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Category: Federal Agency Developments

Post Election Look

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After a long and tenuous campaign season, the election results are in and essentially reflect the status quo. President Obama will serve a second term as President, the Senate will remain in the control of Democrats, and the House will remain in the control of Republicans.

While the party-makeup of the new Congress will essentially be the same as it was in the 112th Congress, at least one-third of the 113th Congress will feature House members with less than three years of experience. Across the board there will likely be greater polarization among the two parties in both chambers – with liberals gaining among Democrats and conservatives gaining among Republicans.

The Washington state congressional delegation picks up three new members.  Suzan DelBene (D) will fill Jay Inslee’s remaining term through the lame duck session and also join the 113th Congress to represent District 1.  Derek Kilmer (D) was elected to the seat being vacated by Congressman Nom Dicks as he retires, and Denny Heck (D) is the member-elect for the new 10th District. All other members of our delegation were re-elected easily.

It is important to note that even though the President was re-elected, his Administration will be reshuffling some of its personnel line-up. In an Administration more willing to push the limits of Executive authority in education policy than any in history, who fills key policy slots at the White House, OMB, and the Education Department, will have a critical impact on education policy throughout the nation. Obama has had considerable success in driving an education policy agenda through the Executive – not Legislative – Branch. Even if there are some shifts in personnel, the Administration is likely to keep a similar team and game plan to create and push policy out through the Department of Education.

The bottom line is that we expect the Obama Administration to be once again in control of the policy-making process – and therefore able to set the policy agenda – right up until the day when Congress proves it can pass bills that can be signed into law. But in the end, there is only so much an Administration can do to implement significant and lasting policy change in education without the involvement of Congress.

The last session of Congress was one of the least productive in memory on education policy. The accomplishments were primarily limited to short-term fixes to the Pell Grant shortfall and preventing the automatic doubling of federal subsidized student loan interest rates. Overall, despite attempts to reauthorize ESEA and WIA, not one education or job training authorization bill made it to the Floor for consideration, with the exception of a charter school bill that was passed by the House. Nor was there a significant amount of education policy driven through appropriations bills, which has been common up until recently. It is extremely unlikely that Congress will take up the Higher Education Act (HEA) even though it is scheduled for reauthorization.

As a result of this inaction, the Obama Administration was given nearly complete latitude to carry out many of their key policy initiatives with very little direction from Congress.

The Office of Federal Relations looks forward to working with the returning and new members of our congressional delegation, and hopes that they can come together to protect and promote education and research issues important to the higher education community in the state of Washington.

DHS Announces New Honors Program

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Yesterday, Secretary of Homeland Security Janet Napolitano announced the creation of the Secretary’s Honors Program (SHP), a new initiative to recruit exceptional recent graduates for careers at the Department of Homeland Security (DHS). Qualified candidates for the SHP compete for a limited number of positions across the Department, and are selected based on their academic performance, experience and other criteria. This premier program includes six different career tracks, and individuals who possess relevant graduate or undergraduate degrees may apply for fellowships related to information technology, cybersecurity, policy, management, emergency management, and law. Those selected for the program will be offered a variety of incentives and enhanced career opportunities including Department rotations, mentorships, focused on-the-job training and inclusion in various professional development programs. Each fellowship lasts one or two years, and participants may have the opportunity to convert to permanent federal positions at DHS.

Sequester Details

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Schedule: Both the House and Senate are out until Wednesday in observance of the Jewish holiday of Rosh Hashanah. When they return, the Senate will take action on the 6-month continuing resolution. Both chambers are expected to recess at the end of the week and not return until after the November elections.

