The House Appropriations Committee released their draft Labor-HHS-Education spending bill today in which they executed several spending cuts and revoked all additional funding for “Obamacare”. Some highlights:

Health & Human Services

• The Health Resources and Services Administration (HRSA) is funded at $6.7 billion, a $1.5 billion increase over FY11 levels
• The National Institutes of Health (NIH) is funded at $31.76 billion, which is $1.4 billion above FY11 and designed to support at least 9,150 new and competing research projects
• Head Start would receive $8.09 billion, approximately $500 million above FY11
• The Center for Medicare/Medicaid Services takes a cut of $290 million from FY11 with an FY12 funding level of $3.2 billion

Education

• Investing in Innovation (i3) funding is eliminated by the House in their FY12 bill
• International Education & Foreign Language (Title VI) is cut by approximately $10 million to $66.7 million from already reduced FY11 levels
• Federal Work Study is level funded at $978.5 million
• TRIO is level funded at $826.5 million
• GEAR UP is level funded at $302.8 million
• the Fund for the Improvement of Post-secondary Education (FIPSE) is eliminated by the House for FY12
• The Pell Grant Program is maintained at a maximum award amount of $5,550 but in order to fill the shortfall in the program, the Committee suggests limiting lifetime eligibility to 6yrs (from 9yrs), rolling back recent changes to the qualification formula, and eliminating eligibility for students who attend school less than half time or students who do not have a diploma/GED

The American Jobs Act introduced by President Obama last week and delivered to congress in full bill form this week, looks like it may carry some tax implications for UW.

• If passed, the bill would expand and extend the existing payroll tax reduction for employees from the already reduced rate of 4.2% to 3.1%.
• Would reduce the payroll tax cut for employers to 3.1% – half of what it is now – for the first $5 Million of payroll. This applies to institutions of higher education, but is designed to primarily benefit small businesses – it will have a minimal impact on UW.
• A couple of tax credits for hiring veterans and long-term unemployed workers may carry a small financial benefit for UW.
• $30 billion for state aid, which would not apply to institutions of higher education, but the provision does contain a Maintenance of Effort provision designed to protect higher ed funding at the state level.

Portions of the bill have already drawn opposition from both parties, and it is unlikely that it will pass completely in its current form. We are more likely to see the tax credits enacted, while the state aid will be more contentious.

The Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies held a hearing yesterday on the Department of Education’s FY12 budget. Secretary Duncan was the witness.

In his opening remarks, Duncan expressed concern that America has gone from being a world leader in education to now being “middle of the pack”.  He also emphasized that demand on the Pell program has increased from 6 million to 9 million students in 2 years and that the Department is focused on closing the Pell shortfall – currently $11 billion – through increased efficiencies and more resources. The Pell program accounts for a third of the Department’s total $77 billion FY12 request. The Secretary cites the increasing number of lower income families and more families without jobs as the reason for the increased demand for the grants. Earlier this week, both Reid’s and Boehner’s debt ceiling deals contained an elimination of the in-school interest subsidy for graduate students, with the money saved by doing this going back into the Pell program to help shore up the shortfall for the next two years. Although this will have a negative effect on students, out of the many rumored changes to Pell that have been floating around during the past few weeks and the negotiation process, this is the best possible outcome for the university community. Pell and changes to the program will continue to be an issue as we head towards Fall and finishing up the FY12 process.

The Committee also brought up the concern that 89% of first-generation college students do not complete their degree. The Secretary stated that this was one of the Department’s FY12 priorities, and they are trying to solve this problem in three ways: 1) Fighting to maintain access to Pell. 2) Investing in community colleges and partnerships with the private sector to leverage funding. 3)  Investing in programs such as i3 and the proposed “First in the World Competition”. The First in the World Competition would provide “venture capital” to encourage innovation approaches to improving college completion (particularly low-income and minority students), research support to build the evidence of effectiveness needed to identify successful strategies, and resources to scale up and disseminate strategies we already know are successful.

The Labor-HHS-Ed Appropriations bills have not yet been drafted in the House or the Senate and we don’t expect to see them until after the August recess.

The National Science Foundation(NSF) and the United States Agency for International Development(USAID) launched a new collaborative program called PEER (Partnership for Enhanced Engagement and Research) last week. PEER is a new international, interagency joint initiative which will address environmental challenges that affect both the United States and the developing world by reinforcing existing relationships and creating new connections. It will unite NSF’s competitively-awarded scientific investments in U.S. institutions with similarly awarded USAID funding to solve global challenges.

More information can be found here.

