The Senate Sheds Education Aid

In reshaping stimulus package to win moderate votes, lawmakers ditch college facilities support and slash education funds for states in half -- but Pell stays in.

February 9, 2009

Hope you haven't spent that stimulus money yet.

A compromise amendment worked out by moderate Democrats and Republicans in the U.S. Senate late Friday slashed billions of dollars that would have flowed to colleges and universities in the Senate's original version, with the biggest cuts coming in education aid to states and funds to modernize college facilities.

To the relief of advocates for students, the compromise legislation sustained $13.9 billion to increase the maximum Pell Grant for needy students, which budget cutters had eyed. College and student lobbyists had worked aggressively late last week as various drafts of the compromise amendment emerged showing Pell funds in and out of the plan, but when Sens. Ben Nelson (D-Neb.) and Susan Collins (R-Maine) revealed the final plan's contents late Friday evening, Pell was in.

The one area important to higher education that seemed to benefit from the changes was biomedical research. The Senate compromise would provide $10 billion in new funds to the National Institutes of Health, almost $8 billion of which would be for scientific studies.

Senate leaders worked closely with the White House to craft the new version of the stimulus bill, which cut more than $100 billion out of a package that, when originally introduced in the Senate late last month, stood at close to $900 billion, significantly more than the $819 billion version passed by the House. With Democrats in the Senate lacking enough votes to ensure passage, and poll numbers suggesting that Republican attacks on the "spendulus" package filled with funds that wouldn't stimulate the economy were taking hold with the American public, the small group of moderates sought to cut it back.

Among the biggest changes for higher education is the outright elimination of a $3.5 billion "higher education facilities modernization fund" designed to be divided among states to finance renovations of "shovel ready" campus buildings (the House bill contains $6 billion for such a fund). College officials, anticipating the injection of funds, have been dusting off proposals for facilities that have gone wanting because their states couldn't finance them or they couldn't raise outside money for them.

The Senate version would also provide significantly less money to states that have been counting on the stimulus package to help them backfill budget gaps for education programs. The original Senate legislation, like the House version, would have created a $39 billion "stabilization" fund designed to be distributed to states to keep their higher education and K-12 budgets at their 2008 levels, as well as $25 billion in additional money for states to use to sustain crucial public services, including education.

Under the revised Senate version, the entire stabilization fund would be cut to $39 billion, with about $31.5 billion to be used by states to protect their K-12 and higher education budgets and the other $7.5 billion to go to states as "incentive grants" to reward them for meeting key education performance measures, mostly focused on high school graduation rates.

This is likely to be a major issue in states such as Missouri, where Gov. Jay Nixon's agreement with university leaders to keep higher education whole in the 2010 budget, in exchange for freezing tuition, depends on the federal stimulus funds to make it work.

While public university officials very much hope the eventual enacted legislation will hew closer to the House level, they are also concerned about how tying the federal funds to the state's 2008 spending levels could limit the ability of some states to tap into the funds for higher education. States that cut back their spending significantly earlier in the decade, but did not impose major funding cuts in 2009, for instance, "would receive little or no federal support under this formula," the National Association of State Universities and Land-Grant Colleges said in a letter to its member presidents this weekend.

Several other pots of research money were also eliminated or reduced in the Senate compromise.

The cuts in education-related programs were admittedly difficult for some of those directly involved in the negotiations. "It's a painful area for all of us, as Democrats, to make these cuts in education assistance," said Sen. Richard J. Durbin, the Illinois Democrat who is assistant majority leader in the Senate.

Whether they have gone too far in their trimming, especially in areas such as education, may depend in large part on the reaction of House Democrats, who passed their version of the legislation without any Republican support and reacted coolly to the revised Senate plan. The Senate is scheduled to vote on the stimulus bill tomorrow, and lawmakers from the House and Senate (almost certainly with the close involvement of the Obama administration) will then try to hammer out differences between the bills to come up with a version of the measure that can pass both houses and win the president's signature.

