President DiPietro, Chancellor Cheek, and more than 150 presidents and chancellors, representing institutions in all 50 states and the District of Columbia and U.S. Virgin Islands, joined APLU and the Association of American Universities (AAU) in a letter to President Obama and Congressional leaders urging bipartisan leadership to reach a balanced long-term deficit reduction agreement that will prevent the indiscriminate cuts of sequestration. The letter notes that the impending sequestration is “an undiscerning and blunt budget tool that would substantially harm our nation’s future by blindly slashing valuable investments in education and scientific research, as well as other important discretionary programs that provide health, economic and national security.”
View the letter signed by President DiPietro and Chancellor Cheek here.
As scheduled, the Senate took up competing measures to address the impending increase in the interest rates on federally subsidized student loans. And as expected, neither garnered enough support to continue in the legislative process. Both required 60 votes for further consideration and, S. 2343, the proposal from Majority Leader Harry Reid (D-NV) failed 51 to 43, while the legislation offered by Senator Lamar Alexander, S. 2366, failed by a vote of 34 to 62.
On May 24, the Senate is slated to take up competing bills aimed at stopping the scheduled increase on interest rates on federally subsidized student loans to 6.8 percent.
The chamber is expected to take up both S. 2343, a bill that would pay for the costs by changing tax provisions related to “S” corporations, and S. 2366, legislation that would pay for the costs of the interest rate extension by eliminating several parts of the health care law.
The committee report for the FY2013 Defense Authorization Bill is now available online.
It appears that most of the recommended funding levels for the basic and applied research programs mirror the requested levels from the Administration.
The committee recommends that the Army basic research programs (“6.1”) be funded at the requested level of $444.1 million while recommending $885.0 million for the branch’s applied research programs (“6.2), $10.3 million more than the request.
Under the committee’s bill, Navy 6.1 programs would see an increase of $13.5 million over the Administration’s request and would be funded at $618.5 million while the Navy 6.2 programs would be supported at the requested level of $790.3 million.
Air Force 6.1 and 6.2 programs would be funded at the requested levels of $516.0 million and $1.1 billion, respectively.
The committee bill proposes to fund defense-wide 6.1 research at $551.8 million, the same level as the requested level, and it would support defense-wide 6.2 research at $1.7 billion, $10 million more than the Administration’s request for that specific account.
The report language notes the following about basic research, especially within the context of defense-wide basic research:
“The committee is aware that funding for basic research is a critical component of the Department of Defense’s strategy for maintaining technological superiority over future adversaries. While much of the recent focus on supporting the warfighter has been on satisfying requests for urgent operational needs, the committee recognizes that long-term modernization needs also require investment and attention. Not only do these basic research initiatives support cutting-edge scientific research, they also contribute significantly to undergraduate scholarships and graduate research fellowships that strengthen the U.S. scientific and technical workforce.
“The committee notes that a recent Defense Science Board study has also determined that the Department’s basic research program is valuable, comparable to other basic research programs in the government and well-suited to the needs of the Department. Therefore, the committee encourages the Department to continue to prioritize and protect these investments vital to the sustained health and future modernization of the military.”
After a partisan debate on the floor about appropriate offsets for the measure, the House passed H.R. 4628, Republican legislation aimed at maintaining the 3.4 percent interest rate on federal subsidized student loans for academic year 2012 by a vote of 215 to 195.
In the Senate, a cloture motion was filed on the motion to proceed on a Democratic alternative, S. 2343, last week. The vote on the motion is scheduled for noon, Tuesday, May 8, after the Senate returns from its recess.
On April 27, at a ceremony at a military base in Georgia, President Obama signed an executive order aimed at curbing fraud and abuse in military and veterans’ education programs.
With the increase on interest rate on subsidized federal student loans scheduled to take effect on July 1 and the issue becoming a bigger political issue, the House has scheduled a vote for April 27 on a measure that would seek to maintain the current interest rate of 3.4 percent on next year’s subsidized loans. The Congressional Budget Office has scored the one-year fix at approximately $6 billion. The bill, H.R. 4268, would find offsets by repealing various parts of the Administration’s healthcare law.
The House Democrats unveiled a competing bill, one that would find savings by changing the subsidy levels provided to oil companies.
In the Senate, Republicans have also coalesced around a proposal that would seek to maintain the current interest rate by changing the healthcare law. On the other hand, Democrats have introduced a competing measure, one that would find the offsets from proposed changes to the tax structure of private “S” corporations.
The Senate Agriculture, Nutrition and Forestry Committee released a proposed five-year Farm Bill that authorizes $289 billion in spending, but would cut $23 billion from the current farm bill. The bill would eliminate direct payments to farmers, consolidate certain programs, encourage bioenergy and addresses corruption issues in nutrition assistance. The Committee plans to begin marking up the bill on April 25. We will update with an analysis upon further review. A summary of the proposal and the Committee print are available on the Committee’s Farm Bill page.
The House Budget Committee passed its fiscal 2013 budget resolution Wednesday, March 21. The spending outline will be sent to the House floor for debate. It is expected to pass. Media reports indicate that the Senate is unlikely to consider a budget for the year.
Below are links to the budget as introduced by the committee as well as additional committee documents, including an analysis from the Congressional Budget office.
HR 2117, the Protecting Academic Freedom in Higher Education Act, is scheduled for a vote on the House floor the week of February 27. This legislation would prohibit the Department of Education from overreaching into academic affairs and program eligibility under title IV of the Higher Education Act of 1965.
This measure would block two highly problematic regulations issued by the Department of Education. Specifically, it would repeal the regulation in Section 600.2 creating a federal definition of a credit hour and the state authorization regulation in Section 600.9. In addition, the legislation would prohibit ED from attempting to impose a federal definition of credit hour in the future.
A number of higher education associations and organizations are opposed to the new ED regulations and support this legislation. View the letter from the American Council on Education here.
View the letter from UT President Joe DiPietro to Congressman Duncan requesting support for the bill here.
View the full text of the bill as introduced here.
The following summary represents a quick review of the budget requests from different agencies for FY2013. We will continue to provide additional updates on the budget proposals after further analyses and as other details become available. The descriptions below reflect initial syntheses of the Administration’s budget documents.
Government-wide budget documents are available here on the White House Office of Management and Budget (OMB) website.
