NAICU Washington Update

Troubling Maintenance-of-Effort Requirement in Education Jobs Bill

September 02, 2010

After months of sending bills back and forth between the chambers, Congress finally passed a $26 billion education jobs and state Medicaid funding bill in early August. The bill included a "maintenance of effort" requirement (MOE) for states to keep up their funding for public K-12 and public higher education - but fails to similarly protect state funding for student aid for public or private students, or funding for private colleges.

The MOE requires states to maintain funding for public institutions of higher education at FY 2009 levels (or in the case of states with lower revenue collections, FY 2006) [link to language]. However, since it doesn't also address state student aid programs, it puts a bull's eye on these programs for state funding cuts.

The federal MOE provision is one of many recent examples of the growing intersection of federal and state policy making in higher education, and is certain to affect how each state association of private colleges lobbies its state house.

NAICU and its state executive colleagues have been working with Congress to improve federal MOE language since the issue first arose 18 months ago in the 2009 stimulus bill. At the time, the combination of increases in the Pell Grant maximum and the MOE for public K-12 and public higher education gave state legislatures two arguments for cutting state student aid - especially for students at private colleges. This was, of course, not the congressional intent of the Pell Grant increases during economic downturn.

It is critically important for NAICU, the state executives, and member presidents to continue to work with congressional and state representatives on the federal MOE issue - educating them about the unintended consequences on state spending for education. Its effect is especially profound on student aid for students at both public and private colleges, and in some states, on state spending directly for private institutions. Local anecdotes, state budget information, and student aid data will help make the case at the state and federal level.

MORE News from NAICU