The Sequester is Here
Barring a last minute compromise, the sequester will become a reality tonight. In preparation for the $85 billion in automatic spending cuts, OMB released a memo yesterday detailing the effect of the sequester on important government functions. Included in the memo is an explanation of how grant funding will be impacted. The excerpt from the memo about financial assistance is provided below.
“Given the widespread use of grants, loans, and other Federal financial assistance to non-federal entities (e.g., State, local and tribal, non-profit organizations, and companies), sequestration will impact the funding of these activities.
As a general matter, agencies should ensure that any new financial assistance obligations or funding increase under existing agreements are consistent with the need to protect the agency’s mission at the post-sequestration level. In light of sequestration, agencies may also consider delaying awarding of new financial assistance obligations, reducing levels of continued funding, and renegotiation or reducing the current scope of assistance. Agencies may be forced to reduce the level of assistance provided through formula funds or block grants. Should any such steps be necessary, agencies should evaluate the associated costs and benefits of such actions and appropriately engage and inform recipient(s) as early as possible.”
A link to the full memo can be found here: http://www.whitehouse.gov//sites/default/files/omb/memoranda/2013/m-13-05.pdf