NAICU Washington Update

FY 2016 Budget Outlook

August 06, 2015

The Senate adjourns for its summer break on August 7 (the House recessed July 31) with big budget deadlines looming in the fall that will impact many core issues, including student aid funding.

Appropriations Start Strong then Grind to a Halt

The FY 2016 appropriations process got off to a promising start early this summer, with the House and Senate writing all of their 12 bills in committee for the first time in five years. However, the House passed only six bills on the floor; and the Senate none, as floor consideration ceased in June after Democrats filibustered the Defense bill because of the spending caps. Once the bills were written at the 2013 sequestration limits, the process ground to a halt, as the Senate could not pass bills, and the President vowed he would not sign bills, that do not restore spending to pre-sequestration levels.

Deadlines Loom

Congress reconvenes September 8, leaving only 10 legislative days to resolve this standoff before October 1, the beginning of the fiscal year. If solutions are not identified, a continuing resolution (CR), keeping the government funded at current levels, will be needed to avoid a government shutdown.

At some point this fall, congressional leaders will need to negotiate a way forward on the spending bills, but the natural leaders have yet to emerge. In 2011, Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) were able to lead a bipartisan negotiation for a two-year deal. However, both have different leadership roles, and the political balance in Congress is different this year. The White House will need to play a stronger role in this negotiation to make this budget deal bipartisan.

Appropriators have been calling for budget talks to start all summer, but leadership does not feel the pressure to move yet. The need to address the debt ceiling may be the catalyst for action this time, as it was in 2011. Treasury Secretary Lew sent a letter to Congress outlining that the statutory debt limit was reached in March, but that extraordinary measures to finance the government can continue through the fall.

Impact on Student Aid

Currently for student aid, the House and Senate agree on funding the scheduled increase in the Pell Grant maximum, to $5,915. However, they differ in that the Senate seeks cuts to SEOG and Federal Work Study, while the House recommends slight increases for TRIO and GEAR UP. However, if no deal can be reached, and a CR through FY 2016 at current levels prevails, it is highly likely that could continue through FY 2017 as well, to avoid budget confrontations in an election year.

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