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Education Funding, Eaten Up by Pell Grants, Once Again on Menu

Senate hasn’t debated education appropriations for 11 years. Since then, a lot has changed

Secretary of Education Betsy DeVos isn’t seeing eye to eye with Senate appropriators on education priorities. (Bill Clark/CQ Roll Call file photo)
Secretary of Education Betsy DeVos isn’t seeing eye to eye with Senate appropriators on education priorities. (Bill Clark/CQ Roll Call file photo)

While military and health care costs have received plenty of airtime in recent years, the federal education budget hasn’t gotten a thorough vetting on the Senate floor since 2007. That will change if the Senate takes up later this week a massive $856.9 billion spending bill for the departments of Defense, Labor, Health and Human Services, and Education and a smattering of smaller agencies.

In the 11-year stretch since the full Senate last debated education appropriations, the Great Recession came and went, exploding the number of students either finding themselves out of work or in need of retraining.

As tuition and other higher education expenses ballooned in tandem, Congress also loosened the federal purse strings, including making it easier to qualify for Pell Grants, which help nearly 7.5 million predominantly lower-income students afford college.

The future of Pell, which makes up roughly one-third of the Education Department’s annual budget — up from a quarter the last time the Senate took up the Labor-HHS-Education bill in 2007 — remains a cloud hanging over the department that lawmakers face a reckoning with in the coming years.

For now, even after some budgetary gymnastics to avoid increasing Pell funding within the Senate’s $179.3 billion allocation for labor, health and education programs, the Senate bill would spend nearly $12 billion more than the White House wants. About $8 billion of that increase would go to the Education Department.

While the Trump administration doesn’t seem likely to block the Labor-HHS-Education measure given its strategic combination with military appropriations, difficult talks with the White House lie ahead on the fine print. And House conservatives are already threatening a revolt in that chamber if GOP leaders bring a Labor-HHS-Education bill to the floor and try to force it through by tying it to Pentagon spending.

Parsing Pell

Discretionary spending on Pell Grants has grown nearly three times as fast as the overall education budget since 2007. And that’s not the whole story, as lawmakers have pumped about $54 billion in new mandatory spending into the program during that time, while also creating a new entitlement to extra Pell cash and letting appropriators off the hook to some extent, allowing them to find other uses for limited resources.

Nonetheless, Pell surpluses created following the recession-era spending binge have been dwindling over the past six fiscal years.

Although it’s not readily apparent on paper, there’s a sizable gap between how the two chambers would handle Pell. Both chambers and the White House would fund the program at $22.475 billion in fiscal 2019, the same as the current year. To keep up with a $175 increase in the maximum per-beneficiary Pell award provided in the fiscal 2018 omnibus, the House version would simply tap Pell’s remaining $7.4 billion surplus.

The Senate bill would go further, tacking on another $100 increase in the maximum award. To help pay for the boost, the Senate would nick another $39 million in mandatory fiscal 2019 Pell funds. But the Senate would also rescind $600 million from unobligated Pell balances to pay for other spending in the bill, exacerbating the raid on the Pell surplus.

Meanwhile, without future action by lawmakers, nondefense appropriations across the government are facing a $55 billion cut in fiscal 2020 that will make it extremely difficult to keep Pell whole without drying up whatever is left of the rainy day fund.

Even while avoiding greater allocations for Pell, lawmakers haven’t been able to do much for the rest of the education budget since the last time the Senate debated education appropriations. Adjusted for inflation, fiscal 2008 discretionary spending on all non-Pell education programs was about 9 percent greater than the fiscal 2019 Labor-HHS-Education bill set to hit the floor this week would provide.

That’s despite the big boost in nondefense funds under the two-year budget deal struck in February, a reminder that Congress is only now digging out from under austere spending caps triggered in 2013.

Charter schools, opportunity grants

Congress and the White House diverge sharply in how they want to spend their newfound education dollars. In fact, the Trump administration wants to spend 11 percent, or $7.7 billion, less overall next year than this year. The House Labor-HHS-Education bill would instead hold spending roughly flat at just shy of $71 billion, a less than a 0.2 percent increase. The Senate would provide a $541 million bump over fiscal 2018, about 0.8 percent higher.