On July 6, the Department released the application for the next phase of the Promise Neighborhoods program, including a second round of planning grants and new implementation grants, totaling $30 million.  Institutions of higher education are eligible to apply for funds to develop or execute plans that will improve educational and developmental outcomes for students in distressed neighborhoods.  The Department expects to award four to six implementation grants with an estimated grant award of $4 million to $6 million.  Grantees will receive annual grants over a period of three to five years, with total awards ranging from $12 million to $30 million.  Remaining 2011 funding will go toward 10 new one-year planning grants with an estimated grant award of $500,000. 

More info can be found here

The Senate has been unable to quickly vote on the House-passed version of Patent Reform, and it now looks increasingly likely that votes will have to be allowed on a couple of controversial amendments to the bill which could cause further problems.

One of the House adopted amendments would recalculate the filing period for patent term extension applications for drug products and other patents covered by the Hatch-Waxman Act. This has raised concern among certain Senators because it would essentially only benefit one biotech firm which filed its application for extension of patent protection on day late.

The other amendment which has already proven to be an obstacle is the issue of patent office funding. While the House version of the bill included language that directed revenue to be continued to be handled through the appropriations process, a larger group of Senators continue to push for allowing USPTO to keep all of the revenue it generates from fees.

It is expected that the House would likely accept changes to the former amendment, but would refuse any alteration to the latter. Also holding up the process is the refusal by many in both chambers to refuse to discuss any other issues until the debt ceiling debate is resolved.

The President signed a bill late last week that will extend the Small Business Innovation Research (SBIR) program until September 30, 2011. The previous extension was set to expire on the 31st of May. There is no increase to the set-aside at this time which will remain at 2.5% for research agencies with R&D budgets greater than $100 million. The extension passed as part of a larger Small Business Administration (SBA) measure.

While the House and Senate have disagreed on several issues regarding the reauthorization of SBIR, the House eventually passed the extension, as it will give negotiators more time to work out a longer-term reauthorization.

The Department of Education has cancelled their FY11 FIPSE grant process due to lack of funds.  The following explanation is posted on the Department’s website: “Congressional action on the FY 2011 budget substantially reduced funds available for grants from the Fund for the Improvement of Postsecondary Education, including new grants under the Comprehensive Program. Therefore, no new awards will be made under the Comprehensive Program in FY 2011.”  Read more.

Senate Democrats plan to reintroduce the DREAM Act.  Just like the previous versions over the past several years, this year’s version will likely authorize the Secretary of Homeland Security (DHS) to cancel the removal of, and adjust to conditional nonimmigrant status, an alien who:

(1) entered the United States before his or her 16th birthday and has been present in the United States for at least five years immediately preceding this Act’s enactment;

(2) is a person of good moral character;

(3) is not inadmissible or deportable under specified grounds of the Immigration and Nationality Act;

(4) has not participated in the persecution of any person on account of race, religion, nationality, membership in a particular social group, or political opinion;

(5) has not been convicted of certain offenses under federal or state law;

(6) has been admitted to an institution of higher education (IHE) or has earned a high school diploma or general education development certificate in the United States;

(7) has never been under a final order of exclusion, deportation, or removal unless the alien has remained in the United States under color of law after such order’s issuance, or received the order before attaining the age of 16; and

(8) was under age 30 on the date of this Act’s enactment.

Read more about the Senate Democrat’s plan.

The Senate convened this morning to vote on a motion to invoke cloture that aimed to limit further debate on the Small Business Innovation Research (SBIR) bill (S493) and its reauthorization through 2019, but failed to meet the required minimum of 60 votes. There was increased controversy arising from the bill, as amendments attached to it were considered irrelevant to the program; this included amending a provision to eliminate tax credits for blending ethanol with gasoline and tariffs on imported ethanol. It is expected that Majority Leader Harry Reid (D-NV) will now turn away from the bill since cloture was not invoked.

 The SBIR Program is geared to aiding small businesses in R&D fields.  The current SBIR bill requires federal agencies with research and development budgets over $100 million to set aside 2.5% of its annual budget for small companies to conduct R&D. One of the provisions within both the House and Senate reauthorization bills concerns the gradual increase in the annual set-aside for small businesses from 2.5% to 3.5%. The UW has joined the broader university research community to support reauthorization of the SBIR program, but also expresses its opposition to any increase in the set-aside without a corresponding increase in the overall fiscal budgets for the research agencies. An increase in the set-aside without a corresponding increase in the research agencies budgets would draw billions of dollars away from funding for important scientific and medical research currently conducted at research universities.

 In the House, progress continues on its version of the SBIR bill (HR1425). Several amendments to the bill have already been voted on and the legislation is currently awaiting full committee consideration and markup.

The current SBIR extension is set to expire on May 31st.

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