levels at approximately FY 2023 levels and provides a 1 percent increase in the following year. The bill also includes a provision encouraging Congress to pass FY 2024 appropriations bills in a timely manner or face a 1 percent cut. Other provisions include:

  • Rescinding about $30 billion in unspent COVID-19 relief funding
  • Fully funding medical care for veterans
  • Rescinding $1.4 billion in funding to the Internal Revenue Service
  • Expanding work requirements for the Supplemental Nutrition Assistance Program (SNAP)
  • Changes in the Temporary Assistance to Needy Families program (TANF)
  • Changes in the National Environmental Policy Act to streamline the process for environmental reviews
  • Ending the pause in student loan repayments in August

The clawback of coronavirus relief funding applies to unobligated funds that remain in several federal programs including, among others, rental assistance, small business loans and broadband in rural areas.

The impact to education would affect approximately $391 million in American Rescue Plan education relief funds, including the Education Stabilization Fund. The education rescissions will be made only to funding that has not been obligated by the U.S. Department of Education to states, districts or institutions of higher education.  There should be minimal impact, if any, to K-12 education programs in public schools.

With overall spending levels for FY 2024 determined by the debt limit legislation, Congress will now turn its attention back to the regular appropriations process over the coming weeks.

Erika Hoffman is CSBA’s Deputy Legislative Director of State and Federal Programs.