A chart reflecting the Administration’s FY2013 requests for agencies and programs is available here.
As expected, the Obama Administration used the figure that was negotiated for the Budget Control Act from last summer as its top-line for the FY2013 budget request. In its budget, the White House projects a projects a $1.33 trillion deficit for FY2012, which is 8.5 percent of the Gross Domestic Product (GDP) and a FY2013 deficit of approximately $900 billion, or 5.5 percent of the GDP.
The budget assumes the extension of the payroll tax cut for the remainder of the calendar year. It calls for cuts of $278 billion in “non-health mandatory” programs over ten years as well as $360 billion in reductions to health care programs, including Medicare and Medicaid during the same period of time. In addition, not surprisingly, the Administration is seeking at least 30 percent in taxes from households earning over $1 million per year in its budget proposal. The budget also assumes the expiration of the Bush-era tax rates for individuals with incomes over $250,000. Consistent with the prior agreements and negotiations, the overall defense budget would be reduced by $487 billion over the next ten years, including a one-percent cut below the FY2012 levels in FY2013.
Unless otherwise noted, the budget figures cited below come from the budget documents released by the Administration on February 13.
Department of Education (ED)
The budget request includes $69.8 billion for the Department of Education, an increase of 2.5 percent.
Even before the budget documents were released, the president spoke about many of the proposals with respect to higher education that his Administration is seeking to pursue in speeches and at activities earlier this year. Most of these ideas will require Congressional authorization.
The budget documents explain that, as part of its “First in the World” Initiative, which would be a $55-million competitive program to encourage greater efficiency and productivity in higher education, $20 million would be set aside for minority-serving institutions (MSI’s). The new program would be administered through the Fund for the Improvement of Post-Secondary Education (FIPSE).
The budget does not provide full details of the Administration’s proposal to dramatically alter the way in which “campus-based” student aid programs—Federal Work-study, Perkins Loans, and Supplemental Education Opportunity Grant (SEOG)—would be allocated among institutions.
This plan has been one of the most controversial pieces of the Administration’s package on higher education within the larger higher education community, partly because of a lack of clear definitions of key terms. The ED budget request states that institutional allocations would depend partly on institutions’ ability to keep “tuition increases low, enroll and graduate relatively high numbers of Pell-eligible students, offer work-study experiences relevant to students’ studies, and provide good value.” At this point, it does not appear that the budget documents provide any clearer definitions of key terms, such as “value.”
In addition, as part of its plans to reshape the campus-based programs, the Administration will seek to expand the amount of funds available in the Perkins Loan Program from $1 billion to $8.5 billion and to expand the number of work-study jobs available. The Perkins program would be expanded by converting the current program into an unsubsidized loan program with an interest rate of 6.8 percent and ED servicing the loans. This is similar to the Administration’s past proposal on Perkins. The budget request would increase funding for the work-study program to $1.13 billion from the current level of $977 million.
The Administration is also seeking to push through its “Race to the Top: College Affordability and Completion” concept, a $1-billion initiative that would send funds back to the states, which in turn would reward institutions “to boost quality and productivity and provide greater value to students through improved undergraduate experiences, new paths to credit attainment and degrees, and increased capacity, among other purposes.”
Another component of the Administration package is its request to Congress that it maintain the current interest rate on subsidized student loans at 3.4 percent. The rate is currently scheduled to increase to 6.8 percent on July 1. ED is requesting that the current rate be maintained through June 30, 2013.
Not unexpectedly, the White House and ED are asking Congress to fund the Pell Grant program at sufficient levels to ensure that the maximum award increases to $5,635 as scheduled. The Administration is also asking Congress to extend and make permanent the American Opportunity Tax Credit (AOTC), which was originally created as part of the American Reinvestment and Recovery Act.
Efforts to alter teaching programs, including those aimed at the preparation of science, technology, engineering, and math (STEM) teachers, figure prominently in the budget proposal. ED’s budget request includes $80 million for a STEM teaching program as part of its “Teacher Pathways” idea and would fund the Administration’s goal of producing 100,000 more STEM teachers in ten years. The Administration is also seeking $30 million each for ED and the National Science Foundation (NSF) to develop, validate, and replicate evidence-based teaching programs. In addition, the budget calls for the “overhaul” of the current TEACH Grants program and seeks $190 million in mandatory funds to replace it with the Administration’s Presidential Teaching Fellowship program. A new Hawkins Centers of Excellence program would direct $30 million to Historically Black Colleges and Universities (HBCU’s) for teacher education programs.
The budget seeks to fund international education programs at $75.7 million next year, which represents a modest increase of $1.7 million from this year’s level, and the Graduate Assistance in the Areas of National Need (GAANN) program at $30.9 million (level funding), which would also allow for “non-competing continuation awards for Javits recipients.”
With respect to possible offsets to fund some of its ideas, the Administration is seeking to limit the interest loan subsidies to 150 percent of a student’s program length. After the 150-percent mark, interests would begin to accrue on subsidized student loans. The move is expected to yield a savings of $1.8 billion over ten years.
The budget also seeks two technical changes to guaranty agencies’ compensation for rehabilitating defaulted loans that may yield $3.4 billion in savings over ten years.
ED’s detailed budget request is available on its website here.
National Endowment for the Humanities (NEH)
The budget request for the NEH is $154.36 million, a modest increase of $8.24 million over the current year funding level.
The increase would be used for a new $5-million Bridging Cultures initiative and to relocate the agency headquarters.
Details about the NEH budget are available here.
The Administration’s request of nearly $141 billion for research and development (increase of 5.5 percent above final FY2012 levels) includes a total of $13.1 billion for the combined budget of the NSF, the Department of Energy (DOE) Office of Science, and the National Institute of Standards and Technology (NIST). It also includes a request for $6.7 billion for cross agency initiatives in clean energy technology as well as $2.2 billion for programs that would promote advanced manufacturing technologies.
With its FY2013 budget proposal, the Obama Administration is seeking a total of $7.37 billion for NSF, an increase of $340 million, or 4.8 percent, above the FY2012 level.
If adopted, the budget would generally divide up the $7.37 billion in the following manner:
The agency’s budget request includes $459 million for its Graduate Research Fellowship and Early Career Development programs.
As part of its broader initiative to promoted advanced manufacturing, the Administration is proposing $149 million to support new manufacturing technology programs at NSF. This would be in the context of a larger $257 million initiative at NSF to transform static systems.
