Monday, August 3, 2009

Federal government progresses on funding higher education; legislators will be at state fair

Both the U.S. House and Senate have been busy drafting their fiscal year 2010 Labor-Health and Human Services-Education appropriations bills, which has Congress on-track to finish the appropriation process on-time this year (prior to the start of a new fiscal year Oct. 1). Last Friday, the full House passed their version of the bill, HR 3293, by a vote of 264-153. This bill appropriates $163.4 billion in discretionary programs. Those programs under the Department of Education will receive $67.8 billion resulting in an increase of $6.2 billion above last year's (2009) appropriation.

Higher education programs will receive a total of $2.3 billion which is an increase of $194 million over fiscal year 2009 and student aid programs will receive $19.6 billion, an increase of $478 million. $17.8 billion will go toward Pell Grants supporting an award of $4,860, which combined with mandatory funding provided in the 2007 College Cost Reduction and Access Act, will increase the maximum award to $5,550 for the 2010-2011 school year. The bill also provides $20 million increases for both the TRIO and GEAR UP programs.

Of the 12 appropriations bills the House and Senate are to consider, the House is considering its last bill, the Defense spending bill, which is being debated on the floor this week.

In the Senate, of the 12 appropriations bills, the full Senate has passed only two appropriations bills, leaving ten bills to take up. The Senate's agenda is full, including the debate and vote on the Supreme Court nominee, Judge Sonia Sotomayor. However, the Senate did introduce their version of the Labor-HHS-Education bill on Tuesday, and the full Appropriations Committee approved the bill yesterday afternoon. Similar to the House bill, the Senate bill includes funding for student financial aid, and maintains the maximum discretionary Pell Grant award level at $4,860, and combined with mandatory funding provided in the 2007 College Cost Reduction and Access Act, will increase the maximum award to $5,550 for the 2010-2011 school year.

Unlike the House bill, other than an increase of $441 million above 2009 funding for the National Institutes of Health, the Senate bill would fund all other higher education programs at their 2009 levels, including Federal Work-Study ($980 million) and Supplemental Educational Opportunity Grants ($757 million). The Perkins Loan Program would receive no new funds under this measure.

The Senate bill was influenced by the recent passage of the American Recovery and Reinvestment Act (ARRA), which appropriated more than $124 billion for programs that are funded in this bill, including almost $100 billion for the Education Department. Since most of the funding for ARRA programs will be obligated during fiscal year 2010, Committee Chair Sen. Tom Harkin, D-Iowa, said they generally did not provide additional large increases in this bill to those programs that received large increases in ARRA, such as Title I grants. Harkin said they expect to put a higher priority on these critical programs in the fiscal year 2011 appropriations bill.
The bill will likely not be before the full Senate until Congress returns from August recess. Once the full Senate passes the bill, a conference committee will be formed to work through the differences between the two bills.

In addition to the Labor-HHS-Education appropriation bill is HR 3221, the budget reconciliation bill. The Student Aid and Fiscal Responsibility Act of 2009, introduced by George Miller, D-Calif, Chairman of the House Education and Labor Committee, contains the new community college initiative announced by President Obama earlier this month. Included in the bill is $6.3 billion in funding to community colleges and other eligible entities. Funding is made available to eligible entities to compete for four year grants (minimum grant is $750,000) to support innovative programs or programs of demonstrated effectiveness that lead to the completion of a postsecondary degree, certificate, or industry recognized credential leading to a skilled occupation in a high-demand industry. Funding will also be provided annually to states to apply for grants to engage in the systematic reform of their community colleges.

The legislation also provides $2.5 billion to states for new community college facilities and modernizing, renovating, and repairing existing facilities. Grants can be used to reduce the financing cost of loans, provide matching funds for community college capital campaigns, and capitalize a revolving loan fund.

The bill also includes reforms to student aid, including simplifying the FAFSA form. The legislation reduces the amount of information that students will need to provide in order to file a Free Application for Federal Student Aid, or FAFSA.

Also included is a provision that ends the subsidized Federal Family Education Loan, or FFEL program by July 2010, and requires all colleges to participate in the Direct Loan program, under which loan capital is provided by the Federal government rather than banks. The Congressional Budget Office has projected a savings of $87 billion over ten years with this change.

Also under the measure, the Pell Grant maximum is increased from $5,550 in fiscal year 2010 to $6,900 in fiscal year 2019. The bill however, does not make the Pell Grant program an entitlement program, as proposed by President Obama; but rather $40 billion of savings from moving to the Direct Loan program is used to augment funding provided through the regular appropriations process. President Obama had proposed transforming the Pell Grant program into an entitlement program that, like Social Security and Medicare, would ensure a minimum level of funding that would increase each year.

The bill also provides $600 million annually from 2010 to 2014 for a "College Access and Completion Fund" designed "to promote innovation in postsecondary education practices and policies by institutions of higher education, States, and nonprofit organizations to improve student success, completion, and post-completion employment, particularly for students from groups that are underrepresented in postsecondary education."

The full House is not expected to take up the bill until September, after the August break. The Senate has yet to formally begin work on its version of the bill.

On Aug. 7 Education Secretary Arne Duncan will participate in a webinar to discuss the Obama administration's higher education agenda and take questions from campus leaders. This is being co-sponsored by the American Council on Education and the National Association of College and University Business Officers. You may find more information here.

Congress is scheduled to be on a recess starting August 10 through Labor Day for summer district work. We will continue to keep you updated as things progress federally.
As a reminder, many of our state and federal elected officials greet citizens at the Minnesota State Fair (August 27 - September 7). This is a good opportunity to meet your representatives and remind them that in hard economic times, the role of Minnesota State Colleges and Universities becomes even more critical as people seek education and training to update their skills or find new jobs. See you at the Fair!