FISCAL YEAR 2016 OMNIBUS SPENDING PACKAGE AND TAX EXTENDERS PACKAGE: IMPACT ON AGENCIES AND PROGRAMS IMPORTANT TO UC

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Marcus Ryan
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1 FISCAL YEAR 2016 OMNIBUS SPENDING PACKAGE AND TAX EXTENDERS PACKAGE: IMPACT ON AGENCIES AND PROGRAMS IMPORTANT TO UC OVERVIEW On December 15, 2015, Congressional leaders released a FY 2016 consolidated (omnibus) bill that provides modest increases for a number of programs of importance to UC, particularly in the areas of scientific research. The $1.15 trillion omnibus includes all 12 appropriations bills and funds the government through September 30, Overall, final numbers are higher than what were contained in the appropriations bills passed by the House and Senate for each of the individual agencies earlier this year. The increases were made possible by a late-october agreement between Congress and the White House that set overall spending levels for the 2016 and 2017 fiscal years. It added $50 billion for FY 2016 to the $1.017 trillion spent in FY 2015, divided equally between defense and non-defense discretionary spending. In addition to the Omnibus legislation, leaders also released a broad tax extenders package. The 233 page tax package includes nearly two-dozen tax breaks for businesses, other entities and individuals. Additional details about the tax extenders package can be found below. The federal government has been operating since October 1 on a series of continuing resolutions (CR), the latest of which is set to expire on December 16. Congress will pass a short term CR to keep the government running to allow time for the House and Senate to take action on the omnibus. The House is expected to take action on the tax extenders packages on December 17 and the omnibus legislation on December 18. The Senate is expected to vote on the omnibus and the tax extenders as one package following House action. Highlights of the omnibus include: $32 billion, $2 billion higher than FY 2015 enacted level, for the National Institutes of Health; $7.46 billion, $119 million higher than FY 2015 enacted, for the National Science Foundation; $5.35 billion for the Department of Energy s Office of Science, which is $281 million above FY 2015; and, The legislation provides $22.48 billion for the Pell grant program and maintains the discretionary based funding for the Pell Grant at $4,860. Together with the available mandatory add-ons and the scheduled mandatory inflationary increase of $140, the maximum Pell Grant will be $5,915 for academic year This is $140 above the academic year. Provided below is information related to the omnibus funding levels for the education, research and health care programs that are priorities to the University FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 01

2 Please note that this summary includes UC FGR s initial effort to analyze program funding levels in the FY 2016 omnibus bill for the University s key priorities. UC FGR will continue to examine this lengthy piece of legislation to determine any additional impacts on the University. HIGHER EDUCATION AND STUDENT AID Overall Department of Education (ED) discretionary funding is increased by $1.2 billion, with the bulk of the increase slated for elementary and secondary education assistance. Most postsecondary education programs, including Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study, Graduate Assistance in Areas of National Need (GAANN), international education, Teacher Quality State Grants, and Math-Science Partnerships are funded at their FY2015 levels. The bill maintains the discretionary base for the maximum Pell Grant at $4,860. Together with the available mandatory add-ons and the scheduled mandatory inflationary increase of $140, the maximum Pell Grant will be $5,915 for academic year Listed below are programs that received increases for the academic year : Student Aid Administration, which is used by the Department to fund nonprofit student loan servicers and to operate its student aid programs, will receive a $155 million boost; Aid for Hispanic Serving Institutions will be funded at $107.7 million, an increase of $7.5 million above FY 2015 enacted levels; Federal TRIO program will be funded at $900 million, an increase of $60.3 million above FY 2015 enacted levels; GEAR UP will be funded at $322.8 million an increase of $21.1 million above FY 2015 enacted levels; The Institute of Education Sciences (IES) is funded at $157,235 million, including increases for research and dissemination and statistics. Overall, this is an increase of $44 million above FY 2015 enacted levels for IES. The Omnibus does not include policy riders that had been included in previous legislative proposals such as those on gainful employment, credit hour, state authorization, teacher preparation or the college ratings system. RESEARCH AND DEVELOPMENT AGRICULTURE US Department of Agriculture, National Institute of Food and Agriculture (NIFA): $1.326 billion, which is $37 million more than FY Within this amount, $819.7 million is for research and education, $475.9 million is for extension activities, and $30.9 is for integrated activities. Highlights include: FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 02