The Administration’s FY2013 request for NSF is available here.
Overall, the Department of Energy (DOE) would be provided $27.2 billion in discretionary funds, a 3.2-percent increase above the FY2012 enacted level. Within DOE, the Office of Science (Science) would see an increase of $118 million, or 2.4 percent, to a total of $4.99 billion in FY2013. Broken down further, the budget calls for the funds to be allocated in the following manner within Science:
In addition, the Administration is calling on Congress to fund ARPA-E at $350 million next year, up from $275 million this year. The budget request is also seeking $120 million for the Energy Frontier Centers, which would represent an increase of $20 million, or 20 percent, from current levels.
Finally, the budget includes a request of $140 million for the Energy Innovation Hubs program that would fund the current 5 hubs and would support a new hub on Electricity Systems, funded within the Office of Electricity Delivery and Energy Reliability, addressing the challenges of modernizing the grid.
As noted above, advanced manufacturing is a cross-cutting theme in the Administration’s budget this year. As such, DOE’s budget request includes $290 million for the Advanced Manufacturing Office at Energy Efficiency and Renewable Energy (EERE).
The detailed budget request for DOE is available here.
Department of Defense (DOD)
The budget request for DOD research programs (“R-1”) is available here. The figures used for DOD research programs come from the DOD’s “R-1” document.
Overall, the budget request includes approximately $525.4 billion in discretionary funding for the DOD, a cut of approximately $5.1 billion, or one percent, below the FY2012 enacted level. This is the first defense budget since the passage of the Budget Control Act (BCA) last summer, which included an agreement to cut defense spending by nearly $490 billion over the next ten years.
In that context, the budget request states the following with respect the DOD-funded research and development:
The Administration will continue its strong commitment to funding the Nation’s long-term scientific and technical needs, including those for national security. Accordingly, the Budget proposes $69.4 billion for research, development, test, and evaluation, including $11.9 billion for early-stage science and technology programs, focusing our efforts on those projects most likely to enhance our capability to respond to new threats. The Budget invests in the Defense Advanced Research Projects Agency and department-wide basic research slightly above the 2012 enacted levels. Such investments will allow the Nation to explore diverse scientific principles and technological applications, including bio-defense, cybersecurity, information access, and cleaner and more efficient energy use, robotics, and advanced computing. Funding in this area will also capitalize on the role that DOD plays in advanced manufacturing by establishing a number of public-private partnerships in targeted technologies to expedite their development and production. DOD-funded research provides future options for new defense systems, helps the Nation avoid a technological surprise by potential adversaries, results in cost savings by solving technical problems early in the life cycle of acquisition programs, and takes advantage of emerging technical opportunities. The funding proposed in the Budget will be awarded through competitive processes, with experts guiding the choices of research topics to be undertaken, and reviewing and selecting projects for funding based on proposals submitted by universities, non-profit organizations, for-profit companies, and Government laboratories.
More specifically, the Administration proposes to fund basic research programs (“6.1” programs) at $2.12 billion (an increase of $2 million) and applied research program (“6.2” programs) at $4.48 billion (a decrease of $262 million).
Basic research programs supported by the Army would be funded at $444.1 million next year, a decrease of $121 million. Army applied research programs would be funded at $874.7 million, a decrease of $72.1 million.
The Navy proposes to fund its basic research programs at $605.0 million and its applied research programs at $790.3 million, which would mean virtually level funding basic research and decreasing applied research by $32.7 million.
The Air Force is requesting $516.0 million for its basic research programs and $1.11 billion for it applied programs. This would mean a cut of $14.9 million to the 6.1 programs and a $110-million decrease for the 6.2 programs.
Finally, the budget proposes to fund “defense-wide” 6.1 programs at $551.8 million, an increase of $31.7 million, and “defense-wide” 6.2 programs at $1.70 billion, a decrease of $47 million.
National Institutes of Health (NIH)
The Administration proposes to level fund NIH at $30.7 billion in FY2013. Operationally, this would mean flat funding or cuts/increases of less than 0.5 percent for most Institutes and Centers (ICs), while the National Institute of General Medical Sciences and the Office of the Director would both be cut by two percent, the National Eye Institute cut by 1.3 percent, and the Fogarty International Center increased by two percent. The most dramatic proposed IC funding level change would be an increase of $62.6 million, or 11 percent, for the National Center for Advancing Translational Services (NCATS).
The Health and Human Services budget link is available at hhs.gov/budget/budget-brief-fy2013.pdf and the NIH section runs from page 34-39 of the report.
Some additional highlights from the NIH budget request include:
Department of Agriculture (USDA)
The USDA National Institute of Food and Agriculture (NIFA) budget request for FY2013 includes $732.7 million for research and education activities, an increase of $27.1 million, or 3.8 percent, over current year’s funding level.
While most programs of interest to higher education are level funded in the budget, Agriculture and Food Research Initiative (AFRI) would see an increase of $60.5 million, or 22.9 percent, for a total of $325.0 million. The Hatch Act would see a cut of $1.5 million while the McIntire-Stennis and Evans-Allen programs would be level funded at $32.9 million and $50.9 million, respectively.
Under this budget proposal, extension programs at USDA would be funded at $462.5 million, which represents a decrease of $12.8 million, or 2.7 percent.
The Administration’s request for “Integrated Activities” includes the creation of new programs, including a Crop Protection program as well as a Sustainable Agriculture Federal-State Matching Grant program. The Administration is seeking $29.1 million for the crop protection program and $3.5 million for the matching grant proposal. Altogether, the Administration is seeking $43.54 million for Integrated Activities, an increase of $22.1 million, an amount that more than the entire account this year.
The full USDA budget is available here.
The NASA budget request is $17.71 billion overall, a 0.3-percent decrease from the FY2012 level of $17.77 billion. NASA Science, Aeronautics, and Education programs are cut significantly in the budget request, while the Space Technology program would get a sizable increase.
The Science Mission Directorate would receive $4.91 billion under the budget proposal, a 3.2-percent decrease and $162 million less than the FY2012 estimated level. Within directorate, the James Webb Space Telescope would receive an increase of over $100 million from FY2012 to $627 million. Planetary Science and Astrophysics would receive significant cuts.
