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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, September 19-23, 2011

Vol. 12, No. 34

  • Budget Update: Senate Rejects House Continuing Resolution; Senate Committee Approves FY 2012 Education Funding
  • President Offers Debt Reduction Proposal
  • Senate Hearing on Improving Educational Outcomes for Veterans, Service Members
  • IN BRIEF: ED Extends Gainful Employment Reporting Deadline; ACE Comments on Proposed DOL Rule Change; College-Provided Cell Phones Now Tax-Free to Employees; Mapping Internationalization Survey Opens Next Week

The budgets for both the current fiscal year and FY 2012 continue to occupy center stage in Washington this week, as we expect they will for the rest of this congressional session. The House has approved six of the 12 appropriations bills for the coming fiscal year which begins Oct. 1, but the Senate has not considered any of the measures passed by the House. Currently efforts are moving along two fronts: passing a stopgap measure to fund the government while Congress completes its work for FY 2012, and finalizing the 12 appropriations bills.

Stopgap funding to keep the government running: Some form of a continuing resolution (CR) will be needed to keep the government running after Sept. 30. The Senate this afternoon voted 59-36 to reject the CR passed by the House early this morning, setting up another threat of a government shutdown. The rejected measure included $3.65 billion for disaster relief, but Senate Democrats said they wanted a spending bill that increased that amount to nearly $7 billion. Although both chambers are scheduled to be on recess next week, Sen. Majority Leader Harry Reid (D-NV) has indicated the Senate will stay in session to resolve the impasse.

FY 2012 appropriations process restarts: The Senate Appropriations Committee on Wednesday evening approved an FY 2012 spending plan for the Department of Education that would maintain the maximum Pell Grant award as well as preserve FY 2011 funding levels for Supplemental Education Opportunity Grants, the Federal Work-Study Program and the TRIO Programs.

The appropriations bill, which was finalized Tuesday by the Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, would allocate a total of $68.4 billion for the Department of Education for FY 2012, an $80 million increase from 2011. It also includes $30.5 billion for the National Institutes of Health (NIH), a cut of $190 million from FY 2011. Sen. Jerry Moran (R-KS) offered an amendment to restore the NIH funding, but it was voted down by Democrats on the committee who did not want the tradeoff: an across-the-board cut to all other programs in the bill.

Despite the additional $17 billion provided for the Pell Grant Program in the debt ceiling bill approved in August, another $1.3 billion is still needed to maintain a maximum grant of $5,550 for the 2012-13 academic year. The Senate bill would make up the difference by ending the government interest subsidy for undergraduate borrowers during the six-month grace period after they leave school (so borrowers would have to begin paying back loans immediately). This is the latest student aid benefit to fall in an effort to maintain Pell funding—we've already lost year-round Pell Grants, graduate and professional student loan subsidies, and on-time repayment incentives for undergraduate borrowers.

Prospects for Senate consideration of any of the appropriations bills are uncertain at best. The House Appropriations Committee has already cancelled markups on the Labor-HHS-Education funding bill, and it is widely believed there will not be any further effort to move that bill through the House.

President Obama on Monday submitted a plan to the Joint Select Committee on Deficit Reduction (also known as the Super Committee) which includes the increased funding necessary to maintain the current maximum Pell Grant award for 10 years.

The proposal is intended to cover the cost of the American Jobs Act (which includes $5 billion in funding for community college infrastructure, employer tax breaks and other measures) and reduce the deficit by an additional $3 trillion over 10 years. The savings come from reductions in mandatory spending (including Medicare and Medicaid), the drawdown of troops in Iraq and Afghanistan and adjustments to various aspects of the tax code.

The Senate Committee on Homeland Security and Governmental Affairs held a subcommitte hearing yesterday on the Post-9/11 GI Bill and for-profit schools.

The primary focus was on whether a change should be made to the 90/10 rule, which requires at least 10 percent of an institution's funding to be from sources other than federal aid. Post-9/11 GI Bill and military tuition assistance funds do not count as federal financial aid, and many for-profit institutions would have problems meeting the standard if GI Bill money and Pentagon tuition assistance funds were counted as part of the 90 percent.

As expected, everyone testifying at the hearing except the for-profit school representative agreed that GI Bill funds should be considered part of the 90 percent. Sen. Jim Webb (D-VA) started off the testimony by discussing a new report released by the Senate Committee on Health, Education, Labor and Pensions, which found that last year, for-profit colleges received more than a third of the $4.4 billion spent on veterans and military tuition assistance. Eight of the 10 institutions receiving the largest amounts are for-profits, and they took in a combined total of more than $1 billion.

Curtis Coy and Keith Wilson of the Department of Veterans Affairs (VA) said reclassifying GI Bill funds to the 90 side of the 90/10 divide is acceptable if it is done carefully to avoid repercussions for veterans. In responding to a question from Sen. Scott Brown (R-MA) about what the VA could do better, Coy and Wilson said the VA has revamped its compliance program for state approving agencies, which must review any institution seeking federal funds. Next month, the VA plans to provide compliance surveys for for-profits. They also discussed understaffing at these approving agencies as well as outreach and support programs for veterans.

If you haven't done so already, you might want to read Hollister Petraeus's New York Times op-ed about negative incentives created under the current 90/10 rule. This piece was brought up at the hearing by Sen. Tom Carper (D-DE), who asked Coy and Wilson for their take on the piece. While agreeing with the overall assessment, they once again said the VA wants to move with care to avoid negatively impacting veterans.

IN BRIEF

The Department of Education sent a letter to all college presidents this week announcing the deadline for reporting information on gainful employment programs to the secretary of education for the 2010-11 academic year has been extended to Nov. 15. In general, the rules apply to all programs at for-profit schools and to all non-degree programs at traditional colleges and universities. These institutions face extensive new reporting and disclosure requirements for all existing gainful employment programs as well as a new notice and approval process for creating programs. Although the deadline for institutions to report this information for the 2006-07 through 2009-10 award years is Oct. 1, 2011, the department will continue to accept information from these earlier years through Nov. 15, 2011. For more information, see the department's gainful employment information page.

ACE sent comments to the Department of Labor (DOL) this week in response to the Notice of Proposed Rulemaking (NPRM) issued in the June 21 Federal Register. The proposed rule would expand the circumstances under which employer-consultants, including outside legal counsel, would be required to file DOL reports about their "advice" concerning labor relations issues. ACE believes the department's rule would interfere with the ability of educational institutions to receive labor relations advice needed to ensure proper compliance with the applicable laws. ACE opposes the revised interpretation of the advice exemption and requests DOL decline to adopt the NPRM.

Last week, the Internal Revenue Service issued new guidelines to implement changes to the tax treatment of employer-provided cell phones enacted last year in the Small Business Jobs Act of 2010. The guidelines clarify that when colleges (like other employers) provide employees with cell phones that may be used for both personal and professional calls, the benefit is generally tax-free to employees, who will no longer need to keep records of their business calls on the phones. ACE wrote to Congress in 2009 to support this change in the tax code.

Please watch for my note to you next week about the survey for ACE's Mapping Internationalization on U.S. Campuses research project, which will open Monday. This is the third in a series of surveys since 2001, and it provides the only comprehensive analysis of internationalization policies and practices at U.S. colleges and universities across all sectors of higher education. We ask you to complete the survey by Oct. 25. For more information, contact Mikyung Ryu in the Center for Policy Analysis at policy@acenet.edu or (202) 939-9301.

Molly Corbett Broad
President of ACE