3 Agriculture and Food Research Initiative (AFRI) $350 million, which is $25 million over FY2015. AFRI funds competitive research on human nutrition and health, agricultural sustainability, renewable energy and biofuels, water supply, and air and water quality. UC scientists typically receive percent of competitive USDA research grants. The Capacity Grants programs Hatch Act, Smith-Lever 3(b)-3(c) and McIntire-Stennis Cooperative Forestry were funded at FY 2015 levels: $244 million for Hatch Act; $300 million for Smith-Lever 3(b)-3(c); and, $34 million for McIntire-Stennis. These programs are crucial to UC s agricultural research and extension work, especially given the California drought. They enable UC to support California agricultural producers by improving conservation practices, production efficiencies, varietal development and cropping methods. The Crop Protection/Pest Management (CP/PM) and Minor Crop Pest Management (IR-4) programs were funded at FY 2015 levels, $17.2 million and $12 million, respectively. These programs support UC s statewide Integrated Pest Management Program, which develops and promotes the use of ecologically sound methods for agricultural crop pest control. Expanded Food and Nutrition Education Program (EFNEP) was flat funded at $68 million. This cooperative extension program helps UC deliver practical hands-on lessons on food, nutrition and health lifestyles to needy families. COMMERCE, JUSTICE, SCIENCE National Aeronautics and Space Administration (NASA) is funded at $19.3 billion, an increase of $1.275 billion above FY Two NASA programs of high priority to UC are: NASA Science Mission Directorate is funded at $5.59 billion, a $345 million (6.6 percent) increase above FY Within this directorate, Earth Science is funded at $1.9 billion, an increase of $148 million (8.4 percent) above FY Space Grant College and Fellowship Program is funded at $40 million, equal to FY UCSD is the headquarters of the California Space Grant Consortium, which is affiliated with nine UC campuses, three NASA centers, several Cal State campuses and other California universities. National Science Foundation (NSF) is funded at $7.46 billion, an increase of $119 million above FY Research and Related Activities (RRA) is funded at $6.034 billion, a $100 million increase. Major Research Equipment and Facilities is flat funded at $200.3 million, and Education and Human Resources is funded at $880 million, a $14 million increase. Items of note include: Understanding the Brain (UtB): $146.9 million for UtB activities, including the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) initiative. Social, Behavioral and Economics Research (SBE): The deep cuts proposed by the House for SBE directorate were not approved, though SBE sciences funding is capped at the FY 2015 level, which is $272 million. Geosciences Research: Proposed House cuts to the Geosciences Directorate were not adopted, which permits geosciences research to receive a share of the NSF RRA increase when the spending plan is developed FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 03

4 Cybersecurity Research: $160 million. Department of Commerce -- National Oceanic and Atmospheric Administration (NOAA) is funded at $5.766 billion, which is $325 million above FY 2015, including increases for the National Weather Service and for weather satellites. Highlights on extramural NOAA programs on climate, weather, water and ocean observing important to UC, include: The Office of Oceanic and Atmospheric Research (OAR) was funded at $462 million, which is $29 million over FY 2015 ($52 million more than in the House bill). Climate Research was flat funded at $158 million ($30 million more than in the House bill). Sustained Ocean Observations were also flat funded at $41.6 million. Integrated Ocean Acidification was funded at $10 million, a $2 million increase over FY Regional Integrated Ocean Observing System, National Ocean Service was funded at $29.5 million, equal to FY National Sea Grant College Program was funded at $64 million, which is $2 million above FY High Performance Computing Initiatives: $12.1 million. The final bill does not include proposed House riders that would have prohibited funding for: climatefocused studies, reports and plans; implementation of the National Ocean Policy executive order; or trade agreements that establish a limit on greenhouse gases. DEFENSE Department of Defense (DOD) Research was funded at $69.8 billion, a $6.1 billion increase (roughly 9.5 percent) over FY Highlights include: Science and Technology programs: $13.25 billion, a nearly $1 billion increase above FY Defense basic research (6.1) is funded at $2.31 billion, 1.4 percent increase over FY The 6.2 and 6.3 research accounts received 7.1 percent and 10.3 percent increases, respectively. Defense Advanced Research Projects Agency (DARPA) is funded at $2.891 billion, a $25 million reduction below FY Defense Medical Research is funded at $1.151 billion, which is roughly $75 million above FY 2015 a 6.5 percent increase. Priority areas of research include traumatic brain injury, psychological health and cancer. ENERGY AND WATER Department of Energy (DOE): $29.72 billion, which is $2.3 billion above FY DOE Office of Science: $5.35 billion, which is $281 million above FY o Energy Innovation Hubs: $24.1 million is provided for the Batteries and Energy Storage Hub run by Argonne National Lab (LLNL and LBNL are partners), and $15 million is FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 04

