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NACUBO Summary of FY11 Budget Agreement

April 13, 2011

White House and congressional negotiators agreed to a six-month FY11 spending bill that cuts approximately $38.5 billion from the federal budget just before the Friday, April 8 midnight deadline, but the actual legislation was not released until early Tuesday morning.

Upon announcing the agreement on April 8, another temporary continuing resolution (CR) was approved and signed by the president which keeps the government functioning until Friday, providing time to prepare and, barring any further complications, pass the final FY11 spending measure. Members of Congress will have just two days to review the legislation; the House is expected to vote on the legislation on Thursday with the Senate following shortly thereafter.

The short-term bill keeping the federal government running through Friday includes $2 billion in spending cuts, which brings total cuts already enacted this fiscal year to $12 billion, even before the final long-term FY11 bill is enacted. This $12 billion is included in, and is not in addition to, the reported $38.5 billion total cut from the FY10 enacted spending level.

Below are some of the details of the six-month FY11 spending plan. Note that there is an additional across-the-board 0.2 percent cut for all non-defense discretionary spending that is not reflected in the numbers below.

Because of the timing and circumstances around its expected enactment, Congress is providing less statutory guidance to federal agencies than usual in this budget. Typically, the budget is sent to agencies with detailed explanatory statements or tables. While some spending figures for certain programs are legally binding due to the way they appear in the legislation, federal administrators will have greater discretion than usual in distributing these FY11 funds because of the way the bill was crafted. However, federal agencies are required to submit spending plans to Congress within 30 days of enactment.

Student Aid

  • The maximum Pell grant will remain at the current $5,550.
  •  Year-round Pell will be discontinued in the 2011-2012 academic year, which starts on July 1, 2011.
    • It is important to note that it is possible for some students to receive a second award for summer study in 2011. The CR includes a provision to lift existing Pell regulations for the summer of 2011, which would allow schools to use a student's remaining 2010-11 funds for a second award. The Department of Education is expected to comply.
  • Leveraging Education Assistance Partnership (LEAP) funding has been eliminated. The LEAP program encourages states to continue to expand their own state grant aid programs to improve access for low-income students. States are required to match each federal dollar two-to-one. The impact on the loss of LEAP funding will be different in each state.
  • The Supplemental Educational Opportunity Grant (SEOG) program is maintained, but with a cut of $20 million (from $757 million), in addition to an across-the-board cut of 0.2 percent. SEOG provides additional grant aid for the neediest Pell recipients.
  • Federal Work Study receives only the 0.2 percent across-the-board cut.

Research

  • The National Institutes of Health will take a 1 percent cut of $260 million.
  • The National Science Foundation (NSF) will get $6.9 billion; NSF research is cut by $43 million and funding for NSF education and human resources is cut by $10 million. The Washington Post reported today that the cuts will translate to 143 fewer grants awarded by the NSF in FY11.
  • USDA’s National Institute of Food and Agriculture is cut by $126 million.
  • NOAA’s Operations, Research and Facilities budget is cut by $119 million.
  • There are no earmarks in the legislation.

SEC To Receive Additional Funding; IRS Level-Funded

Enabling it to meet the oversight requirement of the Dodd-Frank financial overhaul legislation, the Securities and Exchange Commission will see a $74 million increase, bringing its annual budget to $1.19 billion. House Republicans has proposed a $603 million cut to the Internal Revenue Service, but it will essentially be level-funded, except for its share of the 0.2 percent across-the-board cut.


The full text of the CR, HR 1473, is available on the Rules Committee website at www.rules.house.gov.
While the overall budget agreement has been touted for $38.5 billion in spending cuts compared to FY10 spending levels, it is actually $78.5 billion less than President Obama had requested in his FY11 budget plan. Most controversial policy riders were ultimately left out of the final agreement although they proved to be some of the most contentious issues during the talks.


The $38.5 billion in spending reductions represents only about 2.5 percent of the $1.5 trillion federal budget deficit, yet the White House and Congressional leaders nearly brought the federal government to a shutdown to reach this agreement. Given the difficulties in getting to an agreement on what is effectively a six-month budget for the remainder of FY11, Washington is girding for the bigger battles yet to come – most notably, the vote on raising the federal debt limit.

Contact

Liz Clark
Director, Congressional Relations
202.861.2553
E-mail