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Budgets proposed for rest of 2013 and 2014 fiscal years

Dueling Plans for Federal Spending
March 13, 2013

WASHINGTON -- It’s budget season on Capitol Hill, and so far, the mandatory budget cuts that took effect earlier this month seem here to stay.

Details of two budget plans -- a Senate resolution to continue funding the federal government through the end of the 2013 fiscal year, and the proposed Republican budget for the 2014 fiscal year, which begins October 1 -- emerged Tuesday. The parallel budget processes are the result of delays in the government for the 2013 fiscal year; in the next two weeks, Congress must reach an agreement on a resolution setting spending levels for the rest of the year or shut down the government when the current resolution expires March 27.

At the same time, the House of Representatives and the Senate are preparing their budget plans for the 2014 fiscal year, which begins in October. President Obama is expected to propose his own budget on April 8, several weeks later than in the past. And mandatory budget cuts required by the law that raised the federal debt ceiling in August 2011 went into effect at the start of this month, cutting 5 percent across the board from domestic programs.

For higher education programs hit by those budget cuts, known as sequestration, the budget resolution for the rest of 2013 is the most immediately crucial. The Senate proposal does nothing to alter the cuts, which are now the law, meaning that they will remain in place for at least the rest of the fiscal year if the House of Representatives agrees on the spending package. It also does not give agencies greater discretion in applying them, meaning the Education Department could not designate one program to suffer the brunt of the cuts but will be forced to spread them out among various initiatives.

The budget cuts have so far had the greatest effect on federal research -- domestic discretionary programs, including the National Institutes of Health, National Science Foundation and federal research funding from other departments, were cut 5 percent. The Pell Grant was protected from the cuts in fiscal year 2013, but the Supplemental Educational Opportunity Grant and federal work-study funding, as well as TRIO programs to prepare low-income students for college, are facing reductions likely to take effect when colleges make financial aid awards for the 2013-14 academic year.

The Senate continuing resolution, which the House of Representatives is believed to be likely to adopt, would increase funding for federal research over 2012 levels, and includes full-year appropriations bills for several departments, including science agencies. The National Science Foundation would get an additional $221 million, bringing its budget to $7.25 billion, and the National Institutes of Health would get an additional $71 million. But the sequestration cuts would still be in effect, meaning that the increase would have little effect in the face of the across-the-board cut.

An amendment proposed by Senator Tom Harkin, the Iowa Democrat who chairs the Senate Committee on Health, Education, Labor and Pensions, would triple the increase for the National Institutes of Health -- bringing it to $211 million -- and offer an additional $14 million to TRIO programs.

Other education programs, including GEAR UP, TRIO, federal work-study and the Supplemental Educational Opportunity Grant, are level funded from 2012 -- meaning sequestration cuts will go forward. The impact on individual campuses is still unclear, and is likely to remain so until late April at the earliest, when the Education Department will distribute guidance on the cuts’ impact.

Another Tough Budget for Pell

In the House of Representatives, Paul Ryan, the Wisconsin Republican, Budget Committee chairman, and former vice-presidential nominee, introduced a 10-year budget plan on Tuesday that would cap the Pell Grant’s growth at its current level and alter the needs analysis formula for financial aid.

Ryan has called for limiting the Pell Grant’s growth in the past, most recently in last year’s budget. But his fiscal year 2013 proposal (which was never enacted) did not include specific spending levels. This year’s document does, arguing that federal financial aid is responsible for increasing college tuition and calling for capping the Pell Grant at $5,645 -- its current level -- for the next 10 years, a change that inflation would almost certainly turn into a net loss for the grant, because it would cover a smaller fraction of college prices than it does now.

The budget also calls for reversing changes to the grant’s needs analysis formula put into place in 2007, which expanded the number of students eligible for Pell Grants, in essence making fewer students eligible to receive them. It also revisits proposals put forward last year: using “fair value” accounting for student loans, which makes the program seem much less profitable for the federal government than it does under current accounting rules.

House Republicans also want to consolidate job-training programs and create “career scholarships” in their place. And the budget includes a nod to higher education innovation and transparency initiatives that have been gaining currency among some Republicans on Capitol Hill.

“Federal intervention in higher education should increasingly be focused not solely on financial aid, but on policies that maximize innovation and ensure a robust menu of institutional options from which students and their families can choose,” the document reads. “Such policies should include reexamining the data made available to students to make certain they are armed with information that will assist them in making their postsecondary decisions.”

Senate Democrats are expected to propose their budget for fiscal year 2014 today. 

 

 

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