On television news shows on Sunday, Lawrence Summers, the Obama administration's point man on the stimulus package, specifically mentioned higher education as an area that is likely to be in dispute as the House and Senate craft a compromise, and hinted the administration might favor more than the Senate bill would provide. "There are crucial areas, support for higher education, that are things that are in the House bill that are very, very important to the president," Summers said.

A chart comparing the House and Senate versions, as modified, is below. The chart is based on a summary of the Senate compromise released Sunday (and available on the Appropriations Committee's Web site) that specifically notes that it does not contain all programs that would be funded by the bill; and on reports from higher education officials tracking the legislation. So what's below is subject to change as more details become available:

The Stimulus and Higher Education

  House Senate
Aid for Students    
Pell Grants $15.6 billion to increase maximum grant by $500 and eliminate shortfall $13.9 billion to increase maximum grant and close shortfall
College Work Study $490 million Not included
Perkins Loans Not included $61 million for capital contributions
Loan Limits Increase limit on unsubsidized loans by $2,000 Not included
Higher Education Tax Credit Temporarily replace Hope tax credit with $2,500 credit available for four years of college. Credit phases out for individuals with income of $80,000, $160,000 for couples. Credit is 40 percent refundable. Cost: $13.7 billion over 10 years Temporarily replace Hope tax credit with $2,500 credit
available for four years of college. Credit phases out for individuals with
income of $80,000, $160,000 for couples. Credit is 30 percent refundable. Cost: $12.9 billion over 10 years
529 savings plans Not included Allow computers to count as qualified expenses under 529 savings plans
Education Aid for States $39 billion for school districts and public colleges, distributed through existing formulas $26.7 billion for school districts and public colleges, distributed through existing formulas (reduced from $39 billion)
  $25 billion to states for “high priority” needs, “which may include education” $9.5 billion to states for “high priority” needs, “which may include education” (reduced from $25 billion)
College/School Facilities (through Education Department) $6 billion for “higher education modernization, renovation, repair"; $1.5 billion for grants and loans to colleges, schools, and local governments for energy efficiency None (eliminated $3.5 billion to improve technology infrastructure of higher education facilities)
National Institute of Standards and Technology $300 million to construct research buildings at colleges Not included
Agricultural Research Service $209 million for facilities N/A
Computer centers (at public libraries and community colleges) Not included $200 million
Energy Department Not included $330 million for laboratory infrastructure
Scientific Research    
National Science Foundation $2 billion for research grants, $900 million for equipment and facilities, and $100 million for science education $1 billion for research grants (was $1.2 billion), $150 million for infrastructure, $50 million for education
NASA $600 million for climate change and other research $450 million for science, specifically earth science missions (was $500 million)
National Institutes of Health $1.5 billion for biomedical research, $2 billion for facilities renovation and capacity building $7.85 billion for biomedical research (was originally $1.35 billion); $300 million for shared equipment
Energy Department $2 billion for energy efficiency research; $2 billion for basic physical science research $100 million for advanced computer R&D
Homeland Security Not included $14 million for cybersecurity research
National Institute of Standards and Technology Not included $168 million for external grants (was $218 million)
Agriculture Department Cooperative State Research, Education and Economic Service Not included None (was $100 million for Agriculture and Food Research Institute)
Job Training $4 billion $3.25 billion, including $1.95 billion for adult and dislocated workers (was $3.5 billion)
AmeriCorps Not included $200 million (was $160 million)
Teacher quality partnership grants $100 million $50 million (was $100 million)
Preparing health care workers $600 million for training primary care doctors, dentists and nurses Not included
Student Aid Administration $50 million to help Education Department administer student aid in changing student loan environment Not included
Help for Lenders $10 million for larger subsidies for lenders Not included
Arts $50 million for National Endowment for the Arts Not included
Rural distance learning and telemedicine (Agriculture Department) Not included $100 million (was $200 million)


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