Aeronautics Research would receive $551.5 million, a 3.1-percent or nearly $18-million decrease from the FY2012 level of $569.4 million.
The Administration is requesting $699 million for Space Technology, which represents an increase of 21.8 percent, or $125 million, over FY2012 levels. The Space Technology account would to fund the development of pioneering technologies that would increase the nation’s capability to operate in space and enable deep space exploration.
Education programs would be funded at $100 million, a decrease of $36 million, or 26.5 percent, from the FY2012 level of $136 million under the Administration’s budget. This includes $24.0 million for the National Space Grant College and Fellowship Program (Space Grant).
At a macro level, the NASA budget seems to reflect a combination of the fact that this year’s top line number is significantly smaller than last year’s projections and the costs of the Webb telescope continuing to climb.
The detailed budget for NASA is available here.
National Oceanic and Atmospheric Administration (NOAA)
The Administration proposes to fund NOAA at $5.06 billion, an increase of $150 million over FY2012 levels.
Within NOAA, the agency is seeking to allocate a total of $413.8 million for Oceanic and Atmospheric Research (OAR). This amount includes $212.7 million for climate research, $69.5 million for weather and air chemistry research, and $108.8 million for ocean, coastal, and Great Lakes research.
Department of Commerce
Overall, the proposed budget calls for $8.0 billion in discretionary funding, a five-percent increase from this year’s enacted level. The budget also includes $2.3 billion in mandatory funding for new programs.
The budget provides $182 million for Commerce’s Economic Development Administration (EDA) Economic Development Assistance Programs, including $25 million in the Regional Innovation Strategies Program and $60 million in Economic Adjustment Assistance to stimulate entrepreneurship and high-growth business formation.
The budget also requests $47 million for National Telecommunications and Information Administration (NTIA) initiatives, including the Broadband Technology Opportunities Program (BTOP).
The Commerce budget eliminates 16 programs for a $50-million savings, and also finds $176 million in administrative savings.
The Commerce Department’s budget request is available here.
Within Commerce, the budget proposes $857 million for the National Institute of Standards and Technology (NIST), an increase of $106.2 million over FY2012.
More than half of the proposed increased funding would be focused on advanced manufacturing research both at NIST laboratories and through a new industry-led consortia program. The request includes $128 million for the Hollings Manufacturing Extension Partnership program. Additionally, the Administration will propose legislation that will make $1 billion available through NIST for a competitive grant program to establish a number of regional institutes for manufacturing innovation that will accelerate technological advancements in the manufacturing environment.
Additional information about the NIST budget is available here.
Updates will be provided as the budget documents are further analyzed.
President Obama released his Fiscal Year 2013 budget request to Congress. The president’s blueprint calls for $3.80 trillion in federal spending in FY13, up from an estimated $3.79 trillion in FY12. Also under this proposal, total federal tax receipts would rise in fiscal 2013 to $2.90 trillion from an estimated $2.47 trillion in fiscal 2012. With a FY12 deficit estimated at $1.33 trillion, this proposal claims to lower the deficit to $901 billion in the next fiscal year. The deficit was $1.3 trillion in 2011.
The president’s budget would raise taxes by $1.5 trillion by, among other things, allowing the current tax rates on certain incomes to expire at the end of the year.
Concerning higher education and his tuition proposals laid out in the State of the Union, the president requested $1 billion to expand his Race to the Top initiative to include higher education, and another $55 million to create a competitive grant for universities or nonprofits that create cost-saving mechanisms.
The president’s request includes funding the maximum Pell grant award of $5,635 for low- and middle-income students. This is an increase of about $80 over last year’s maximum grant.
In addition, the president would like to make permanent a college tax credit worth up to $10,000 for four years of college, and prevent an increase in student loan rates in July from 3.4 percent to 6.8 percent.
The budget is available on the Office of Management and Budget website.
In his State of the Union message on January 24, President Obama spoke broadly about directing federal education dollars away from colleges and universities that do not keep tuition down and will shift that funding towards those institutions that keep tuition affordable. Recently, the president provided more details for his proposal.
Updates will be provided as the proposal develops. View the Administration’s proposal here.
After a weeklong Thanksgiving recess, Congress returns with a host of issues to resolve in December. The failure of the Supercommittee will not affect any current government awarded contracts, nor will it affect Fiscal Year 2012 funding levels. The “budget sequestration” automatic cuts are not due to begin until the 2013 calendar year, by which point it is likely that Congress will have taken action to alter the spending reductions or rehash a debt-reduction plan.
End-of-year business over the next month will be focused on continuing to move Fiscal Year 2012 spending bills through Congress and deciding whether to extend last year’s tax breaks and unemployment benefits originally passed to boost the struggling economy. One last order of business will be the “doc-fix,” a vote on Medicare’s payment formula to prevent a 27 percent cut in doctor’s pay starting January 1.
Background and Current Situation:
The 12-member bipartisan congressional “super” committee tasked to find at least $1.2 trillion in deficit reduction announced its inability to negotiate a deal on the evening of November 21.
The Supercommittee was created and officially formed on August 2nd as part of this past summer’s debt ceiling deal to address the Federal Government’s fiscal crisis with minimal interference from individual Members of Congress and outside interest groups. To appease the House Republicans, the deal further outlined that the failure of the Supercommittee would result in automatic spending cuts of $1.2 trillion over 10 years to start in 2013, with the reductions split evenly between defense and domestic spending programs, barring any cuts to Social Security and no more than a 2% reduction to Medicare.
Shortly before the midnight deadline, co-chairs Senator Patty Murray (D-WA) and Representative Jeb Hensarling (R-TX) released a full statement on the committee’s inability to find bipartisan ground to reduce the debt. “After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline. ... We are deeply disappointed that we have been unable to come to a bipartisan deficit reduction agreement, but as we approach the uniquely American holiday of Thanksgiving, we want to express our appreciation to every member of this committee, each of whom came into the process committed to achieving a solution that has eluded many groups before us.”
In true congressional fashion, it is likely that Members will try to alter or sidestep the future cuts. Some Members have already begun drafting legislation and discussing plans to prevent the automatic cuts from taking place. Defense Secretary Leon Panetta immediately came out against the automatic spending cuts that would slash the Pentagon’s budget by about $1 trillion over 10 years, and is urging Congress to come up with a new plan to avoid “cuts that will tear a seam in the nation’s defense.”
