FEDERAL FUNDING OUTLOOK. Caps, Cuts, Squeezes and Sequesters. Joel Packer, Executive Director The Committee for Education Funding

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1 FEDERAL FUNDING OUTLOOK Caps, Cuts, Squeezes and Sequesters Joel Packer, Executive Director The Committee for Education Funding

2 Committee For Education Funding The Committee for Education Funding (CEF) is the oldest and largest education coalition. We represent 115 national organizations and institutions from PreK through graduate education. For more information: Follow us on Twitter: 2

3 Medicaid 9% Fiscal Year 2015 Outlays Other Mandatory 17% Interest 6% Discretionary Defense 15% [CATEGORY NAME] [PERCENTAGE] Dep't. of Education 3% Medicare 14% Social Security 24% 3 Source: CEF based on CBO and OMB data

Trench Warfare! Since January 2011 Republicans and Democrats have had multiple battles over the budget and deficit. Republicans are opposed to revenue increases.

4 Trench Warfare! Since January 2011 Republicans and Democrats have had multiple battles over the budget and deficit. Republicans are opposed to revenue increases. Liberal Democrats are opposed to entitlement cuts. Education and other nondefense programs have borne the brunt of the cuts. Outlook not good for breaking stalemate. 4

5 FISCAL YEARS 2011/2012 $1.5 BILLION IN DISCRETIONARY CUTS 5

6 Final FY 11 and 12 Appropriations FY 11 cut ED (other than Pell) by $1.2 billion. Eliminated LEAP and Byrd Honors Scholarships. HBCUs/MSIs; TRIO and GEAR UP cut. Career/Tech grants cut 11%. FY 12 total ED funding cut by $233 million. All programs cut by 0.189% across-the-board cut. Maximum Pell grant of $5,550 maintained. 6

7 FISCAL YEARS 2011/2012 $75 BILLION IN STUDENT AID CUTS 7

8 Student Aid Cuts Enacted Eliminated the interest subsidy for graduate student loans and for the six-month grace period for undergrads; Limited to 150% of program length the period an undergrad can receive a subsidized Stafford loan; Eliminated the summer Pell grant and reduced to 12 the number of semesters a student can receive a Pell grant; Eliminated ATB and made it more difficult for some lowincome students to automatically qualify for the maximum Pell grant; and Cut eligibility for the minimum award. Pell grants have been cut by $54 billion. Student Aid in total by $79 billion! 8

Sequestration = Largest Education Cuts Ever! FY 13 = fixed percentage across-the-board (ATB) cuts. Non defense discretionary (NDD) cut was 5% = $2.5 billion from ED.

9 Sequestration = Largest Education Cuts Ever! FY 13 = fixed percentage across-the-board (ATB) cuts. Non defense discretionary (NDD) cut was 5% = $2.5 billion from ED. Pell grants exempt from across-the-board cuts. Final ED non-pell grant FY 2013 funding was lower than in FY 04. FY no longer ATB cut; further lowers discretionary caps. Squeezes education $; Pell no longer exempt. 9

Budget Deal House Budget Chair Ryan and Senate Budget Chair Murray in December 2013 agreed to the Bipartisan Budget Act: Partially replaced the sequester cuts to

10 Budget Deal House Budget Chair Ryan and Senate Budget Chair Murray in December 2013 agreed to the Bipartisan Budget Act: Partially replaced the sequester cuts to discretionary programs just for FY 2014 and FY Paid for by extending mandatory sequester cuts into FY 2022 and FY 2023 and other small mandatory cuts and user fees. 10

11 FY 2014 Omnibus Based on BBA, in January Congress passed Consolidated Appropriations Act of In aggregate only restores 2/3rds of ED sequester cuts. Big winner was preschool. Developing HSIs (+3.6%) GEAR UP (+5.3%) TRIO (+5.3%) SEOG (+5.3%) Work-Study (+5.3%) First in the World = New $75 million 11

12 FY 2015 CRomnibus In December 2014 Congress passed the Consolidated and Further Continuing Appropriations Act of In aggregate cuts ED discretionary by $166 million. Most programs frozen. Only provided negligible increases for a few programs: Federal work-study = +$15 million (+1.5%) Aid for HBCUs/MSIs = +$8.7 million (+1.6%) TRIO = +$1.5 million (+0.2%) 12

13 FY 2015 CRomnibus Pell grant maximum award only increases by $45 to $5,775. Restored the Ability to Benefit provision allowing students who lack a high school diploma, GED, or home schooling, to pass an test to be eligible for a Pell Grant. This provision applies only to students who first enroll in an eligible career pathways program on or after July 1, In addition, students who enroll on or after July 1, 2015 will not be eligible for the mandatory add-on to the $4,860 base maximum award. 13