Office of Management and Budget Director Mick Mulvaney criticized Senate appropriators in a July 16 letter noting they would fund “virtually all” of the 28 education programs the administration wanted to eliminate to save nearly $6 billion. House appropriators accommodated some of the White House-backed terminations, but their version still includes “over $4 billion in unnecessary spending at the Department of Education,” according to a separate Mulvaney letter.

The White House nonetheless wants targeted increases such as a 25 percent, or $100 million, boost over the current year for charter schools, a priority of Education Secretary Betsy DeVos. Despite the higher allocations, neither chamber would meet Trump’s $500 million charter schools request — the House would provide $450 million, the Senate $445 million. Both the House and Senate also rejected a DeVos proposal to create a new $1 billion “Opportunity Grants” program that would offer scholarships to low-income families to choose different public or private schools.

Education Detail Approps-01

So-called School Improvement programs would be slashed from nearly $5.2 billion this year to just $645 million under Trump’s fiscal 2019 request. Both chambers ignored the requests, instead proposing small increases. Major Trump-proposed terminations in this category include the following:

— Supporting Effective Instruction State Grants, funded at $2.06 billion in fiscal 2018; both the House and Senate would keep that level-funded next year. States and local education agencies can use the funds for a variety of programs to improve teacher and administrator effectiveness, including teacher hiring to shrink class sizes, as well as teacher mentoring, testing, and merit-based compensation. The funds can also help pay for schools to use alternative teacher certification or licensing requirements.

— 21st Century Community Learning Centers, a formula program for states to award competitive grants for things like before- and after-school programs, drug and violence prevention, and family literacy programs. Funding for the program is $1.2 billion in fiscal 2018, which both the House and Senate would preserve in fiscal 2019.

— Student Support and Academic Enrichment Grants, funded at $1.1 billion in fiscal 2018. The House and Senate would each provide substantial increases next year, of $100 million and $125 million respectively. The grants, which are disbursed by formula to states, can be used for a wide variety of activities including coordinating mental health resources, increasing the use of technology, and improving school conditions.

Other Trump-backed program eliminations include $840 million for Federal Supplemental Educational Opportunity grants, which provide need-based grants of up to $4,000 for more than 1.5 million undergraduate students, and $200 million for Teacher and School Leader Incentive Grants for improving school management, including through performance-based compensation. House and Senate lawmakers ignored those requests.

‘Harsh treatment’

While on net the funding levels are similar, there are some notable funding differences between the House and Senate bills on a program level. For example, career, technical and adult education programs would be funded at $1.86 billion in the Senate bill, nearly $30 million above the current year. The House’s $1.95 billion level is nearly 5 percent higher than the Senate, with a greater focus on grants to states for community and technical colleges and secondary schools with vocational education programs serving low-income populations.

Another sticking point, which pits the Senate against both the House and Trump administration, is that chamber’s support for another $350 million to forgive loans for student borrowers with qualifying government or nonprofit jobs, but who chose the wrong repayment plan and turned out to be ineligible for the so-called public service loan forgiveness program.

The Senate wants to continue to provide first-come, first-served relief as in the fiscal 2018 omnibus, which also provided $350 million. The White House wants to kill the temporary loan forgiveness window as well as the entire program, which began in 2007 and forgives debt for student borrowers now in lower-paid public service jobs who have made at least 10 years of loan repayments. The House, with a slightly lower overall Labor-HHS-Education allocation at $177.1 billion, would also zero out the $350 million.

While they have funding and policy issues to work out that will make it difficult to achieve lawmakers’ goal of getting a conference report to Trump’s desk by Sept. 30, the end of the fiscal year, the two chambers are much more in sync with each other than they are with the White House.

“We’re pleased and not entirely surprised that neither bill reflected the president’s harsh treatment of education,” said Sarah Abernathy, deputy executive director for the Committee for Education Funding.

The Senate version in particular, shorn of “poison pill” policy riders on abortion and other hot-button issues, moved out of the Appropriations Committee on a 30-1 bipartisan vote, a good sign for comity on the floor in the coming days. What the appetite is for compromise in the House and in the White House is unknown at this point. But at least lawmakers appear to have found yet another temporary workaround for a Pell Grant problem that will only become deeper in the years to come.

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