Chairman of the House Armed Services Committee, Howard “Buck” McKeon, promised to introduce legislation to prevent the cuts. “Those who have given us so much have nothing more to give,” he said.
In the Senate, Senators John McCain (R-AZ) and Lindsey Graham (R-SC), who both serve on the Senate Armed Services Committee, said they would “pursue all options” to avoid deeper defense cuts.
President Obama released a statement vowing to veto any attempts to circumvent the automatic cuts. Soon after the Supercommittee’s statement, the President released his own stating, "[T]here's still too many Republicans in Congress who have refused to listen to the voices of reason and compromise that are coming from outside of Washington. ... Already, some in Congress are trying to undo [the] automatic spending cuts [trigged by the supercommittee deadlock]. My message to them is simple: No. I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending. There will be no easy off ramps on this one. We need to keep the pressure up to compromise -- not turn off the pressure."
If the automatic cuts go through, the Pentagon would face a 10 percent reduction in its $550 billion budget in 2013. On the domestic side, education, agriculture and environmental programs would face cuts of around 8 percent.
Despite the president’s warning, Congress still has more than a year to negotiate a new debt plan, rework the cuts or hope that a new post-election “Lame Duck” session (or new president after next year’s elections) will reverse them. Another option on the table is to rework or undo the cuts using the must-pass FY2012 defense appropriations bill as a vehicle. It is likely that President Obama would, in fact, not veto legislation eliminating the automatic spending cuts as long as it was tied to a tax reform package that included some Democratic priorities.
December legislative business will now shift to expiring temporary tax breaks, unemployment benefits and other items that must be addressed before the end of the year, including a continuation of negotiations on FY12 spending bills.
Media reports that the Joint Select Committee on Deficit Reduction, the “super committee” of six Democrats and six Republicans created through legislation raising the federal debt ceiling, remain deadlocked on an agreement to reduce the deficit. The panel has a November 23 deadline for recommending $1.2 trillion in spending reductions over 10 years, but the language must be submitted for Congressional Budget Office (CBO) scoring by Monday, November 21. While leaders say negotiations continue, other media reports indicate the panel will announce that it was unable to reach an agreement over reducing entitlement spending and raising taxes.
If no deal is in place, $1.2 trillion in spending reductions are scheduled to begin in January 2013. The Budget Control Act of 2011, which established the Joint Select Committee, also imposed discretionary spending caps for the next 10 years. A link to the CBO’s analysis of the legislation is included here.
Updates will be provided as details emerge.
President Obama officially unveiled the Administration’s plans to assist student loan borrowers better manage their student loan debt in this current environment. The Administration proposal includes two parts:
According to documents released by the Administration, approximately 6 million student loan borrowers have loans through both the direct loan (DL) and the old Federal Family Education Loan (FFEL) programs. The plan would allow those borrowers with loans from both programs to consolidate into the DL program, starting in January, 2012.
As students consolidate into the DL program, the federal government would no longer be responsible for continuing the special allowance payments for the FFEL program, thus producing savings. According to Administration documents, borrowers who consolidate could see a reduction of up to 0.5 percent in their interest rates: a reduction of 0.25 percent in the interest rate on their consolidated FFEL loans and a 0.25 percent reduction in the interest rate on the entire consolidated FFEL/DL loan.
Senior Administration officials have stated that this “one-time” consolidation initiative would be available from January through June of 2012.
“Pay as You Earn”
As part of the health care reform legislation in 2010, the income-based repayment (IBR) program was changed so that, starting in 2014, student loan repayments would be capped at 10 percent of a borrower’s discretionary income for a number of students and the balance that was not paid off in 20 years would be forgiven.
The President’s plan would expedite those changes to start in 2012 for select borrowers. The Administration estimates that about 1.6 million borrowers could benefit from this change.
The Administration has announced that it plans to implement these changes through executive authority, which has already been questioned by some members of Congress.
A student loan fact sheet released by the White House can be found here.
Recently, Director of the Congressional Budget Office (CBO) Doug Elmendorf testified before the “Super Committee” on discretionary outlays. His testimony was factual, explaining what is considered discretionary spending and outlining some possible discretionary spending scenarios for the future. He made the point that “lawmakers have already taken significant steps to constrain discretionary spending.”
A copy of his testimony is available here.
On Thursday, October 27, the House overwhelmingly passed a measure, H.R. 674, that would repeal the “3% withholding” provision in the tax code. Currently, certain federal, state, and local agencies, including public colleges and universities with more than $100 million in annual expenditures, are required to withhold 3% on the purchase of goods and services in excess of $10,000. The repeal is favored by various organizations and interest groups, including the public higher education community. The proposal calls for the House to take up a second bill, H.R. 2576, which is related to eligibility changes for certain healthcare programs and to combine the two measures after final passage and send to the Senate as a single package. H.R. 2576 would essentially serve as an offset for the repeal of the “3% withholding” provision.
While H.R. 674 has had bipartisan support, the second bill, H.R. 2576, has been much more controversial, especially among the House Democrats. It is uncertain if the Senate will consider this measure.
View the joint letter to the chairs of the Joint Select Committee on Deficit Reduction here.
In a joint letter to the chairs of the Joint Select Committee on Deficit Reduction, the heads of East Tennessee State University, Meharry Medical College, UT Health Science Center and Vanderbilt University's medical centers urged caution in regards to cutting funding for medicial and clinical care. The letter may be view here.
President Obama presented his $450 billion American Jobs Act to a joint session of Congress Thursday evening and called on lawmakers to solve the unemployment crisis in America.
According to White House estimates, the total package would cost about $447 billion, more than half the size of the $787 billion economic stimulus package enacted in early 2009. Attached is a link to the White House fact sheet on president’s proposal.
Broadly similar to the 2009 stimulus, it is unlikely that either chamber will accept many of the president’s spending proposals, such as funding for road, airport and rail construction. According to the White House, tax cuts in some form account for more than half of his proposal.
At the moment, the White House has not provided legislative language or specific details to offset the cost of the jobs proposal. However, the president called on Congress to increase the amount of deficit reduction that the new Joint Select Committee on Deficit Reduction is tasked with finding to pay for his American Jobs Act.
Some of the details include:
View the full text of the American Jobs Act here.
Additional analysis will be provided when legislative language is introduced.
