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FY11 Budget Overview

Despite an overall spending freeze proposal from the Obama administration, the student aid and research priorities of the higher education community faired relatively well in the President’s Budget Request for FY11. Within the Department of Education, the PBR seeks to increase the maximum Pell grant to $5,710 in FY11 from the current $5,550 level. More importantly, the proposal would make the Pell grant an entitlement, which would guarantee future increases. However, several of the agency’s student services programs (e.g. TRIO, GEAR UP, Graduate Assistance in Areas of National Need) were level funded in the proposal.

On the research side, the National Institutes of Health were provided an increase of $1 billion (3.2%) over FY10 in the FY11 PBR -representing the largest NIH dollar increase in 8 years (outside of the Recovery Act). Additionally, the National Science Foundation (NSF) is provided an 8% increase to $7.4 billion. Within NSF, the Ocean Observatories Initiative — a UW joint project — was provided $90.7 million for FY11 -as expected. The Department of Energy, Office of Science, is provided a 4.4% increase in the PBR. Within DoE, the Advanced Research Projects Agency -Energy (ARPA-E) is slated for its first significant regular annual appropriation -at a level of $300 million. Additionally, workforce investments for scientists and teachers is identified as a priority area for the agency.

The PBR includes an extension of an additional six months, through June 2011, the temporary Federal Medical Assistance Percentage (FMAP) increase provided by the Recovery Act. The extension will result in an additional $25.5 billion to States for maintaining support for children and families helped by Medicaid. Details on agency and program line items are provided in previous posts, and additional analysis will be provided by the Office of Federal Relations.

The UW FY11 Federal Agenda will express support for many of the increases in student aid and research contained in the PBR. Additionally, UW specific requests will be made in the following areas: tidal energy research and development; promoting health professions through dental, nursing, and physicians assistant programs; environmental sustainability; increasing student services for our returning veterans; emerging research on the treatment of battlefield injuries to eyes and bone; small business development in the Tacoma area; and increasing K-12 learning outcomes through the use of advanced technology in classrooms.

The FY11 appropriations process will play out in the halls of Congress over much of this calendar year, with the goal of having a final budget in place by October 1, 2010. However, as was the case last year, Congress often requires extra time to push spending bills across the finish line.

Additional Glimpses Into Obama Budget Request

Despite President Obama’s plan to call for a three year freeze of domestic discretionary spending, K-12 and certain higher education student aid/support services grant programs stand to receive significant increases in the FY11 budget process -according to administration officials. As mentioned in yesterday’s (1/26) post, certain federal programs may be cut, consolidated, or eliminated to achieve the President’s increases for education while maintaining an overall freeze on federal spending.

During the State of the Union address tonight, President Obama is expected to reiterate his support for the Student Aid and Fiscal Responsibility Act (SAFRA) that passed the House of Representatives last September but has been delayed in the Senate -pending passage of health care reform. SAFRA would eliminate banks from federal student loan programs, yielding roughly $80 billion in savings that would be spent to increase the mandatory funds available for Pell grants as well as to fund certain college access and completion grant programs.

At the K-12 level, President Obama is expected to propose an allocation of $1.35 billion for the Race to the Top program, which funds state education innovations and reforms. Additionally, $1 billion would be set aside to fund an overhaul of No Child Left Behind. Additional details will be provided in the State of the Union this evening, with a full blueprint available when the FY11 budget request is released on February 1st. The Office of Federal Relations will provide additional information as it becomes available.

Secretary of Educations Pens Op-Ed on Student Loan Overhaul

Yesterday, The Wall Street Journal, published an op-ed by U.S. Secretary of Education Arne Duncan. In the piece, Secretary Duncan makes the case that banks don’t belong in the federal student loan business and that the subsidies they currently receive through Federal Family Education Loan program would be better spent on student aid. The Senate is expected to act on the legislation when it returns in the new year.

The Wall Street Journal Op-Ed: Banks Don’t Belong in the Student Loan Business

House Passes Jobs Bill with Higher Ed. Provisions

Yesterday, the House of Representatives passed a jobs package (H.R. 2847 -Jobs for Mainstreet Act of 2010) that provides $75 billion of unspent funds from the Troubled Asset Relief Program (TARP) for assistance to states and local governments in avoiding government layoffs and supporting infrastructure repair and modernization. 

Of note to the higher education community in the bill is an additional $300 million for the College Work-Study program, as well as the following aid for public colleges and universities:

Education Jobs Fund: $23 billion for an Education Jobs Fund to help States support an estimated 250,000 education jobs over the next two years.  95% of the funds will be allocated by States to school districts and public institutions of higher education to retain or create jobs to provide educational services and to modernize, renovate, and repair public education facilities. The remaining 5% of funds is reserved for State education-related jobs and administration of the Education Jobs Fund.”

The Senate will not act on a companion bill until January at the earliest.

Appropriations Committee Summary of H.R. 2847

Future of Tax Extenders Legislation Remains Unclear

Despite House passage of the Tax Extenders Act of 2009 (H.R. 4213), it appears possible that tax provisions important to the higher education community may expire at the end of the month. The provisions include the education tuition deduction, the IRA charitable rollover, and the research and development tax credit. Disagreements in the Senate over offsets for the tax provisions, as well as the laser focus on health care reform, make passage of the legislation by the end of the month unlikely. However, it remains possible that the a bill will be passed in early 2010 that would be retroactive to the beginning of the year.