What’s Going on With Budget Reconciliation, and Why Should Higher Ed Care?

Jon Fansmith: Hello, and welcome to a brand new season of dotEDU, the higher education policy podcast from the American Council on Education. In our new season, we'll be continuing our conversations with higher education news makers. But in addition, once a month, we'll be welcoming ACE Senior Vice President, Terry Hartle, to the podcast in a crossover with ACE's Public Policy Pop-Up to discuss key issues of the day in Washington. I'm joined this week by my co-host, Mushtaq Gunja, and Sarah Spreitzer. Sarah, you were on with Terry this week, and I know you covered pretty much everything under the sun, but how did that conversation go?

We will would divide the House reconciliation package into four categories. Category number one, student aid. Some of these things are familiar to all of you. The House bill would increase the maximum Pell Grant by $500. This would be the biggest increase in the maximum Pell Grant in the program's history. So it's obviously notable, but it's also a long way from the $1,400 that president Biden proposed in his American Families Plan, and it's an even further away from the president's proposal to double the Pell Grant program. So $500 maximum increase in the Pell. The possibility exists that we could get money in reconciliation for Pell, and we could get more money as part of the 2022 budget process, but that's a separate discussion. The second thing in the higher education area of the House reconciliation bill, funding for historically black college universities and other minority serving institutions for research infrastructure. This was originally proposed to be a $20 billion program. The House has put forward a $2 billion competitive grant program. So a much smaller initiative than what the Biden administration called for. Completion grants, sometimes referred to as retention and completion grants. These are ideas. The effort here is to ensure that not only did students get into post-secondary education, but that they complete their post-secondary education. The president had proposed completion grants to be funded at $63 billion. We're now looking at $9 billion over five years, again, a substantial reduction from what the president initially proposed. Note that even at a billion and a half dollars a year for five years, that's a substantial amount of money. It would mean that the program would be at least the size of the TRIO program. So it's the creation of a big program, but it's a far way short of what the president originally called for. Finally, the bill also includes free community college and two years of subsidized tuition for many students at Historically Black Colleges [and] Universities, and minority serving institutions. So those would be the four higher education specific measures in the House bill that's under consideration.

There are a number of tax provisions that haven't gotten quite as much attention, but that have the possibility to be extraordinarily beneficial to our students. For example, the taxability of Pell Grants would be repealed under the provisions put forward by the House Ways and Means Committee. This is an enormously big deal for low income students, particularly students at community colleges, and it is a high priority for several of the higher education organizations. The second, the tax provisions would repeal the felony drug conviction limitation on eligibility for student aid. Third, a number of bond provisions like advanced refunding bonds and direct payment bonds that would be created that would help institutions, particularly public institutions. And finally, energy efficient construction tax credit included in the House passed bill could be very beneficial to colleges and universities. Fourth provision in the reconciliation bill is more funding for scientific research. The Biden administration had proposed much larger funding. The House bill provides about three and a half billion dollars more funding for the National Science Foundation. That's a huge priority for higher education. It would benefit the nation enormously to invest more heavily in the NIH... Excuse me, NSF basic research. It's always been something of a poorer cousin to the National Institutes of Health, but the work it does is equally important. And finally, the House bill includes about a billion dollars for the Academic Facilities Modernization Act, which would help many college universities with facilities, particularly research related facilities, but not exclusively. So all in all, not as much as the president was talking about, not as much as we were hoping for, but a very substantial piece of legislation that would certainly affect every institution of higher education in the country. $3.5 billion price tag, the political status of this when the House is going to try to move the legislation is an open question as I'll come to in a minute.

In the Senate, as I mentioned earlier, we know that the House and Senate Democratic staff have been working closely together to develop the proposals, but we haven't seen proposals come forward out of the Senate yet. We have been hearing things, but haven't seen anything. So the Senate is a little bit more of a mystery. The mystery gets more complicated because the political situation is so uncertain at the present time. One uncertainty is that about 10 moderate Democrats in the House, and two moderate democratic Senators, Senator Sinema from Arizona, Senator Manchin from West Virginia have been suggesting that they might not be on board for a $3.5 trillion package. So the Democrats, particularly in the Senate are having to figure out how to address the possibility that a couple of their senators won't vote for anything remotely close to $3.5 trillion. What would you toss overboard if you had to? The second question is the size of the package in terms of offset? How much will be paid for? What taxes will go up to pay for this proposal? Initially, the story was this was $3.5 trillion in new spending. Well, no, it's not because there will be a tax increases that will be imposed that will offset the new spending. What of tax increases are going to be acceptable across the Democratic coalition? Republicans aren't going to give this any support in either chamber. The Democrats have a majority of three in the House. They have a majority of zero in the Senate, so they need everybody on their team to agree on how to do this. It can be difficult to get all members of one party to agree that the sun will come up in the east tomorrow, let alone get them to agree on a package of this size and this complexity.