A Joint Select Committee on Deficit Reduction—the super committee of six Democrats and six Republicans created through legislation raising the federal debt ceiling—will hold its first meeting on Thursday, September 8, and a public hearing on September 13. The panel must move quickly: It has a November 23 deadline for recommending $1.5 trillion in cuts over 10 years, but there are few weeks when both chambers are in session.
Also, under a provision of the debt-ceiling bill, both chambers are likely to vote this month on resolutions disapproving of the president raising the debt limit. Assuming congressional passage of the measure, Obama will veto it and opponents will likely lack the votes to override him.
Meanwhile, lawmakers face several deadlines. Congress must extend federal funding for the current fiscal year by October 1. Lawmakers will almost certainly move a continuing resolution funding the government into the next fiscal year.
Deficit Reduction Committee Timeline
Sept. 8: Organizational meeting of joint committee.
Sept. 13: First hearing of joint committee.
Oct. 14: Deadline for standing committees to forward their recommendations to joint committee.
Nov. 23: Deadline for joint committee to vote on legislative proposals, with a 10-year deficit reduction goal of $1.5 trillion.
Dec. 2: Deadline for joint committee to formally report proposals.
Dec. 23: Deadline for House and Senate to vote on proposals, without amendment.
Jan. 15: Deadline for enactment of at least $1.2 trillion in deficit reduction, or across-the-board spending cuts will be triggered.
Jan. 2, 2013: If triggered, across-the-board cuts will take effect.
The Congressional Research Service (CRS) has issued an analysis of the legislation,which can be viewed here.
Title V of the Budget Control Act of 2011 would amend the Higher Education Act of 1965 to appropriate additional funds for the federal Pell Grant program and make two changes to the Federal Student Loan Program. The Congressional Budget Office (CBO) estimates that, on net, those changes would increase direct spending by $7.4 billion over the 2012-2016 period but reduce direct spending by $4.6 billion over the 2012-2021 period.
Pell Grants. The bill would directly appropriate $10.0 billion for fiscal year 2012 and $7.0 billion for fiscal year 2013 for Pell grants. Those funds would be used to supplement funding for the portion of the Pell Grant program that is funded through annual discretionary appropriations. CBO estimates that this provision would increase direct spending by $17.0 billion over the 2012-2015 period (with no impact on outlays after 2015).
Student Loans. As required under the Federal Credit Reform Act of 1990, most of the costs of the federal student loan programs are estimated on a net-present-value basis. The bill would make two changes to the student loan programs. CBO estimates those changes would reduce direct spending by $9.6 billion over the 2012-2016 period and $21.6 billion over the 2012-2021 period. The legislation would:
Following yesterday’s passage by the House, the Senate took up and cleared the Budget Control Act of 2011 by a vote of 74 to 26. President Obama has signed the measure into law. Within the next 14 days, Congressional leaders must name the 12-person deficit committee tasked with coming up with $1.5 trillion in savings over the next ten years.
The House passed the Budget Control Act of 2011 on Monday, August 1. The bill had bipartisan support, with 174 Republican and 95 Democrat votes in favor of the measure. The final count was 269–161. After the vote, the House recessed and will return September 7.
The Senate is expected to vote on the measure by noon today, August 2.
Lawmakers in Washington agreed to a broad deal to raise the federal debt limit Sunday evening, July 31. The deal would raise the debt limit while imposing 10-year domestic spending caps. The agreement comes after a long weekend of failed votes in both chambers on different measures dealing with the debt and deficit ahead of the Treasury imposed August 2 deadline for debt default.
Various press accounts are reporting that the negotiators must still convince a number of rank-and-file members of each party in the two chambers to support the bill in order to ensure its passage. Votes are expected in both the House and Senate later today, August 1.
The following is an initial summary of the agreement.
Student Financial Aid and Higher Education: The legislation includes $10 billion for the Pell Grant Program in FY2012 and $7 billion in FY2013. While not completely eliminating the funding gap for next year, the additional resources improve the situation for the Pell program greatly.
The increases would be paid for by changes to the student loan program as envisioned by the original House bill. Starting in July 2012, graduate and professional students, with few exceptions, would no longer be eligible to participate in the subsidized loan program. Incentives for borrowers in the direct loan program to make on-time payments, in the form of reduced origination fees, would also be eliminated. Finally, these provisions related to higher education would not be subject to either the “master calendar” or negotiated rule-making requirements.
In total, the student loan programs changes provide a savings of $21.6 billion, of which $17 billion would go to the Pell and $4.6 billion would go to deficit reduction.
Discretionary Spending Caps: The compromise calls for the creation of binding discretionary spending caps for ten years, starting in FY2012. For next year and FY2013, the legislation establishes separate caps for “security” and “non-security” categories. Total discretionary spending in FY 2012 and FY2013 will be limited to $1.043 trillion and $1.047 trillion, respectively, about $7 billion and $3 billion below Fiscal Year 2011. Congressional Quarterly is reporting that the FY2012 cap in this legislation would be approximately $24 billion higher than the cap adopted in the House budget resolution.
The “security” category would be expanded to include the traditional programs at Defense as well as those at the Departments of Homeland Security and Veterans’ Affairs and agencies and programs supported through the intelligence community, the National Nuclear Security Agency, and international affairs budget function (“Function 150”). At least one source has reported that the expansion of the definition of the “security” category was to appease the defense hawks in Congress. Starting in FY2014, the firewall would be removed and all programs would be part of a single cap.
Debt Ceiling: Under the bill, the debt ceiling is likely to increase between $2.1 trillion and $2.4 trillion. The debt ceiling would be raised through a number of phases. It could be raised by $400 billion almost immediately. It could increase by another $500 billion if Congress fails to approve a joint resolution of disapproval against the increase.
After the initial $900 billion, if the President certifies another breach of the debt ceiling and Congress fails on a joint resolution of disapproval, the ceiling would be raised by another $1.2 trillion. If Congress is successful in passing a balanced budget amendment to the Constitution, the President would have the authority to raise the ceiling by $1.5 trillion, instead of the $1.2 trillion. The increase could also be larger than $1.2 trillion but less than $1.5 trillion if the recommendations of joint committee established reduce the deficit are adopted by Congress.