5 provided for the Fuels from Sunlight Innovation Hub run by Cal Tech (LBNL, UC Irvine, UC Berkeley and UC San Diego are partners). o BioEnergy Research Centers: $75 million is provided for the three BioEnergy Research Centers, including LBNL s Joint BioEnergy Institute. Advanced Research Projects Agency-Energy (ARPA-E): $291 million, which is $11 million over FY Nuclear Weapons and Nonproliferation: $8.85 billion is provided for nuclear weapons activities, $660 million more than in FY The bill also provides $1.94 billion for nonproliferation activities to reduce the threat of nuclear terrorism, which is $300 million above FY Computer Science and Computational Resources o The LBNL National Energy Research Scientific Computing Center is funded at $86 million, including funding for the Computational Research and Theory Facility. o Exascale Computing Initiative: $157.9 million for the Exascale Computing Initiative in the Office of Science Advanced Scientific Computing Research Program, and $64 million for Exascale in the National Nuclear Security Administration intended to maintain the schedule to deployment by Advanced Manufacturing/Energy Efficiency: $228.5 million, which is $28.5 million above FY The funding includes $70 million for five Clean Energy Manufacturing Innovation Institutes and $20 million for the Manufacturing Demonstration Facility. Building Technologies/Energy Efficiency: $200.5 million, which is $28.5 million above FY Conference Travel: Bill language provisions related to Office of Management and Budget Memorandum M (federal employee travel and conferences) were included in the Financial Services division. The language provides an opportunity to revisit overly restrictive policies that currently hamper legitimate travel and conference participation by federal government scientists and other personnel. HOMELAND SECURITY Department of Homeland Security, Science and Technology Directorate: Research, Development and Innovation programs are funded at $434.8 million, equal to FY University Programs are also flat funded at $39.7 million. INTERIOR, ENVIRONMENT AND RELATED AGENCIES Department of Interior, US Geological Survey (USGS): $1.062 billion, which is $17 million above FY Several USGS programs, though relatively small, are of importance to UC campuses and the UC Division of Agriculture and Natural Resources (UCANR): Earthquake Hazards Program: $60.5 million, a $1 million increase above FY Of this amount, $8.2 million is included to transition the Earthquake Early Warning Demonstration FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 05

6 Project into operational capability on the West Coast. UC campuses and other California universities are instrumental in this work. Global Seismographic Network (GSN): $6.45 million, which is $1.6 million above the FY 2015 funding level. Water Resources Research Institutes (WRRI): The bill provides level funding of $6.5 million for WRRIs, including the California Institute for Water Resources, which is part of UCANR. Climate and Land Use Change, and Climate Science Centers: The bill provides $140 million for Climate and Land Use Change programs, including a $4 million increase over FY 2015 for Landsat 9. Climate Science Centers are funded at $26.4 million, a slight decrease from FY National Endowment for the Humanities (NEH): The bill provides funding of $148 million for the NEH, which is a $1.9 million increase from the FY 2015 enacted level. HEALTH AND HUMAN SERVICES The FY16 omnibus includes funding for several key programs related to UC s health care services and health research priorities. Below are details and highlights of several key priorities of UC Health: National Institutes of Health FY16 NIH Funding: $32 billion, $2 billion higher than FY 2015 This amount of $32 billion reflects the largest regular appropriations increase in more than ten years and allows for increases across all of the NIH Institutes and Centers to continue investments in innovative research that will advance fundamental knowledge and speed the development of new therapies, diagnostics, and preventive measures to improve the health of all Americans. Most notably, President Obama s Precision Medicine Initiative is funded in full ($200 million) along with significant increases for both the BRAIN Initiative and Alzheimer s Research. Highlights of the NIH Sub-Title BRAIN Initiative: The bill provides $150 million in support for the BRAIN Initiative (Brain Research Through Application of Innovative Neurotechnologies), an increase of $85 million. Precision Medicine Initiative: The bill provides $200 million for the Precision Medicine Initiative, divided between the National Cancer Institute ($70 million) and the Common Fund ($130 million). Alzheimer s Research: The National Institute on Aging will receive more than $930 million to study Alzheimer s Disease, $350 million more than in FY Basic Biomedical Research: The legislation recognizes the importance of ongoing funding and support for basic biomedical research and urges the NIH to continue the traditional focus on basic biomedical research ensuring that it remain a key component of both the intramural and extramural research portfolio at the NIH. National Center for Advancing Translational Sciences (NCATS): $685 million has been provided to the NCATS, an increase of $50 million over FY The agreement also provides $500 million for the Clinical and Translational Science Awards (CTSA) to support the goal of using FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 06

