Federal Policy Update
To:          AASCU Presidents and Chancellors
From:     Ed Elmendorf, Sr. VP for Government Relations and Policy Analysis
               Robert Moran, Director of Federal Relations and Policy Analysis
               Blakely Whilden, Assistant Director of Federal Relations & Policy Analysis
Re:          FY 11 Continuing Resolution and FY 12 House Budget Resolution
Date:      April 13, 2011

***  ACTION Advisory ***

·         Members are encouraged to contact their Members of the House and Senate in support of maintaining the maximum Pell Grant award at $5,550 as agreed to in the FY 11 continuing resolution.
·         In addition, members are urged to voice opposition to their representatives in the House with regard to the FY 12 budget resolution.
 More information is below.

Fiscal Year 2011 Continuing Resolution (CR)

As was widely reported, congressional leaders and President Obama came to agreement on the terms for funding the federal government for the remainder of fiscal year 2011.  The agreement was brokered literally in the 11th hour last Friday night, just before the federal government was to shut down.  Early yesterday morning,  House Appropriations Chairman Harold Rogers (R-KY) released the CR legislative language. The bill cuts federal spending nearly $40 billion from the FY 2010 funding levels. 
News is mixed for higher education programs.  The maximum Pell Grant award will be maintained at $5,550 for Academic Year 11-12 which begins July 1, 2011.  While this is good news, we are concerned that the measure eliminates student's ability to receive a second Pell Grant award in a given year (widely known as year-round Pell) in order to cover increased costs in the program and to reduce the cost burden in future years. The Supplemental Education Opportunity Grant program (SEOG) is funded at $737 million, a $20 million reduction, and Federal Work-Study is level-funded at $960 million.  In addition, the bill includes a $25 million reduction for TRIO programs for a total funding amount of $828 million and a $20 million reduction in the GEAR-UP program for a funding level of $303 million.  Further, the Leveraging Educational Assistance Partnerships (LEAP) program had been zeroed out in an earlier short-term CR and was not reinstated in this final measure.
The House is expected to pass the CR Thursday followed shortly thereafter by the Senate. Current funding for government operations expires Friday.

The Senate Labor, Health and Human Services, and Education Appropriations Subcommittee provided this explanation of the funding under its jurisdiction.  The notice highlights how this CR is not like a normal appropriations bill and will not have accompanying funding tables.  This provides discretion to the Departments and Agencies on what level of funding to provide to other programs.  Final details on funding for other higher education programs will not be finalized until the Department of Education issues its funding levels.  They have 30 days in which to make these decisions.

Fiscal Year 2012 Budget Resolution
Last week, the House Committee on the Budget passed a fiscal year 2012 budget resolution that would reduce federal spending dramatically both in discretionary and mandatory funding accounts.  On the mandatory side, the large focus of savings is achieved through block-granting the Medicare and Medicaid programs.  The overall non-security discretionary funding level proposed in the resolution is the same level as in fiscal year 2008.  The House Budget Committee released its report early yesterday morning. The report and other Budget Committee documents call for returning Pell Grant funding to a pre-stimulus funding level—approximately $16 or $17 billion. In short, the proposed funding level in the budget resolution is $7 billion below the current funding level and will lead to a significantly reduced Pell Grant maximum award if enacted. One analysis of that funding level, without major changes made to the Pell program, indicated that this funding level would result in a $2,100 maximum Pell Grant award, a 60% reduction.  The report calls for a number of changes to the Pell Grant program to reduce its overall cost.  They include:
  • eliminate the year-round Pell Grant program
  • reduce the maximum number of semesters from the current 18 semesters to 12
  • return the needs analysis formula and criteria to a pre-2007 determination
  • eliminate institution administrative fees (currently $5 per award)
  • establish a maximum income level as a cut-off for eligibility
  • eliminate eligibility for less-than-half-time students
  • align the eligibility threshold for the minimum Pell award with the minimum award
  • adopt sustainable maximum award level
Adopting these proposed suggestions will not produce enough savings to fully address the funding gap that is facing the Pell Grant program at its current rate of growth.  These reforms will result in millions of students losing eligibility for the award, and if the award level is decreased, each of the 9 million students currently receiving a Pell Grant will be impacted.  AASCU is deeply engaged in finding a long-term solution to the Pell funding situation and will continue to work with Congress and the Administration .

AASCU will keep its members updated as budget discussions progress.

Subscribing to AASCU Policy Publications
here to subscribe to AASCU's free higher education policy publications
Follow AASCU Policy on Twitter: @aascupolicy