Joint Deficit Committee: The legislation calls for the establishment of a bicameral, bipartisan deficit reduction committee charged with finding $1.5 trillion in savings over the next ten years. The committee must vote on a set of recommendations the day before Thanksgiving, November 23. Both chambers of Congress must take up the bill by December 23.
Enforcement: If Congress does not approve at least $1.2-trillion worth of cuts included in the joint committee package, a set of revised discretionary caps would be imposed starting in FY2013, through FY2021. Defense and non-defense programs would each absorb half of the cuts.
In addition, under this scenario, it appears that defense programs would no longer be protected under the expanded “security” category and would revert back to including only those in the traditional Function 050 of the federal budget.
Balanced Budget Amendment: The legislation would also require each chamber of Congress to vote on a balanced budget amendment between October and December.
We will provide additional details as they become available.
Below are links to the bill, a section-by-section analysis, a White House fact sheet on the measure, and the Congressional Budget Office estimate of the bill’s impact of the deficit.
View the 2011 Budget Control Act.
Read the Congressional Budget Office's estimate of the bill's impact on the budget.
View the White House Fact Sheet.
Details of the competing measures intended to raise the debt ceiling in each chamber of Congress became available recently. View the text of the the House proposal and the Senate proposal. View a section-by-section of the House legislation prepared by the House leadership here.
Originally, the House Republican leadership had hoped to vote on its proposed solution Wednesday. That plan has hit a snag, however, as the Congressional Budget Office (CBO) has scored the savings in the bill at $850 billion over 10 years and not at $1 trillion as the Republican leadership had previously claimed. This development has forced the sponsors of the measure to pull the original bill to make modifications. The situation still remains very fluid.
The version of the text released yesterday, before the CBO score, would allow the debt ceiling to be raised by a total of $2.5 trillion in two phases. The first step would essentially increase the ceiling by $900 billion: The president’s certification that the ceiling would be reached would automatically trigger an increase of $400 billion. If Congress does not approve a resolution of disapproval within a very short period of time, then the ceiling would be raised again by $500 billion. It is believed by many that this process would enable government borrowing through the beginning of 2012.
The second phase would authorize the President to raise the ceiling by another $1.6 trillion, but only if Congress adopts at least $1.6 trillion in cuts recommended by a bipartisan and bicameral deficit reduction committee. The committee would be appointed by the Senate and House leaders and would be tasked to find ways to reduce the deficit by $1.8 trillion over the next 10 years.
In addition the addressing the debt ceiling, the House language would also impose a discretionary spending cap on each of the next 10 years, including a specific cap for defense for FY2012 and FY2013.
The legislation also calls for a balanced budget amendment to the Constitution.
It also explicitly addresses student financial aid in a number of ways:
First, it seeks to provide additional mandatory funding for the Pell Grant program: an increase of $9 billion in FY2012 and $8 billion for FY2013. The summary document notes, however, that the legislation would provide a total of $13 billion over two years.
The House package would also eliminate subsidized federal loans for graduate and professional students starting July 1, 2012. After an initial review of the language, it appears that there is an exemption for students in prerequisite courses for degrees or certificate programs, including those in teacher certification/credentialing programs. The bill would also eliminate on-time payment incentives for direct loans made after July 1, 2012. Under the bill, these higher education provisions would also be exempt from the Department of Education’s negotiated rulemaking and master calendar requirements.
Unlike the House legislative package, the Senate proposal introduced by Majority Leader Harry Reid (D-NV) would immediately raise the debt limit by approximately $2.7 trillion.
The Senate bill would also impose discretionary caps over the next 10 years, including specified caps on defense for FY2012 and FY2013. In addition, it calls for the creation of a joint committee on deficit reduction.
With respect to explicit language on student aid, the Senate proposal appears to be slightly more generous to the Pell Program, with an additional $10.5 billion in mandatory funds in FY2012 and $7.5 billion in FY2013. This legislation also eliminates subsidized loans for graduate and professional students, but does not include the exception in the House bill. It does not address the loan repayment issue but does include the same language on negotiated rulemaking and the master calendar.
By a vote of 234 – 190, the House passed the “cut, cap and balance” bill (HR 2560) on July 19. This measure would reduce fiscal 2012 spending by more than $110 billion, impose spending caps for the next several years and increase the debt limit only if Congress sends a constitutional amendment to the states for ratification.
The bill has virtually no chance of winning Senate passage, and President Obama already has threatened a veto.
View HR 2560 here.
Negotiations over legislation on the deficit and possible debt limit increase continue to evolve by the hour. We will update as situation develops.
On July 19, the bipartisan group of Senators working on a long-term deficit reduction plan, the “Gang of Six,” released and shared its work product with a large number of their colleagues. View a very broad outline of the proposal here.
Under the group’s plan, the deficit would be reduced by approximately $3.7 trillion over ten years when compared to the Congressional Budget Office baseline projections and by approximately $4.6 billion when compared to the projected baseline numbers put forth by the Simpson-Bowles Fiscal Commission earlier this year. Among other things, the plan would impose an immediate cap on discretionary spending through FY2015, implement budget changes, and change the tax code.
Initial press reports of a meeting of Senators on the proposal seem to indicate bipartisan support among the Members.
On June 9, the Administration announced plans establishing the White House Rural Council to “strengthen rural communities and promote economic growth.” The Council will address the challenges of increasing postsecondary attainment and success of rural students, as well as other issues facing rural communities. Secretary of Agriculture Tom Vilsack will lead the Rural Council. UT is working on a strategy to engage the Administration and the agencies on this initiative. The full press release and the Executive Order can be found here.
The Surface Transportation Extension Act of 2011, signed into law in early March, included language giving the Department of Transportation (DOT) the discretion to redistribute funds allocated to specified research projects, including University Transportation Centers (UTCs), if the Secretary determined that those projects had received sufficient funds in previous years. Secretary LaHood recently determined that the projects had been sufficiently funded and now DOT has announced that they will begin steps to redistribute the funding. The DOT will take the following actions in the coming weeks:
UT Knoxville is home to the federally supported Southeast Transportation Center, a consortium of nine universities from five states in DOT Region IV focused under the theme Comprehensive Transportation Safety. This center is one of the UTC’s impacted by the secretary’s announcement. Additionally, the secretary’s directive will eliminate FY11 DOT funding for UT’s Southeastern Regional Sun Grant Center.
DOT has stated that most current UTC grantees will be able to submit applications for funding through the new competitive grant making process.