7 CTSA to build networking capacity and support for innovative collaborative projects. $25 million has been designated for the Cures Acceleration Network. Executive Level Compensation: Retains the current Executive Level II Salary Cap which is below the UC Request but greater than what the House previously proposed. Health Resources and Services Administration (HRSA) Title VII Health Professions Training FY 2016 Funding: $262 million; $7 million higher than FY 2015 This Title includes funding for two programs important to UC and previously zeroed out in the FY 2015 Budget Request: $14 million for the Health Careers Opportunity Program $30 million for Area Health Education Centers Title VII medical education training and loan programs are critical sources of financial support for many of UC s students and physician faculty as they are the only federal programs designed to educate providers in interdisciplinary settings to meet the needs of special and underserved populations, as well as increase minority representation in California s health care workforce. In FY14, UC received $8.99 million in Title VII grants. TITLE VIII Nursing Workforce Development FY 2016 Funding $229 million; $2 million below FY 2015 HRSA s Nursing Workforce Development Programs provide training for entry-level and advanced degree nurses and are the largest source of federal funding for nursing education, providing loans, scholarships, traineeships, and programmatic support to over 50,000 nurses. In FY14, UC received $2.6 million in Title VIII grants. 340b Drug Pricing Program: HRSA is requested to provide a briefing to update the Committees on Appropriations of the House and the Senate on the status of the 340B guidance, the secure website, and covered entities in the 340B drug program. Centers For Medicare And Medicaid Services (CMS) FY 2016: $3.669 billion for CMS management and operations, the same as the FY 2015 level Relevant CMS Provisions: With concerns over Recovery Audit Contractors and the unintended consequences that audits can have on patient access to care, HHS is directed to take steps to improve consistency, transparency, and the processing of appeals. CMS is requested to continue to monitor the return on investment for compensating auditors on a contingency fee basis, to review contractor audit practices, and provide an update on actions related to these items in the FY17 Budget Request. $681 million will be transferred from the Medicare trust funds for Health Care Fraud and Abuse Control activities. Reduces the Independent Payment Advisory Board (IPAB) by $15 million FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 07

8 National Institute for Occupational Safety and Health (NIOSH): $28.5 million is provided for the Education and Research Centers (ERC), two of which are located at UC campuses (the Southern CA ERC involves UCI and UCLA, and the Northern CA ERC involves UCB and UCSF). The NIOSH Agriculture, Forestry and Fishing (AFF) Program, which supports the AFF Center at UC Davis, is funded at $25 million. These NIOSH ERC and AFF Center funding levels are increases over the FY 15 level for both programs (in FY 15, the ERCs received $27.5 million and the AFF Centers received $24 million). Other Relevant Agencies and Funding Streams $7.2 billion for the Centers for Disease Control and Prevention, $308 million above the FY 2015 level. $295 million for Children s Hospital Graduate Medical Education funding, $30 million over the FY 2015 level. $2.73 billion for the Food and Drug Administration, $132 million above the FY 2015 level. The Agency for Healthcare Research and Quality received $334 million, $34 million below FY 2015 but avoided being completely eliminated as was proposed in the House bill. TAX EXTENDERS PACKAGE Congress also finalized negotiations on a broad tax extenders package. The bill includes a number of provisions important to the higher education community. The tax package would make permanent: an enhanced American Opportunity Tax Credit (AOTC), including new AOTC program integrity changes for institutions and for students intended to reduce improperly filed claims; the IRA Charitable Rollover provision, a charitable tax incentive important to development offices, which allows for tax free distributions of individual retirement account funds to charitable organizations, such as universities; a modified Research and Development tax credit; and, parity for the exclusion from income for employer-provided mass transit and parking benefits. The package also extends the above-the-line deduction for qualified tuition and expenses for tax years 2015 and In addition, the package expands 529 education savings plans, and changes the reporting requirements for universities for 1098-T filings, to require institutions to report only qualified tuition and expenses actually paid, rather than choosing between amounts paid and amounts billed, as under current law FEDERAL GOVERNMENTAL RELATIONS UNIVERSITYOFCALIFORNIA.EDU 08

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