14 $100 $80 Education Department Funding In billions Sequestration below FY 04! FY 15 below FY 08 $60 $40 $20 $0 14 Total Discretionary Total Discretionary w/out Pell

15 NDD Cap Levels Budget Authority in Billions $700 $650 $600 $550 $500 $450 $400 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY FY 12 Cap adjusted for inflation BCA Pre-Sequester Caps Sequestration Ryan-Murray Source: CEF Calculations based on CBO and OMB data

16 FY 2016 BUDGET INVESTING IN AMERICA S FUTURE

17 The President s 2016 Budget Eliminates sequester cap for NDD provides an additional $37 billion. Strengthens education from early childhood through higher education. $70.7 billion in discretionary funding for ED, an increase of $3.6 billion, or 5.4 percent. Mandatory initiatives include Preschool for All, Teaching for Tomorrow, and America s College Promise. 17

18 The President s 2016 Budget Four core themes: Increasing equity and opportunity for all students Expanding high-quality early learning programs Supporting teachers and school leaders Improving access, affordability, and student outcomes in postsecondary education Freezes campus-based student aid. Freezes most aid to HBCUs/MSIs Big increase for First In The World ($+140 million) 18

19 Pell Grants Pell grant maximum award projected to increase by $140 to $5,915 for the school year. Projects a long-term Pell shortfall of $29 billion. Continue indexing the maximum Pell Grant award beyond 2017 (costs $29 billion) 19

20 Community Colleges America s college promise = $60 billion over ten years in mandatory funds ($1.4 billion in FY 16) Proposed grant program for States to make community college free for responsible students, enabling them to earn a certificate, an associate s degree or up to 2 years worth of credits toward a bachelor s degree without paying an tuition and fees. Federal funding will cover about three-quarters of the average cost of community college Allocation of the Federal portion will be based in part on a formula that includes both student enrollment and outcomes such as program completion or transfer to four-year institutions 20

21 Community Colleges Eligible programs are academic programs that fully transfer to local public 4-year colleges and universities, giving students a chance to earn half of the credit they need for a 4-year degree; or, are occupational training programs with high graduation rates and that lead to degrees and certificates that are in demand among employers. Eligible students must attend at least half-time, maintain a 2.5 Grade Point Average, and make steady progress toward completing their program. The program eliminates tuition and fees for all eligible students for a maximum of 3 years. Students with an adjusted gross income of $200,000 and above would not be eligible. 21

22 AND NOW THE BAD NEWS DEEP CUTS POSSIBLE 22

23 House Republican Budget Fails to raise the FY 2016 sequester level cap for nondefense discretionary spending making it virtually impossible for needed education investments. Starting in FY 17 cuts the NDD cap below the sequester level each year, for a total cut of $759 billion (-13.8%). Eliminates $89.3 billion in mandatory funding for Pell grants. Pell maximum could be chopped from $5,775 to $4,860 a cut of $915 or 15.8 percent. 23

24 House Republican Budget Eliminates in-school interest subsidy for undergraduate needbased Stafford loans - a cut of $34.8 billion. Increases debt by $3,750 for those borrowing maximum of $23,000. Rolls back expansion of IBR - cut of $16.3 billion Eliminates Public Service Loan Forgiveness cut of $10.5 billion. In total cuts student aid by $150 billion! 24

Price Budget Slashes Non Defense Discretionary by $759 Billion In billions of $ 506 515 499 479 536 522 520 506 492 492 483 469 552

650 613 496 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 12 Cap adjusted for inflation BCA

25 Price Budget Slashes Non Defense Discretionary by $759 Billion In billions of $ FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 12 Cap adjusted for inflation BCA Pre-Sequester Caps Sequestration Price FY 2016 Budget Ryan-Murray Source: CEF Calculations based on CBO and OMB data and House Budget Committee

26 Senate Republican Budget 26 Fails to raise the FY 2016 sequester level cap for nondefense discretionary spending making it virtually impossible for Congress to provide needed education investments. Starting in FY 17 cuts the NDD cap below the sequester level each year, for a total cut of $237 billion (-4%). Eliminates $89.3 billion in mandatory funding for Pell grants. Pell maximum could be chopped from $5,775 to $4,860 a cut of $915 or 15.8 percent. Eliminates in-school interest subsidy for undergraduate needbased Stafford loans - a cut of $34.8 billion. Increases debt by $3,750 for those borrowing maximum of $23,000.

27 Next Steps House and Senate Budget on floor this week. If passed need conference to resolve differences. House and Senate Appropriations Committees make 302(b) subcommittee allocations May? House and Senate Labor-HHS-Education Appropriations Subcommittees markup FY 16 bills June/July? October 1 = start of FY

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Summary and Analysis of President Obama's Education Budget Request

New America Foundation Issue Brief Summary and Analysis of President Obama's Education Budget Request Fiscal Year 2013 Federal Education Budget Project, Education Policy Program February 2012 President