Will progressive Democrats agree to vote on the infrastructure package before they know what they're going to get on reconciliation? A logical thing to do here would be to say, okay, let's take as much as we can get. Let's vote the infrastructure package, but Senate progressives believe if we do that, we might never see anything by way of reconciliation. So an awful lot is going to happen between now and next Monday when we get to that vote on the 27th. And it's impossible to predict how it's going to go both in terms of the substance and the sequencing of what the votes, if any, will be going forward.

Sarah, let me change directions here. As we've talked about reconciliation being the monster that swallowed New York and the debt ceiling and the CR both merging is incredibly important unresolved issues. Some of the things that we have spent most of the last six months worrying about or thinking about, or addressing, seem to be getting less attention than we might have anticipated. So for example, legislation to enhance research security, legislation to boost America's ability to compete with China is still there, remains a bipartisan bicamel priority, but it's not making very much progress toward being enacted. Well, essentially where we were, I guess in June, which is the Senate had passed a 2,600 page bill. The House had passed two small reauthorization bills, one for NSF, one for the Office of Science at the Department of Energy. But the two bills don't really match up and it's not entirely clear what their plan is for conference. So talk a few a little bit about that. And then we've got the National Defense Authorization Act coming into play, which could be another vehicle for addressing some of the issues.

The lowering of the section 117 threshold from 250 to 50,000 for every gift in contract. And then the creation of a new Section 124 in the Higher Education Act, which would require a lot of colleges and universities, around 400, to create and maintain databases that would track individual gifts and contracts to individual faculty and staff. And so those were all problematic things. We recently sent up a lot to the various committees on talking about these issues if they were indeed conferencing them. But some of the wind has been taken out of the sails, I think on the debate about these bills. It came up for instance, during the markup and the House Science Committee, when they were marking up their portion of the reconciliation bill, because here they are putting in a huge amount of funding into the National Science Foundation before they've gone through the authorization. And so there were House Republicans that were asking should we be putting this funding forward before we've actually completed the authorization bill?

It's also come up in the debates about the National Defense and Authorization Act or the NDAA, this is a bill that has to be passed every year that authorizes programs at the Department of Defense. And in the last couple of years, we've seen a lot of amendments introduced around research security, around institutions of higher education, and our relationships with some countries such as China and Russia. This year, the House Rules Committee is actually meeting today to consider around 850 amendments. I think there aren't any right now around Section 117, or Section 124, but there's definitely still an interest, bipartisan interest, within Congress about foreign influence, foreign interference, and bringing more transparency and more sunlight to these partnerships between either whether it's our research faculty or whether it's institutions of higher education. So I think the outlook on that Terry is we're going to have to wait to see it get through reconciliation, get through the CR, and then see whether or not there's any will within Congress. I think supporters of the bill will say that they're very close to the finish line and this could be a victory, right? A bipartisan victory that they could show that they passed this legislation in a very divided Congress, but we're just going to have to wait to see.

But turning to Afghanistan, Terry, Afghanistan has been taking up a lot of time, our institutions of higher education are really stepping up to support displaced scholars and students. There's been a lot of institutions doing a lot to help evacuate people from Afghanistan as that situation has deteriorated. I would just say that we are now starting to look at how support these displaced scholars and students if they have gone out of Afghanistan? And Congress is going to be considering a supplemental, we are planning to send a letter up to Congress this week outlining some requests, including asking that they require the Department of Homeland Security to designate Afghanis for temporary protected status or deferred enforcement departures, which would allow those Afghanis who are in the US say on a student visa, who are unsure about their ability to return to Afghanistan, to remain in the US until they figure out what their plans are. We are also asking for additional funding for USAID because that was the agency that was funding a lot of the scholarly work or the academic work going on in Afghanistan. Faculty and staff have been able to get to third countries, but their USAID grants are not being funded anymore because they were based in Afghanistan, so we are asking for support for that. And then funding for USCIS to process, because we know that they're going to have to process a lot more applications with the influx of Afghanis. And then finally, some flexibility around non-immigrant intent for F1 and J1 scholars who may be applying from a third country. So we have already heard from several institutions where they have a student applicant, say in Pakistan but they hold an Afghani passport, applying for an F1 visa and it's being denied because they're unable to prove their intent to return to Afghanistan. And so some flexibility for those students and scholars, given the situation in Afghanistan. I would also say that ACE along with AAU, APLU, and IIE is working on a resource document for institutions that are interested in hosting these displaced scholars and students. And we hope to publish that within the next week or so. And we see it really as a living document, as the situation changes, and we get more information about resources that are out there to help.

And a very special thank you to the producers who help pull this podcast together. Laurie Arnston, Audrey Hamilton, Malcolm Moore, Anthony Trueheart, Catherine Ahmad, Carly O'Connell and Fatma NGom. They do an incredible job making this happen and making Mushtaq, Sarah and I sound as good as possible. And finally, before we leave, thank you so much for listening.