The budget for education reflects the administration's

I agree with all the above posters. As soon as you see "demand that" (or any other of the words in a similar category..."require," "propose," "request," etc.), sirens should be wailing up the street telling you to make sure that the demand is expressed correctly in the subjunctive mood. To do so, take the infinitive form of the verb...here "to be" and nix the "to."

I demand that he [strike]to[/strike] be arrested.
He obeyed the queen's order that he [strike]to[/strike] remove himself from her presence.
She proposed that you [strike]to[/strike] call after 9 a.m.

Ideally, you read the question, the appropriate alarm bells set off, and you go right to the answer-- here, only 1 choice uses the subjunctive correctly..

BUT...what if you don't see that error, or don't see it right away? What can you eliminate via other methods?

In this sentence there is also a split *after* the comma--the usages of pronoun "it."

Choice E uses "it" twice, to refer to both money and budget, so E is definitely out. Choices A and C intend for "it" to refer to "the money." Choices B and D use "it" to refer back to "the budget." There are several singular nouns in the sentence preceding "it"--"budget," "demand," and "education." Some students think that a pronoun must ALWAYS refer back to the closest noun, and would therefore lose B and D, but if we look at the structure of the sentence, we can see that the first part is in a fairly straightforward SUBJECT-VERB form.

The budget reflects (Subject Verb) ......, BUT ..... [the budget] allows [the districts] to spend the money...

The power of the subject position in the structure of this sentence is so strong that B and D are OK on that front.

What else could we look at to eliminate answers? Choice C uses a different form of "allow" after the comma than the other answers do-- "allowing." This is, in fact, a modifier rather than a verb, and is not parallel to either of the previous clauses ("The budget demands" or "the money is"). C is also out.

That leaves us with A, B, and D. There are few nuances that might nudge us toward the correct answer....you could make an argument that in choice B the pronoun "them," which is in the object case, is structurally in the same position as its antecedent ("local school districts"), which is an object because it follows a preposition (the money is controlled BY the districts). In choice D, "local school districts" is the subject of the subordinate clause, so all things being equal I'd probably prefer B to D, even in a world where I knew nothing about the subjunctive. That would leave us with A and B-- a 50/50 shot knowing NOTHING about the subjunctive.

I'm certainly not suggesting that you do all this unnecessary work while taking your CAT-- hopefully you see the subjunctive trigger right away and answer this question in 6 seconds flat. BUT if you don't see it, keep breaking down the sentence piece by piece according to what you DO know. This can be a good exercise when reviewing a question too-- even one that you've gotten right-- to see if you can identify other issues with the incorrect choices. The more tools you have in your bag, and the more flexible you are using them, the better shot you'll have at a killer score.