OMB Sequester Report: In the report released last Friday, the Office of Management and Budget (OMB) warns the sequester would be “deeply destructive” to national security, domestic investments, and core government functions. The report outlines some $109 billion in automatic reductions – or sequester – triggered by last year’s debt limit agreement. The automatic cuts would reduce spending over the next decade across more than 1,200 federal accounts starting January 2, 2013, trimming defense by $54.67 billion, domestic discretionary spending by $38 billion, Medicare by $11 billion, and other mandatory spending programs by about $5 billion. The 394-page report estimated the reductions would reduce discretionary defense spending by 9.4 percent and domestic discretionary spending by 8.2 percent. The estimates are calculated based on the level of federal spending in FY2012. Spending in FY2013 is almost sure to be higher since the proposed six-month continuing resolution (CR) increases spending slightly for the fiscal year that begins October 1st.

Sequester and Higher Education: If Congress fails to head off the $109 billion in overall cuts for 2013 before January 2nd – part of $1.2 trillion in required cuts over the next decade through the sequester – most aspects of federal spending relating to higher education would face reductions of either 8.2 percent (for discretionary programs) or 7.6 percent (for mandatory programs), including appropriations to the National Institutes of Health (NIH) and the National Science Foundation (NSF). NIH, for example, would lose more than $2.5 billion from its more than $30 billion appropriation, a cut of 8.2 percent. The report does not specify how the NIH and other agencies would carry out the reductions internally. In addition to cuts in programs, the law would raise the 1-percent origination fee for unsubsidized Stafford student loans by 7.6 percent, to about 1.1 percent of a total loan. PLUS-loan and unsubsidized-loan fees would rise slightly, from about 4 percent to about 4.3 percent of a total loan. Pell Grants would not be affected by the sequester in the first year.

OMB Report on Sequestration Implementation

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The Office of Management and Budget (OMB) today released a report mandated by the Sequestration Transparency Act (STA, PL 112-155) that detailed the impact of the $109 billion in cuts that will be imposed by the sequester in January if Congress does meet certain spending targets. According to the report the cuts would result in an 8.2 percent across the board spending cut in all non-exempt nondefense discretionary spending. Congress could reach an agreement to delay the cuts or replace them with targeted cuts by specific program areas.

OMB notes the estimates and classifications in the report are preliminary. If the sequestration were to occur, the actual results would differ based on changes in law and ongoing legal, budgetary, and technical analysis.

Under the assumptions required by the STA, the Pentagon would take the largest hit of any single department, with a 9.4 percent reduction in non-exempt discretionary spending that amounts to a $55 billion cut for defense programs.  This could cut into defense-funded research programs.  The non-exempt nondefense discretionary funding is our main concern and the report indicates an 8.2 percent reduction in this funding. The sequestration would also impose cuts of 2.0 percent to Medicare – mostly taken in cuts to to doctors and other medical providers, not beneficiaries – 7.6 percent to other non-exempt nondefense mandatory programs, and 10.0 percent to non-exempt defense mandatory programs. Medicaid is exempt from the sequester.

Health Sciences

For NIH, the report indicates that $30.711 billion in discretionary budget authority would be subject to the 8.2 percent sequester, equal to $2.518 billion, and an additional $150 million in mandatory budget authority (for diabetes research) would be subject to a 7.6 percent cut, equal to $11 million. The total cut to NIH would equal $2.529 billion.

The report does not provide program-specific details for budget items under the Health Resources and Services Administration (HRSA), such as the Title VII health professions programs. According to the report, however, discretionary programs at the agency will be subject to an 8.2 percent cut. Mandatory appropriations, such as funding provided through the Affordable Care Act for the Prevention and Public Health Fund and presumably the National Health Service Corps, will receive a 7.6 percent cut.

Funding for the Agency for Healthcare Research and Quality (AHRQ) is exempt from the sequester since it is provided through the evaluation tap as opposed to direct appropriations. However, the Patient-Centered Outcomes Research Trust Fund (which funds the Patient-Centered Outcomes Research Institute) would be subject to a 7.6 percent cut, amounting to $30 million from the $390 million fund in FY 2013.

The complete report is available here.

The Office of Federal Relations is going through the remainder of the report now but I think it’s safe to assume that most of the non-health related research accounts will face an 8.2 percent cut if the sequester is implemented in January 2013.