February 2, 2009

Economic Recovery Package Set for Consideration by Full Senate

By jnurse

Last week, the House of Representatives passed (H.R.1) an $819 billion economic recovery package. The measure includes $550 billion in spending and $275 billion in tax provisions. The legislation passed the House on a 244-188 party line vote. This week, the Senate will continue consideration of its own version (S.1) of an economic recovery package. The partisan divide present in the House may be seen in the Senate to a lesser degree, as many Republicans contend that the legislation includes too much spending on initiatives that will not provide a stimulus to the economy in the near-term. The Senate Finance and Appropriations committees have already approved their respective portions of the legislation, where some Republican concerns were voiced and addressed. Republican leaders in the Senate have not threatened to filibuster the legislation, though their 41 member caucus would permit consideration of the option. Such a move would be hard to sustain, as Democrats would only need to draw support from a couple members of the minority. Olympia Snowe (R-ME) has already expressed support, for at least the tax portion of the bill, through her vote in favor of the legislation in the Senate Finance Committee. President Obama has articulated that he remains open to changes within the bill, during Senate deliberations, which might draw more Republican support.

At present, the higher education provisions of the House and Senate stimulus bills primarily include the following:

The Stimulus and Higher Education

  House Senate
Aid for Students    
Pell Grants $15.6 billion to increase maximum grant by $500 and eliminate shortfall $13.9 billion to increase maximum grant and close shortfall
College Work Study $490 million N/A
Loan Limits Increase limit on unsubsidized loans by $2,000 N/A
Higher Education Tax Credit Temporarily replace Hope tax credit with $2,500 credit available for four years of college. Credit phases out for individuals with income of $80,000, $160,000 for couples. Credit is 40 percent refundable. Cost: $12.5 billion over 10 years. Temporarily replace Hope tax credit with $2,500 credit available for four years of college. Credit phases out for individuals with income of $80,000, $160,000 for couples. Credit is 30 percent refundable. Cost: $12.9 billion over 10 years
Education Aid for States/State Fiscal Stabilization Fund* $39 billion for school districts and public colleges, distributed through existing formulas; including $657 million for the state of Washington in FY09 and FY10* $39 billion for school districts and public colleges, distributed through existing formulas; including $657 million for the state of Washington in FY09 and FY10*
  $25 billion to states for “high priority” needs, “which may include education” $25 billion to states for “high priority” needs, “which may include education”
Infrastructure    
College/School Facilities $6 billion for “higher education modernization, renovation, repair”; including $125 million to the state of Washington; $1.5 billion for grants and loans to colleges, schools, and local governments for energy efficiency. $3.5 billion to improve energy efficiency and technology infrastructure of higher education facilities.
National Institute of Standards and Technology $300 million to construct research buildings at colleges N/A
Scientific Research    
National Science Foundation $2 billion for research grants, $900 million for equipment and facilities, and $100 million for science education $1.4 billion for grants and infrastructure
NASA $600 million for climate change and other research $1.5 billion
National Institutes of Health $1.5 billion for biomedical research, $2 billion $3.5 billion for biomedical research
Department of Energy $2 billion for energy efficiency research; $2 billion for basic physical science research $40 billion total, including an undetermined portion for research
Pandemic Research $900 million N/A
Other    
Preparing health care workers $600 million for training primary care doctors, dentists and nurses N/A
Arts $50 million for National Endowment for the Arts N/A

*State Fiscal Stabilization Fund: There are several requirements that states must satisfy with the Secretary of Education in order to access these funds. One requirement provides that states must maintain support for both K-12 and higher education in FY2009 and FY2010 at a minimum of FY2006 levels. There is strong support on the Hill for such a “maintenance of effort” provision in both the House and Senate. A waiver has been suggested as a means for states in dire budgetary situations to access the stabilization funds while still making necessary cuts.

In addition, as currently drafted, the language mandates that states use the money to support higher education in FY2009 and FY2010 at no more than FY2008 levels. In effect, the language could impose a “cap” at the FY2008 levels on the amount that can states can allocate to public higher education from these federal funds. Monies not needed to meet 2008 higher education levels would be used for K-12.

FMAP: The House and Senate bills will each likely provide for an increase of $86.6 billion in the Federal Medical Assistance Percentage (FMAP), which will result in some relief for state budgets.

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