Federal Relations

By Scott Fleming, Interim Vice President for Federal Relations, AJCU

As work begins on funding federal programs for FY20, Congress and the Administration will also need to deal with two overarching issues. First, budget caps established under the Budget Control Act of 2011 are scheduled to trigger into effect for the coming fiscal year. These caps would require $126 billion in cuts to discretionary spending (both defense and non-defense) from appropriated levels for FY19. Second, the federal debt ceiling (which had been waived in the last two years) went back into effect on March 1, and federal borrowing has already reached its limit.

The impact caused by these issues will not be immediate: over the years, presidential administrations have utilized what are referred to as “extraordinary measures” to avoid the need to borrow, and those tools are in use right now. These measures (e.g. using annual income tax revenues that flow into the Treasury during tax season, and moving funds from available accounts to cover other expenses that are more time-sensitive) are projected to avert a default until this coming fall. So, when the new fiscal year is set to begin, Congress and the Administration will be forced to deal with the debt ceiling crisis. The good news is that such a confluence of events tends to focus the minds of policy makers and forces decision-making.

The recent government shutdown led to a considerable delay in the release of the Administration’s FY20 budget. Typically, that occurs on the first Tuesday in February, but the shutdown delayed the release until mid-March. When the initial budget figures were finally released on March 11, they were, simply put, nothing that higher education, including AJCU schools, could be pleased about. It is heartening to know that many of our priorities did very well in the FY19 appropriations process; moving forward, this should serve as an important benchmark. Moreover, members of Congress on both sides of the aisle have said, in effect, that this budget proposal is dead on arrival.

On the student financial aid front, the Administration’s budget proposal would:

• Eliminate all funding for the Supplemental Education Opportunity Grant (SEOG) program;

• Cut Federal Work Study (FSW) funding from $1.3 billion to $500 million, thereby reducing the number of FWS beneficiaries by more than half. The proposal calls for rewriting the allocation formula for FWS to emphasize Pell Grant student enrollments and would allow FWS to support placements at for-profit firms provided they are “career or academically relevant”;

• Freeze discretionary funding for the Pell Grant program and maintain the current maximum award of $6,195 without any increase. The proposal would also rescind $2 billion from the Pell carryover account, thus diminishing that resource to address future economic downturns. The proposal would also permit Pell funds to support students in short-term programs that offer credentials, certifications or licenses in “in-demand fields”;

• Eliminate the federal student loan in-school interest subsidy thereby increasing the cost of borrowing to students, who would see their debt accrue interest even while in school;

• Consolidate loan repayment options leaving just one income-driven repayment plan. This plan would cap monthly payments at 12.5% of a borrower’s discretionary income; the balance would be forgiven for undergraduate borrowers after 15 years, and for graduate borrowers after 30 years;

• Eliminate the Public Service Loan Forgiveness program while preserving teacher loan forgiveness programs; and

• Eliminate funding for the Graduate Assistance in Areas of National Need (GAANN) program.

From the research perspective, the budget would:

• Eliminate all funding for the Title VI/Fulbright Hays International Higher Education programs;

• Reduce National Institutes of Health funding from $38.2 billion to $33.7 billion (a cut of $4.5 billion or more than 10%);

• Impose a $1 billion cut (from $8.1 billion to $7.1 billion) for funding of the National Science Foundation; and

• Cut U.S. Department of Health and Human Services Health Workforce funding by more than 50% including a reduction from $234 million to $83 million for the Nursing Workforce Development program.

The budget proposal calls for:

• A cut of more than 10%, from $1.06 billion to $950 million, to the federal TRIO programs;

• Elimination of the Gaining Early Awareness and Readiness (GEAR-UP) program;

• Cutting all funding for Teacher Quality Partnership grants;

• A doubling of H1-B visa fees that would impact foreign scholars on our campuses at the same time that the Administration is readying a change that would deny work permits for spouses of H1-B visa holders who are on H-4 visas; and

• Reduce funding for U.S. State Department Educational and Cultural Exchange programs by more than 50%.

You can be sure that AJCU is actively engaged in working to bolster critical investments in higher education and our students, and to ensure that the damaging proposals in the Administration’s proposed budget do not gain traction. As part of our efforts, AJCU has signed on to a coalition letter to the bipartisan leadership of the House and Senate Appropriations Committees urging a significant increase in the budget allocation available to the Subcommittees that fund the U.S. Departments of Labor, Health and Human Services and Education. That is a first step, but much work still lies ahead.