TG's Legislative Report
For more information, contact:
TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100
July 21, 2008
Congressional Update and Reauthorization of the Higher Education Act
On July 14th, the House and Senate leadership issued a statement to the effect that it is their intention that the current congress complete its work by September 26th and adjourn on schedule without a post-election lame duck session in November and December.
If needed, the leadership's intention is to pass a continuing resolution extending current year appropriations, and any other laws requiring reauthorization by the congress, into 2009 that cannot be acted upon prior to the end of the current fiscal year.
This may mean that while the congress has extended the Higher Education Act through July 31, 2008, unless the conference committee report can make its way onto the House and Senate calendars before the end of the month, the Act may be extended once again for several months.
Politically, for the Democrats, extending these bills through a continuing resolution and betting that the 111th Congress will have larger Democratic majorities dealing with a Democratic White House, the continuing resolution route is strategically more appealing than having to deal with a slew of threatened vetoes from the White House and a recalcitrant minority large enough to have blocked legislation in the Senate.
The conference committee report on the HEA reauthorization bill is all but complete with a few issues still being ironed out (state maintenance of effort, 90-10 requirement, income-based repayment eligibility, guarantor role in the PLUS auction pilot program, guarantor advisory board membership, new accreditation process) and the sponsors are waiting for floor time to be made available for the bill to be placed on the House and Senate calendar. Unfortunately, both calendars are full with legislation that was scheduled to be dispensed with weeks ago.
At this time, several pieces of major legislation are crowding the congress' floor calendars, including, the war supplemental bill, energy bill, housing/mortgage financing legislation, and, of course, the twelve FY 2009 appropriations bills.
On the subject of the FY 2009 budget and appropriations, the congress approved an election-year budget blueprint that leaves to the next president the task of sorting out a host of fiscal problems.
The House-Senate compromise measure allows large near-term increases in defense and domestic programs, but leaves hard decisions on Medicare and other federal entitlement programs to future policymakers.
It also manages to project small budget surpluses by 2012, but only by permitting several of the 2001 and 2003 federal tax cuts to expire as scheduled at the end of 2010.
The immediate impact is to provide a $24 billion (5%) increase for domestic programs for FY 2009 beginning Oct. 1. It also endorses Bush's $36 billion increase for the Pentagon's core budget, more than 7%.
But it relies on a host of questionable assumptions to predict a $340 billion budget deficit for next year, achieving it only by understating likely war costs — even if an anti-war Democrat takes back the White House — and assumes that Congress will raise taxes to finance the $50 billion-plus cost of "patching" the AMT.
The same assumptions call into question Democrats' promises to produce small surpluses by 2012.
The budget also extends some expiring tax breaks for business, and prevents doctors from absorbing cuts in their Medicare payments, and a major boost in the GI Bill for veterans college benefits at a cost of more than $50 billion over the upcoming decade.
But the measure paints a bleak picture for the next president, who'll face tough decisions on cutting benefit programs to prepare for the retirement of the Baby Boom generation and whether it's possible to extend the full menu of Bush's tax cuts.
On taxes, the Democratic plan relies on a surge in tax revenues — averaging $129 billion a year — after 2010 to claim balance in four years.
The compromise budget plan promises to renew tax cuts aimed at the middle class, including the $1,000 per child credit, relief from the marriage penalty, estate tax cuts and the 10% tax rate on the first $7,825 of income for individuals.
But there's not enough money to extend cuts on income tax rates, capital gains and dividend income and still produce a surplus under the Democratic plan, which rejects Bush's proposed cuts to domestic programs.
All of this is to say that in this environment, there many moving parts and the substance and timing of the HEA reauthorization legislation is impacted by all of them, i.e., the lack of time, crowded congressional calendars, a very active election cycle, budget and appropriations, and conflicting congressional and national priorities.
The issue of financial liquidity within the FFELP will be an issue that will continue to be of concern during the 111th Congress with proposals to address the issue in a variety of ways coming from all interested parties, associations, and organizations. It is continuing to become clear that HR 5715 — and the implementation process used by the Department of Education — will not permanently insure adequate liquidity in the FFELP.
Additionally, there is serious consideration, even at this early stage, being given to the possibility of a major budget reconciliation bill being a part of the FY 2010 budget resolution that will be among the first major legislation taken up by the 111th Congress. Futhermore, there is speculation that a reconciliation bill will include a savings target for education and labor, and that savings will come from the FFELP. This will not be a partisan issue. It will be a small part of a new Congress and a new agenda that attempts to shift fiscal, monetary, and policy priorities and direction.
The HEA reauthorization, if not completed during the current congress, may be folded into the budget reconciliation process thereby opening up the act for more restructuring.
State Legislative Update
The Feasibility Study for Restructuring Texas Student Financial Aid Programs mandated by the 80th Regular session of the Texas Legislature released its preliminary findings and recommendations.
Among the recommendations are to:
- maintain the TEXAS Grant Program as the state's primary postsecondary education grant;
- begin to phase in a merging of the TEG and TEOG into the TEXAS Grant Program, but maintain the separate revenue streams for each program until the merger;
- align the eligibility and allocation formulas for the three programs;
- focus the programs to the lowest income population groups;
- maintain the TPEG Program as a campus-based program and the B-On-Time programs as a secondary incentive program for full-time students;
- add a further merit component to the TEXAS Grant Program (1300 SAT, or rank in the upper 40% of one's high school graduating class, or complete the high school Distinguished Curriculum);
- develop an eligibility pathway for low income nontraditional and independent students for a TEXAS Grant by earning an associate degree, or complete 12 hours of transferable general education courses with a 3.0 GPA, or complete 24 hours of transferable general education and/or major-specific courses;
- use the federal Pell Grant and institutional definition of Satisfactory Academic progress for renewal TEXAS Grants;
- maintain a decentralized administration of student financial aid programs with some new standardization of formulas and FAFSA priority dates;
- merge smaller programs into a workforce shortage program and a college readiness program; and
- improve monitoring and accountability of the success of the state's programs.
The final report will be submitted to the Texas Higher Education Coordinating Board for action at its July 24th meeting and the legislature in the fall. The CB is expected to request a few changes to the report's recommendations that will include dropping the "12 hours of transferable general education courses" requirement, allow the CB to determine a satisfactory SAT/ACT score, substitute "top 30%" for "top 40%" of a high school graduating class, add a high school GPA requirement of 3.0 using a statewide standard GPA calculation (when or if available), and maintain the current state definition of Satisfactory Academic Progress.
The 81st Regular Session of the Texas Legislature will take up and consider legislation in 2009.
