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President to President

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President to President
Molly Corbett Broad's weekly email newsletter to higher education leaders.

President to President, January 10-14, 2011

Vol. 12, No. 2

  • ​Arizona Shootings Postpone House Schedule
  • Supreme Court Rules Medical Schools Must Pay Social Security Taxes for Residents
  • Veterans Educational Assistance Improvements Act Signed Into Law
  • Early Bird Registration Ends Today for ACE's 93rd Annual Meeting

The House of Representatives put most work on hold this week as Washington, along with the rest of the country, dealt with the aftereffects of the attempt on Rep. Gabrielle Giffords' (D-AZ) life and the killing of six others at a political rally Saturday in Tucson, AZ. With no legislative activity planned in the Senate until after the Martin Luther King Jr. holiday, it has been a quiet week.

I would like to express my great appreciation and thanks to University Medical Center, the surgeons from the University of Arizona College of Medicine and President Robert N. Shelton for providing such diligent care for the victims and families while under the spotlight of worldwide media attention. The university's McKale Memorial Center also provided the setting and hosted President Obama for Wednesday evening's very moving memorial event.

I would also like to recognize the good work of President Louis Albert of Pima Community College and his staff, who have had an especially difficult week and have provided us all with a strong example of how to manage the challenges of student mental health issues on our campuses.

As we wait for this new congressional session to begin again, I have just a few brief updates for you.

In a decision that will have significant—and very expensive—ramifications for all teaching hospitals and universities, the Supreme Court this week ruled unanimously that medical schools must treat residents as employees and therefore these students are not exempted from paying Social Security and Medicare taxes.

Mayo Foundation for Medical Education and Research v. United States was on appeal from the U.S. Court of Appeals for the Eighth Circuit, which ruled in June 2009 that the University of Minnesota, the Mayo Foundation for Medical Education and Research and the medical residents of both institutions must pay the Federal Insurance Contributions Act (FICA) tax on their stipends. ACE and a coalition of higher education and medical groups submitted an amicus brief to the Supreme Court in August in support of Mayo and the University of Minnesota.

As University of Minnesota officials told Inside Higher Ed, because the university has been paying the taxes in accordance with the Treasury rules since 2005, "a ruling in Mayo's favor would have netted $24 million in estimated refunds for residents." It is estimated that medical schools and universities around the country would have garnered more than $1 billion if the Supreme Court had overturned the lower court's decision.

President Obama on Jan. 4 signed into law the Veterans Educational Assistance Improvements Act of 2010, which makes changes to the Post-9/11 GI Bill.

While we are pleased the new law contains some of the modifications we and veterans' service organizations were interested in accomplishing—notably making National Guard and reserve forces eligible for the benefit—it falls short in a couple of noteworthy respects: 1) a number of veterans (those who are already enrolled at a private institution where the tuition and fee cap exceeds the new $17,500 limitation) will face a reduction in the benefit level when they re-enroll; and 2) institutions will be required to disburse all other tuition and fee aid for which a veteran might be eligible—including state and private philanthropic aid—prior to accessing the Post-9/11 benefit, which will create chaos and confusion. (Read our Dec. 14 letter to the House which discusses both issues.)

When the legislation was pending, we enthusiastically supported the Senate version of the bill. However, the haste to pass a Post-9/11 modification in the lame duck session caused Congress to take short cuts that precluded consideration of this version. During debate on the bill, staff expressed a willingness to address these concerns in the new Congress, but we think this is unlikely.

The Department of Veterans Affairs last week sent a letter to institutions outlining the basic provisions of the new law, but please note it fails to mention the GI Bill benefit must be withheld until other assistance has been awarded. We will offer a webinar to discuss what the bill means for your campus and students on Feb. 23 from 1-2:30 p.m. EST. I will share more details with you next week.

Lastly this week, I hope you are planning now to join us in Washington for ACE's Annual Meeting, which will be held March 5-8.

A day of exclusive programs has been designed especially for presidents and chancellors, beginning with a special reception on Saturday, March 5. Visit the website to view the full schedule of programming and to register. Early Bird registration ends today.

Molly Corbett Broad
President of ACE