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Federal update: Good, bad news for higher ed

April 20, 2011
Lori Clark

Lori Clark

We are hearing details about the compromise Continuing Resolution (CR) that was approved last week that will fund the federal government for the remainder of Fiscal Year 2011 (through Sept. 30, 2011). The final CR includes nearly $40 billion in reductions from FY 2010 levels.

For higher education programs, there is good and bad news.

The maximum Pell Grant award will remain at $5,550 for the 2011-2012 academic year, although funding for the summer or year-round program was eliminated. The Supplemental Education Opportunity Grant Program was reduced by $20 million, and the Federal Work-Study Program was level-funded. The TRIO programs were reduced by $25 million, and the GEAR-UP program was reduced by $20 million.

No funding was provided for the Leveraging Educational Assistance Partnership (LEAP) programs.

Because a CR is not like a normal appropriations bill, federal departments and agencies will have some discretion on what level of funding to provide to other programs. The final details on funding for other higher education programs will not be finalized until the Department of Education issues its funding levels within the next 30 days.

The Department of Energy had a 5 percent reduction over FY2010 funding levels, considerably less than the reductions called for in H.R.1. Hopefully, the drastic job losses anticipated at both Argonne (1,000+) and Fermi (500+) national laboratories will be averted.

The CR provides funding above the FY2010 level for the National Institute of Standards and Technology research and manufacturing programs. New funding for High Speed Rail was eliminated from the Department of Transportation, and $400 million in previous year funding for high speed rail was rescinded. Transportation and the Environmental Protection Agency sustained very large reductions.

Last week, the House of Representatives passed H Con Res 34, the Budget Resolution for FY 2012 that was introduced by House Budget Committee Chair Paul Ryan, by a vote of 235-193. This concurrent resolution also sets forth budgetary levels for Fiscal Years 2013 through 2021. The resolution would reduce federal spending dramatically in both discretionary and mandatory funding accounts.

On the mandatory side, Medicare and Medicaid programs would be changed to block grant programs to the states, projected to result in significant federal savings. The overall non-security discretionary funding proposed would be the same level as in FY2008.

Of great concern to us is the call for a return of Pell Grant funding to a pre-stimulus funding level – or $7 billion below the current funding level.

One analysis of that proposed funding level shows that, without major changes to the Pell program, this funding level would result in a $2,100 maximum Pell grant award, a 60 percent reduction.

House Budget Committee reports also call for a number of changes to the Pell Grant program to reduce its overall cost, including:

  • eliminate the year-round Pell Grant program;
  • reduce the maximum number of semesters from the current 18 semesters to 12;
  • return the need analysis formula and criteria to a pre-2007 determination;
  • eliminate institution administrative fees (currently $5 per award);
  • establish a maximum income level as a cut-off for eligibility;
  • eliminate eligibility for less-than-half-time students;
  • align the eligibility threshold for the minimum Pell award with the maximum award; and
  • adopt sustainable maximum award level.

We are monitoring this situation closely, and we are meeting regularly with Illinois’ congressional delegation to stress the importance of student financial aid programs.

The next anticipated battle in Washington should begin when Congress reconvenes on May 2 after its two-week Easter/Passover break.

Congress and President Obama must agree to increase the nation’s $14.3 trillion debt limit by mid-May in order to prevent a catastrophic default on our national obligations. Although President Obama was trying to deal with this issue separately, conservative Republicans in the House have made it clear that they will not compromise unless the Democrats are willing to institute caps on federal spending and additional budget cuts that would result in more deficit reductions.

A bi-partisan “Gang of Six” members of Congress, including Illinois Sen. Dick Durbin, have been privately negotiating a broader set of debt reduction measures, including an overhaul of the tax code, based on the recommendations issued late last year by the president’s Debt Commission.

Several pieces of legislation are emerging that would cap federal spending. It is likely that there will be some type of deficit reduction plan linked to raising the national debt ceiling, but no one is certain that a compromise can be reached before the May 16 deadline when it is projected that the U.S. government will reach its debt ceiling and possibly begin defaulting on national debt.

There promises to be very spirited debate as Congress and the President address this issue.

The Voices section of NIU Today features opinions and perspectives from across campus. Lori Clark is director of federal relations for NIU.