NAICU Washington Update

FY 2014 Final Budget Stops the Bleeding from Sequestration

January 17, 2014

Following a holiday break spent reconciling 12 different bills, Congress sent a $1.1 trillion omnibus spending package to the president for signature on Thursday, January 16. The measure restores sequestration cuts for all student aid programs, and funds Pell Grants for its scheduled increase to $5,730.

Overall for the Department of Education, the bill provides $67 billion in discretionary spending, which is a $1.6 billion increase over FY 2013 sequester cuts. Restoration of program cuts is a mixed bag across education programs, but student aid fared well, with $144 million restored. This is the first full Labor-HHS-Education bill passed in 2 years; programs have otherwise been funded on continuing resolutions.

With overwhelming bipartisan support, both chambers moved quickly to pass the bill: the House vote was 359 to 67; the Senate vote was 72 to 26. The bill, which President Obama has pledged to sign, is a welcomed resolution to the budget battles that have put federal student aid funds at risk the past few years.

Highlights of FY 2014 Budget

  • The Pell Grant maximum award is increased by $85, as scheduled, to $5,730 (from the current level of $5,645), for the upcoming academic year. Discretionary funding for Pell is $22.8 billion.
  • SEOG is funded at $733 million.
  • Federal Work Study is funded at $975 million (and work college funding was increased by $2.4 million).
  • TRIO is funded at $838 million.
  • GEAR UP is funded at $302 million.
  • Funding is restored to Title III and Title V minority-serving institutions.
  • The administration’s First in the World grants to support innovative approaches to college affordability and completion is funded at $75 million.
  • National Institutes of Health received a $1 billion increase in funding.
  • The sequester cut to Teacher Quality Partnership Grants was not restored, so funding remains at $40 million.

The bill does not include the $1 billion administration request for the Race to the Top College Affordability proposal. With the pending Higher Education Act reauthorization, and the public response to the administration’s college rating proposal, the Appropriations Committee decided not to wade into higher education reform in a spending bill.

Two higher education studies are also included in the bill. For the first, $1 million is provided to fund a study by the National Academy of Sciences, originally authorized in the 2008 Higher Education Act reauthorization, to research the effect of federal reporting requirements and regulations on colleges. The second is a requirement that the Department of Education conduct a study on enrollment, graduation and default rates for Pell Grant recipients; and make its first report to the committees in May of this year. This study follows up on the Department’s March 2012 announcement to improve the evaluation of the Pell Grant program in the National Student Loan Data System (NSLDS). While the language addresses the need to minimize institutional burden, many changes will likely be needed to appropriately address the institutional collection and reporting of data and the NSLDS analysis of that information. The inclusion of these studies is not a surprise, as we have heard the themes of accountability, affordability and completion during multiple congressional hearings on the reauthorization of the Higher Education Act.

What’s Next?

Now that the FY 2014 budget battle is over, it will soon be time to begin the FY 2015 process. We already know that the release of the president’s budget (usually the first Monday in February) will be delayed until mid-March because of the late finish of the FY 2014 process. While Congress does not need to write a budget resolution this year, House Budget Committee Chairman Paul Ryan (R-WI) is expected to propose a budget anyway to develop a long-term outlook. Senate Budget Committee Chairman Patty Murray (D-WA) is not planning to develop a budget this year because the provisions included in the December budget deal already set the spending levels for FY 2015.

Before they can do any work on FY 2015, the Appropriations Committees will need to wait for the president’s budget to be released, hold hearings with administration officials, and receive the Congressional Budget Office scoring of the president’s request. They know going in, however, that total funding for FY 2015 is the same as this final FY 2014 spending bill. How that gets divvied up will be decided during the spring and summer, before hitting an early recess for the 2014 campaign season.