Federal Relations

April 30, 2015

FY16 Budget Conference Committee Resolution

Late yesterday, House and Senate conferees released SConRes 21 – the Budget Resolution for FY 2016, which is the conference agreement for the FY16 Budget. As a reminder, the Conferenced budget is not law. While it is not signed by the President, the measure does bind the House and Senate on policy and spending directives for the current fiscal year and into the future effectually carrying the force of law.

As a note, the work of Senator Patty Murray (D-WA) and Congressman Paul Ryan (R-MN) lead to the enactment of the Bipartisan Budget Act in December 2013. That law rolled back and replaced a portion of the sequester of discretionary spending required by the 2011 Budget Control Act for FY 2014 and FY 2015 and thereby enabled Congress to later enact omnibus appropriations packages for those two years.

The House is expected to consider the measure today, and it is expected to pass.

The measure’s FY 2016 discretionary spending adheres to the sequester-reduced defense and non-defense caps set by the Budget Control Act but also includes more funds for defense for FY 2016 through the uncapped OCO account and proposes to add extra funds to that account through FY 2021. It assumes an extra $245 billion for defense over 10 years while cutting non-defense spending below sequester-reduced levels by $496 billion.

It proposes $4.2 trillion in reductions to mandatory programs over 10 years, calls for a deficit-neutral overhaul of the tax code that lowers rates and assumes $124 billion in additional savings through “dynamic scoring” through Fair Value Accounting. This accounting measure is concerning because it changes fundamental assumptions of the costs of major programs like Pell and student loans. The measure’s FY 2016 discretionary spending adheres to the sequester-reduced defense and non-defense caps set by the Budget Control Act, but also includes more funds for defense for FY 2016 through the uncapped OCO account and proposes to add extra funds to that account through FY 2021. It assumes an extra $245 billion for defense over 10 years while cutting non-defense spending below sequester-reduced levels by $496 billion.

The agreement calls for a balanced budget by FY 2024, entirely by reducing spending $5.3 trillion over the next 10 years. Funding would be reduced though:

  •  instructions to House and Senate committees with oversight over the health care law to trigger the budget reconciliation process to try to repeal that law,
  • reducing spending on Medicare and Medicaid
  • changing programs such as food stamps.

For higher ed specifically:

  • The budget eliminates all mandatory Pell funding, assumes the maximum grant will be frozen at the current level and be fully funded on the discretionary side.  This purportedly would achieve a $84.6 billion in savings (Mandatory Pell funding is $73.9 billion over ten years, plus another $10.7 billion of mandatory spending already provided to support the discretionary grant.)
  • Eliminates in-school subsidies for undergraduate Stafford loans.  (Saving $34.8 billion.)
  • Eliminates public sector loan forgiveness. (Saving $10.5 billion.)
  • Eliminates expansion of Income Based Repayment programs. (Saving $16.3 billion.)

The Budget Committee’s switch to Fair Value accounting, would make student loans appear vastly more expensive to the federal government than they are – $223 billion more expensive from this year through 2024. Previously, student loans were seen as assets that made money for the federal government.