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Federal Funding Update

December 30, 1899

Higher Education Budget & Appropriations News

Feb. 19, 2013

While there was a great deal of discussion in Washington last week around either repealing or delaying the impending sequestration cuts, there was little tangible action. 

The week started with the President’s State of the Union address, where he discussed the sequester and emphasized his desire to protect education and scientific research (among other items) from its potential impact. He also pointedly rejected an approach that would repeal cuts in defense funding by shifting the cuts to non-defense programs. 

The president suggested that by reforming the tax code and entitlement programs such as Medicare and Social Security, the government would be able to meet necessary deficit reductions and offset the scheduled funding cuts. He is expected to make a strong appeal for avoiding the sequester in a public campaign this week, following the testimony of numerous Cabinet secretaries (including Education Secretary Arne Duncan) last week on its potential impact.  

However, despite growing public attention and bipartisan recognition that the cuts could have a devastating effect on the American economy and national defense, there was little progress towards legislation addressing the sequester as Congress headed toward a weeklong Presidents’ Day recess.

This may be attributed in part to a perceived lack of urgency in addressing the sequester. Following guidance from the administration stating that federal agencies would give at least 30-days’ notice before furloughing employees, there was a sense in Congress that it had at least the month of March before there would be a real impact felt from sequester. With the FY 2013 continuing resolution (CR) set to expire on March 27, some members have said that they might prefer to address sequester within it.

In the Senate, Democrats (with the support of the administration) introduced a bill that would provide $110 billion to replace the sequester through December 2013. It would do so by making cuts to agriculture and defense spending previously agreed to by Republicans and by raising new revenue by setting a minimum income tax rate of 30 percent on families earning over $1 million, as well as changing tax and subsidy provisions relating to oil production.
Senate Republicans have publicly rejected the inclusion of new revenue and have said they will draft their own legislation to avert sequestration. Majority Leader Harry Reid (D-NV) plans to have both bills on the floor for a vote when they return from recess on Feb. 25.

On the House side, efforts to address the sequester have focused more on changing the nature of the cuts rather than replacing them.

No legislation has been introduced by the Republican majority, but Rep. Hal Rogers (R-KY), chairman of the House Appropriations Committee, has proposed including language in the FY 2013 CR that would allow the departments of Defense and Homeland Security flexibility in how they would implement sequester cuts. This mirrors legislation proposed in both chambers to allow agencies (either defense only or all agencies) flexibility so long as they meet their overall target levels of cuts.

Such legislation (which is unlikely to be taken to the floor in the Senate) would provide agency heads with unprecedented authority in how they choose to allocate their funding.

Feb. 11, 2013

Last week saw the continuation of the debate over sequestration and the release of surprising (and welcome) news on federal financial aid.

The week’s biggest news was the Congressional Budget Office’s release of early estimates for the Pell Grant Program and federal student loans. Details can be found here, but the gist of it is that if Congress doesn’t actively seek to cut funding for Pell Grants, the program will be fully funded for the next two academic years.  

Another positive trend was the reduction in the estimates for student borrowing, which has been rising sharply over the last few years. Of particular interest is the sharp decline in estimated Parent PLUS loan borrowing. This follows reports that a recent tightening of standards by the Department of Education has led to numerous difficulties in obtaining approval for these loans, even among families who have borrowed previously.  

The other key news in federal funding was the continued debate over the impending sequestration process, due to take effect March 1. President Obama held a press conference Feb. 5, calling on Congress to replace the sequester cuts with a mix of new revenue and other cuts, though he did not specify details. The president’s statement was immediately rejected by House Republicans who oppose the inclusion of any new revenue. 

Numerous other proposals for addressing the sequester were advanced or discussed, but so far, there does not appear to be a clear path forward. 

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