We will continue to monitor this important issue and continue to add information as it develops. We are working with the delegation, the university transportation center consortium, and the Department of Transportation to resolve this controversial matter.
View FY11 impacted projects and programs here.
Recently, the U.S. Supreme Court issued a ruling in the Stanford v. Roche case siding with Roche by a vote of 7-2. (Justices Breyer and Ginsburg dissented.) The Court held that Roche Molecular Systems, Inc. did not infringe on Stanford University patents to HIV drugs invented by a Stanford researcher working part-time for a company Roche later acquired.
Leading up to the decision, there had been great concern in the higher education community that a Supreme Court ruling against Stanford could significantly undermine the Bayh-Dole Act which established the intellectual property framework for inventions arising from federally-funded research. While further analysis of the case is underway, many in the community point to the last paragraph in Chief Justice Roberts' majority opinion as an indication that the case was more about how contracts are written than the fundamental integrity of Bayh-Dole.
The University joined with a coalition of higher education institutions and research groups in an amicus brief in support of Stanford University’s petition to the Supreme Court. Additional amici to the brief include over forty universities.
The full decision and dissenting opinion can be found at here.
On Thursday, June 2, the Department of Education (ED) released the long-awaited final regulations on “gainful employment” programs. The release of the regulations, which are aimed at fraud and abuse in the federal student aid programs, were delayed as result of the volume of public comments received by ED.
The press release from the Department announcing the final regulations is available here.
The actual text of the regulatory package is available here.
While the larger “program integrity” regulatory package finalized earlier this year included provisions related to gainful employment programs, such as the data elements that institutions must provided and disclose, it did not address the most controversial issues, such as eligibility criteria for federal student aid. This package focuses on the thresholds and criteria that gainful employment programs and their graduates must meet in order to remain eligible for federal student aid program.
We will provide a more in-depth analysis after a full review of the regulatory language.
Visit the news stories below to find out more about this hot issue.
The Washington Post:
"Federal ‘gainful employment’ rule tightens oversight of for-profit colleges"
View the letter of support for STEM Education here.
On Wednesday, May 11, House Appropriations Committee Chairman, Rep. Hal Rogers (KY), announced both the FY12 allocations for each of the 12 appropriations subcommittees, also known as the 302(b) allocations, and provided a tentative timeline for completing each bill. The committee proposes a total discretionary spending level of $1.02 trillion for FY2012, which is $30.4 billion below the final FY2011 enacted levels and roughly $121.6 billion below the Administration’s request for the next fiscal year.
The Labor-HHS-Education bill appears to be target of the largest cut under the committee plan, as it would receive $18.2 billion less than the current level and $41.6 billion less than the requested level.
While Chairman Rogers anticipates the Committee completing all 12 bills before the August recess, his timeframe allows for all but the last three listed to be passed by the House of Representatives before the August break. Please see press release below.
View the 302(b) allocations here.
View University of Tennessee President Joe DiPietro's letter to the House delegation here.
WASHINGTON, D.C. – House Appropriations Chairman Hal Rogers today announced the schedule for the completion of work on the 12 fiscal year 2012 Appropriations bills by the end of the fiscal year on September 30th. The plan includes marking up and approving each bill at both the Subcommittee and Full Committee levels in the next few months before the August recess.
To read more about Chairmain Rogers' schedule, visit the U.S.House of Representatives News Room.
View the FY12 House appropriations mark up schedule here.
The University of Tennessee joined with the Energy Sciences Coalition and the Task Force on American Innovation to urge Congress to make robust and sustained funding for the Department of Energy (DOE) Office of Science a priority in the Fiscal Year 2012 Energy and Water Development Appropriations Act. See letter here.
We also signed on to a letter with colleagues across the country in support of robust funding for the Advanced Research Projects Agency – Energy (ARPA‐E) in the FY12 budget. See letters here.
Early Tuesday morning, April 12, the final agreement (HR 1473) on the FY2011 Continuing Resolution (CR) to last through September 30, 2011 was filed. The House and Senate are scheduled to vote on it Thursday. The Bill summaries by subcommittee are available here and the full text is available here.
For a list of highlighted program cuts, click here.
To view a summary of the cuts and their impact, click here.
House Budget Committee Chairman Paul Ryan (R-WI) released recently his budget plan for FY2012. The full House will vote on the package the week of April 11. A summary of the budget resolution is available here.
A cursory review of the proposal has revealed the following about the Ryan budget:
The full text of the legislation can be found here.
We will provide further information after additional analysis.
View what the UT officials have been doing to promote the University in the current budget negotiations by following the links below:
On Tuesday, February 15, the House will begin debating its version of a Continuing Resolution (CR) for the remainder of Fiscal Year 2011. The House version of the CR, which contains $61 billion in cuts to the President's budget request, is attempt by the Republicans to cut federal spending in the current fiscal year. Leaders in the Senate have already indicated that the House CR is dead on arrival. Indeed, the cuts are so deep that there may not be any negotiations between the two chambers. The most likely next move by Congress is either to pass a short term (~ 1 month) CR or to allow the federal government to shut down and see who "wins" the political battle in the press.
Some Members may insist on a shutdown. Others will advocate for a short-term CR until the overall FY11 budget picture is resolved. While ultimately certain programs may be reduced or cut from the president’s 2011 request, this process will likely drag on for at least a few more weeks.
On the Fiscal Year 2012 front, the president released his FY12 budget proposal even though the Congress has not completed work on fiscal year 2011. To view a summary of the FY12 budget proposal click here.
With the FY11 House republican plan and the FY12 administration budget proposal released simultaneously, there is a lot of confusion about numbers and final outcome, particularly for FY11. The president’s FY12 budget, for instance, increases many accounts above his FY11 request even though FY11 was never enacted.
The president has proposed for FY12 a “spending freeze” but only in some parts of the budget. For instance, the administration would reduce the Environmental Protection Agency’s budget by $1.3 billion while the House Republican plan would double that cut to $2.7 billion in FY11.
The president is proposing almost $7.8 billion for the National Science Foundation in Fiscal Year 2012 while the House Republican plan would reduce that to about $6.5 billion in FY11. The National Institutes of Health would grow by about $1 billion under the president’s plan for FY12.
Washington, DC Office
Associate Vice President and Director of Federal Relations