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NACUBO Preview: A Frustrating Fall Ahead in Washington

August 10, 2015

Capitol Hill will be quiet for the next month as members of the House and Senate have left Washington for their annual August recess. But when they return to business on September 8, lawmakers will be forced to contend with a confluence of budget, tax, and policy deadlines, including the expiration of the Higher Education Act on September 30, 2015.

HEA Reauthorization

Since January, the Senate Health, Education, Labor and Pensions (HELP) Committee has held numerous hearings in preparation for reauthorization of the Higher Education Act (HEA).  In the weeks leading up to the August recess, three hearings focused on improving student success, addressing campus sexual assault, and examining barriers to and opportunities for innovation. 

The current HEA is set to expire at the end of September. Yet, it is unlikely that Congress will complete a full-scale reauthorization by that deadline. NACUBO expects Congress to pass temporary extensions of the current law until policymakers can come to agreement on a comprehensive update to federal higher education laws.

In a speech on July 16, HELP Committee Chairman Lamar Alexander (R-TN) acknowledged that the committee is first focused on completing its work on K-12 legislation (an update to No Child Left Behind) but that he intends to, with his Democratic counterpart Sen. Patty Murray (D-WA), make public a draft of the higher education legislation early this fall.

Alexander also made clear his four goals for reauthorization: "ending the overregulation of colleges and universities; ending the federal collection and dissemination of useless data; improving our accreditation system; and ensuring that institutions begin sharing in the risk of lending to students."

Tax Extenders

On July 21, the Senate Finance Committee approved a bill that generally would extend through December 31, 2016 tax provisions that expired on December 31, 2014. While this represents some headway and is an indication of support for the provisions within the bill, final congressional action on extenders is likely to be delayed, if not entangled with, other budget and policy votes this fall.

Notably, the bill includes an extension of the deduction for energy efficient improvements to commercial buildings, 179D. The bill modifies the existing provision to enable nonprofits to participate, a goal NACUBO has supported, along with a number of interested parties.

NACUBO and a group of other higher education associations also wrote to the Finance Committee leadership to express appreciation for the inclusion in the committee approved legislation of two-year extensions for the above-the-line deduction for qualified tuition and related expenses and for the Individual Retirement Account Charitable Rollover.  Also in the package are provisions to extend the modification of tax treatment of certain payments to controlling exempt organizations, the tax credit for research and experimentation expenses, and a provision to provide for mass transit commuter tax parity.

Fiscal Storm Brewing

As in the fall of 2012, when the term "fiscal cliff" was coined, college students and higher education institutions have a lot at stake when lawmakers return to Washington. Congressional leaders, together with the White House, must find a way to keep the federal government operating after September 30, find funding to extend the federal highway bill beyond October 28, and avoid default, as the Department of the Treasury estimates it will reach the current debt ceiling by early November. 

The biggest question ahead is how Congress will deal with funding for federal FY16. Budget writers are limited by the caps put in place by the Budget Control Act of 2011, which triggered 10 years of across-the-board spending reductions, split between domestic and defense budgets. Congressional Democrats and the White House are unlikely to agree on any fiscal deals that don't include a year or two of relief from defense and domestic spending caps, but small-government Republicans likely will stand firm in their efforts to prevent any compromises that include busting the caps.

Earlier this year, appropriators marked up legislation that would raise the maximum Pell Grant to $5,915 for the 2016-17 academic year, but the final decisions on Pell and other student aid programs such as the Federal Supplemental Educational Opportunity Grants, Federal Work-Study, Federal TRIO Programs, Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), as well as budgets for federal research agencies, will be determined when lawmakers find their way out of the fiscal storm ahead this fall.

RESOURCES

CBO Speaks: Keeping An Eye on Washington - 2016 Legislative Landscape with Liz Clark

Contact

Liz Clark
Director, Federal Affairs
202.861.2553
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