FEDERAL BUDGET STATUS AS OF May 04, 2005

 

FY’06 BUDGET RESOLUTION

Congress approved its FY 2006 budget resolution (often referred to as a budget "blueprint" or outline) on April 28, following weeks of behind-door conference discussions between the House and Senate.  The resolution passed by slim margins in both chambers and caps overall discretionary spending at the same level as the House budget and that requested by President Bush.  The resolution cuts overall domestic discretionary funding (i.e., annual appropriations) for FY 2006 by almost one percent.  This broadly tracks the President's budget, and will make securing increases (or even avoiding cuts) in critical programs a challenge.  Decisions on funding for individual programs will be made by members in the coming months. 

 

STUDENT FINANCIAL ASSISTANCE

The recently passed Conference Report on the FY 2006 Budget Resolution sets discretionary spending at $843 billion and includes non-binding language that would increase Pell Grant funding by $100 per grant (for a maximum grant of $4,150). 

 

The conference report includes reconciliation instructions for the House Education and Workforce Committee to produce $12.7 billion in savings over the next 5 fiscal years and the Senate Health, Education, Labor and Pensions Committee to produce a $13.7 billion reduction over the same time period.  This language does not bode well for restoring the 48 education programs identified for elimination in the President’s budget.   Experts in the student loan industry believe a large amount of any final reduction (potentially $7 billion) may come from student loan programs.  Negative press about excess earnings in for-profit student loan providers is fueling this likely reduction.  In Montana, where the bulk of our student loans are done by not-for-profit entities, we could feel unintended consequences if funding is decreased -- including increased defaults and reduced early awareness programs.  

 

CARL D. PERKINS FEDERAL GRANT

The Senate’s Perkins reauthorization bill, S. 250 (the Carl D. Perkins Career and Technical Education Improvement Act of 2005) passed by a vote of 99-0 in mid-March.  This bill maintains 15% administration funds to be divided between administration and state leadership.

 

On May 4, the House passed HR 366 (the Vocational and Technical Education for the Future Act) by a vote of 416 to 9.  HR 366 is the House version of Perkins reauthorization.  H.R. 366 addresses many legislative priorities that are beneficial to postsecondary career and technical education in Montana, but it still reduces state administration to 2%.  House passage of the bill takes this legislation to the next stage in the reauthorization process -- a conference committee where the differences between House and Senate versions will be negotiated.   

 

WORKFORCE INVESTMENT ACT (WIA)

The House bill to reauthorize the Workforce Investment Act is HR 27 (Job Training Improvement Act) and passed in March 2005.  The Senate bill, S 9 (Lifetime of Education Opportunities Act of 2005), has not yet passed and is currently deadlocked in the Health, Education, Labor, and Pensions Committee.  The Committee chair, Senator Enzi of Wyoming, is working toward a bipartisan approach to reauthorization of WIA and does not want to use HR 27 as the basis for the Senate bill. 

 

HR 27 contains a US Department of Labor amendment to add the Perkins program to a list of programs governors could choose to block grant.  If Perkins remains, it is likely the administration will recommend it to be added to the list of programs that can be block-granted under WIA. 

 

COMMUNITY-BASED JOB TRAINING GRANTS

U.S. Secretary of Labor Elaine Chao today announced the competition for the first $125 million to be awarded through President Bush’s Community-Based Job Training Grants.  This is a reduction from the original amount of $248 million which is most likely a result of the FY06 Budget Resolution that recently passed.   The criteria for these grants are:

  • Only publicly funded community and technical colleges are eligible to apply. 
  • Applicants must propose a combination of capacity building and training activities targeted at high-growth industries in the local economy.  Proposed capacity building strategies are expected to address significant barriers that impede the ability of the community college to meet local industry demand for workforce training.  Training activities must lead to an appropriate credential.
  • Applicants must demonstrate that projects will be developed and implemented in the context of a strategic partnership that includes business and industry, the workforce investment system, and the K-12 education system.

In Montana, as a rural state, it is difficult to compete for federal dollars against states with larger population centers and stronger business and industry infrastructures.

 

HIGHER EDUCATION ACT (HEA)

Recent action by the Senate Health, Education, Labor, and Pensions Committee has given hope that reauthorization is still a possibility in 2005.  September 20th will mark the expiration of the one-year extension of the Higher Education Act.  Few believe Reauthorization can happen before then, but many believe it will happen prior to July 1, 2006 when the variable rate interest structure is scheduled to change to a fixed rate.

 

The Community College Access Grant program would provide $125 million for concurrent enrollment and articulation between two and four- year institutions.  Both the Community-Based Job Training Act and the Community College Access Grant would replace Perkins at postsecondary level if Perkins were eliminated as requested in the President’s FY06 budget proposal.

 

UPWARD BOUND & TALENT SEARCH PROGRAMS

The Bush Administration budget targets 932 Upward Bound and 469 Talent Search programs for de-funding at the end of the ‘05-‘06 year.  Last year, Upward Bound (UB) and Talent Search (TS)placed 74,100 high school seniors into higher education nationally.  Each program serves students considered educationally disadvantaged.  Within Montana, de-funding the programs would terminate 6 Classic Upward Bound projects, 1 Upward Bound Math and Science project, 1 Veteran’s Upward Bound project, and 3 Talent Search projects.  The total impact of de-funding the Montana programs would lead to an estimated 700 seniors being denied pre-college services annually (out of the total 3,366 served by TS and UB).

 

In the House and Senate Budget Resolution that passed on April 29 there is sufficient money to fully fund and moderately increase the appropriation for the TRIO programs, if Congress ultimately chooses to do so.  However, there are many competing funding priorities and it will require a continuing effort to educate and lobby members to keep TRIO funding on the priority list.  

 

TRIO programs have been successful in Montana:

·        An average 84 percent of all 2004Upward Bound high school seniors statewide enrolled in postsecondary education this past fall semester.

·        An average 54 percent of all 2004 TS high school seniors statewide enrolled in postsecondary education this past fall semester or completed a GED.