WASHINGTON — A House Natural Resources Committee investigation has found that President Obama’s Office of Management and Budget ordered that sequestration cuts be applied retroactively to funding for rural schools over the opposition of the Agriculture Department.

The committee’s report released today, “A Less Secure Future for Rural Schools: An Investigation into the Obama Administration’s Questionable Application of the Sequester to the Secure Rural Schools Program,” detailed how last February the USDA had determined 2013 sequestration wouldn’t apply to 2012 funds that had already been distributed in the program. The White House stepped in and overruled the USDA, though both agencies haven’t turned over numerous subpoenaed documents that could reveal more behind the decision.

The Secure Rural Schools program helps provide rural counties with funds for teachers, schools, police officers, emergency services and infrastructure — “necessary because the federal government had failed to uphold its century-old promise to actively manage our national forest to provide a stable revenue stream for rural counties containing national forest land,” Chairman Doc Hastings (R-Wash.) said in reference to the timber industry link.

The program dates back to a 2000 bill, which was extended in July 2012 for that fiscal year. The $323 million in funds were doled out to 41 states by the USDA in January 2013. But two months later, after sequestration went into effect, the Obama administration announced it wanted $17.9 million back — prompting bipartisan backlash from governors and congressional representatives of the affected states.

“The Obama administration appeared intent on making this sequester as painful and visible as possible, and this was another example. Instead of working with Congress to make responsible cuts and reforms, the administration took the political opportunity to go after funds used to pay teachers and police salaries,” Hastings said at a hearing on the report today.

The chairman expressed his “frustration and disappointment in the Obama administration for repeatedly stonewalling Congress and stalling our legitimate oversight efforts” — ignoring requests for documentation and forcing the committee to issue subpoenas. Agriculture Secretary Tom Vilsack turned down a request to testify, as did U.S. Forest Service Chief Tom Tidwell, USDA General Counsel Ramona Romero, and OMB Director for Budget Brian Deese.

The only witness sent by the administration was USDA Undersecretary for Natural Resources and the Environment Robert Bonnie.

Ranking Member Peter DeFazio (D-Ore.) said it was a case of “you create a bad law, the administration applies the bad law.”

“It’s nothing really to investigate here. But we can waste a couple hours on it instead of doing something proactive to try and figure out how we are going to better provide for counties, schools and economic activity in rural areas,” DeFazio said.



Bonnie similarly testified that “the negative impacts of sequestration on Secure Rural Schools demonstrate that sequestration is a bad policy.”

He said that 19 states weren’t able to give back the funds as requested under sequestration, with half a dozen in the administrative appeals process. They could get docked for “outstanding debt” in the distribution of fiscal year 2014 funds.

“One option is to withhold dollars from Secure Rural Schools in F.Y. ’14. A second option is to withhold it through the departmental funds that may go to states. A third option is to refer to Treasury,” Bonnie said.

The report by the committee’s Republican majority summarized that “the Obama Administration complied with the law to make a SRS payment authorized in FY 2012, but then acted to retroactively apply the FY 2013 sequester to payments that had already been disbursed with the full knowledge that sequestration was set to take effect. This action demonstrates an obvious attempt of the Administration to make the sequester appear as ‘painful as possible.’”

However, the report notes, none of the responses from OMB or USDA on the incident “included internal emails or other documents that would shed light on the inner workings of the Obama Administration or how the decision to apply the sequester was made or how it was implemented.”

Over the course of the investigation the OMB has provided more than 1,300 pages of documents and the USDA more than 2,200 pages.

“Given the change in USDA’s legal analysis, pressure by the White House’s OMB, and the choice to apply the sequester of SRS funds as broadly as possible, it is clear that Congress, states, and rural communities were right to question whether these decisions were correct and made for any reason other than to make sequestration as visible and painful as possible in rural communities across the country,” the report states.

Hastings said the ultimate solution needs to be Senate passage of H.R. 1526, the Restoring Healthy Forests for Healthy Communities Act, which already passed the House with bipartisan support and is intended to stop the Band-Aid for timber-reliant communities.

“The Secure Rural Schools program was intended to be a short-term solution and counties are still lacking a stable, dependable source of revenue,” Hastings said.