NAICU Washington Update

Action Needed for Private Colleges on House-passed Supplemental

July 10, 2010

Before breaking for the July 4th recess, the House sent the Senate its amendments to H. R. 4899, in the latest ping-pong match between the chambers on the FY 2010 Emergency Supplemental Appropriations bill.  The House version includes much-needed funding for the Pell Grant shortfall, but also contains a problematic maintenance of effort (MOE) provision.  As written, the MOE protects state higher education funding for public colleges only, and not for students. 

We need NAICU members to help support the Pell Grant funding, while also working to improve the MOE.


The $75 billion emergency war and disaster supplemental spending package includes $16 billion in domestic spending.  Components of the domestic spending piece are $10 billion to avert anticipated teacher layoffs, $4.95 billion for the Pell Grant shortfall, and $701 million for border security, with the rest going to disaster relief.

For higher education, the critical piece is the nearly $5 billion for the Pell Grant shortfall.  The health care and student loan reform bill last March provided $36 billion over the next 10 years for increases in the Pell Grant program.  Still, the recession is driving ever increasing demands on the program.  Already, additional funds are needed just to maintain a $5,550 Pell Grant maximum for the 2010-11 academic year.

Without the additional $5 billion through the 2010 supplemental appropriations bill, appropriators will face tough choices:  either cut the maximum grant by up to $875 for the 2011-12 academic year, or cover the burgeoning Pell Grant costs by cutting other education programs.  Adding the Pell money was a contentious decision in the House, given growing concerns about the deficit.   The fate of the additional Pell funds is even more uncertain in the Senate.

White House Problems

The White House issued a Statement of Administration Policy (SAP) on July 1, in support of H. R. 4899, especially noting that "Since the quality of education we afford our children also is essential to our long-term strength and security, the Administration supports the proposed funding to avert the layoff of hundreds of thousands of public school teachers and deep cuts in Pell Grants that millions of students need to attend college."

However, that same SAP includes a veto threat because the bill's education increases are partly paid for by a proposed $800 million cut in Race to the Top funds - the White House's favored program of K-12 reform.  (Even though the bill is considered "emergency spending," deficit hawks pushed for the $16 billion in additional domestic funding to be offset.)

The MOE Problem

As we've already noted, the maintenance of effort provision is problematic for private colleges.  Like the 2009 stimulus bill, the provision requires states to maintain education funding only for public K-12 and public higher education.  The MOE (see pgs. 12-14) doesn't include state student aid for public or private colleges, or state funds to private colleges.

When similar MOE language was included in the 2009 stimulus bill to protect public K-12 and public higher education, the result was that several states cut state-based student aid programs to balance their budgets.  - Since the stimulus bill also contained a $500 Pell Grant increase, some state lawmakers argued that the Pell increase offset the state-grant cuts.  This, of course, defeated the very purpose of the Pell Grant increase.

In many states, state-based aid was maintained only after valiant efforts by independent college state associations to fight proposed cuts.  We're concerned that if Congress protects institutional funds to public colleges, but not state student aid, many of these battles will be reignited.

NAICU has sought to amend the House bill's MOE to protect all students, and all institutions in all sectors of higher education.  This proposed MOE modification builds upon a current provision in Higher Education Act, Section 137.

How You Can Help

The House and Senate have been engaged in sending amendments back and forth, rather than working through a conference committee to reconcile differences on the bill.  We encourage all NAICU members to advocate for the NAICU amended MOE with their congressional delegations as soon as possible.  The Senate reconvenes the week of July 12, and at that point, will determine when it will bring up the supplemental bill for further consideration and amendment.

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