2011 Higher Education Government Relations Conference

•Brian F lahaven, CASE•J im Hermes , AACC•Bob Moran, AASCU•Jenni fer Pou lakidas , APLU

Washington Update: Briefing on Federal Legislation and Policy

Issues

FY 2012 Appropriations

Status of federal funding for Fiscal Year 2012

Began 1 October

No FY12 bills passed at that point

Operated under Continuing Resolution(CR) until 18 November

FY 2012 Appropriations

Some Success!

“Mini-bus” of 3 bills: Ag, C-J-S, T-HUD

And some further procrastination…

Extended CR until 16 December

FY 2012 Appropriations

What we know USDA AFRI: $264.5m (flat) NSF: $7.03b (+2.5%) NASA:

• Science directorate $5.09b (+2.9%) • Aeronautics research $570m (+6.5%)• Education programs $138m (-4.8%)

NOAA: $4.89b (+6.4%) NIST:

• Manufacturing Extension Program $128.4m (flat)• Technology Innovation Program $0 (-100%)

HUD Sustainable Communities: $0 (-100%)

FY 2012 Appropriations

Still Pending

Labor-HHS-Ed (Pell, other student aid, NIH)

Energy & Water (energy research)

Defense (defense research)

Interior-Environment (NEH, USGS, EPA)

State-Foreign Operations (USAID higher ed programs)

FY 2012 Appropriations

Labor-HHS-EdStudent Financial Aid: Pell max maintained at $5550 SENATE eliminates in-school interest subsidy for

undergrad loans during 6-mo grace period HOUSE Pell changes: 18 to 12 semesters eligibility;

zero family contrib income up to $30k from $15k; eliminate eligibility for less than half-time; IPA allowance

HOUSE bill also cuts and eliminates other higher ed programs

New accounting spin re Pell, $1.3b shortfallNIH SENATE $30.5b HOUSE $31.7b

FY 2012 Appropriations

Outlook… anybody’s guess!

Within 2 weeks with big package of remaining spending bills

Before end of year in super package of remaining spending bills, expiring tax provisions, sequestration limits

CR until Feb/March 2012

Year-long CR

Budget Control Act

Negotiated measure to address the nation’s debt ceiling issue.

Raised the ceiling $2.1 trillion in a two-step process under certain conditions. $900 billion immediately $1.2 trillion subject to Congressional action/inaction

Vote on a Balanced Budget AmendmentCreation of Joint Committee on Deficit

Reduction

Budget Control Act

First Step - $900 billionAgreement established $900 billion in

discretionary savings by setting security and non-security spending caps for the next 10 yrs.

Gave the President ability to immediately raise the debt ceiling by $400 billion.

President can request an additional increase of $500 billion, subject to a vote of disapproval.

Budget Control Act

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,043 $1,047

$1,066

$1,086

$1,107

$1,131

$1,156

$1,182

$1,208

$1,234

$1,087

$1,109

$1,134

$1,159

$1,186

$1,218

$1,251

$1,285

$1,319

$1,353

Budget Control Act

Second Step - $1.2 trillion - $1.5trillionPresident may request an additional $1.2

trillion – subject to disapproval.President may request an additional $1.5

trillion if both the House and the Senate pass a Balanced Budget Amendment to the Constitution for ratification by the states.

President may request amount between $1.2 and $1.5 trillion subject to Joint Committee.

Budget Control Act

Joint Select Committee on Deficit Reduction(Super Committee)

Democrats Republicans

House

Chris Van Holland (MD)James Clyburn (SC)Xavier Becerra (CA)

Jeb Hensarling (TX)Dave Camp (MI)Fred Upton (MI)

Senate

Patty Murray (WA) Max Baucus (MT)John Kerry (MA)

Jon Kyl (AZ)Rob Portman (OH)Pat Toomey (PA)

Budget Control Act

Joint Select Committee on Deficit Reduction(Super Committee)

“GOAL—The goal of the joint committee shall be to reduce the deficit by at least 1,500,000,000,000 over the period of fiscal years 2012 to 2021.”

Timeline

Sept. 8: First organizational meeting held and rules for operation of committee established.

Oct. 14: House and Senate committees must submit recommendations to the committee by this date.

Nov. 23: Deadline for the committee to vote on a plan with $1.5 trillion in deficit reduction.

Dec. 2: Deadline for the committee to submit bill to the president and Congress.

Dec. 23: Deadline for both houses to vote on the committee bill.

Timeline

March 2012 – Approximate time when the first $900 billion in the debt ceiling increase runs out.

Year End 2012 – Approximate time when the additional $1.2 billion in the debt ceiling runs out.

January 2013 – Sequestration begins – if necessary.

BCA Sequestration

Sequestration requires OMB to cut $984 billion ($1.2 trillion minus $216 in interest savings) for fiscal years 2013 - 2021. $109 billion per year – split evenly between defense

and non-defense.Discretionary funding will experience an

across the board cut for fiscal year 2013. For fiscal years 2014 – 2021, caps will be lowered and it is at the discretion of appropriators where to cut.

BCA Sequestration

Mandatory funding is subject to across-the-board cuts through 2021. Complex formula to determine exact amounts,

dependent on previous year’s outlays.Many programs exempt from sequestration,

including Pell Grants (discretionary portion 2013 only). Because of exemptions, roughly 75% of cuts would

come from discretionary programs.Cuts of approximately 15% to discretionary

spending from the current baseline.

BCA: Looking Ahead

BCA Sequestration Not Until January 2013, Leaving Congress One Year to “Fix” Things Obama vow to veto legislation reducing cuts. Attempts to avoid defense cuts – could produce

additional pressure on discretionary programs. Further attempts at “Grand Bargain”? Election year politics.

Other, intertwined issues Payroll tax cut. Unemployment insurance extension. Bush tax cuts.

Govt. Relations at CASE

Higher Educatio

n

Charitable

Sector

Tax Issues - CASE

Issues

Charitable DeductionEstate TaxIRA Charitable RolloverState Charitable Solicitation Laws

Higher Ed Tax Incentives

Charitable Deduction Cap

Current Lawo Taxpayers making over $200,000 (married couples $250,000)- itemized deductions at 33 percent or 35 percent rate

Pres. Obama’s FY12 budget plano Taxpayers making over $200,000 (married couples $250,000)- itemized deductions capped at 28 percent rate

• Deficit Commissiono Elimination of charitable deduction, replace with 12 percent

nonrefundable credit

CASE opposes charitable deduction cap

Charitable Deduction Cap

American Jobs Act- Raises $400B of

$467B needed- “Fairness”

Super Committee- Sen. Toomey

proposal- Dem. proposal

Charitable Deduction Cap

Tax Reformo Democrats – “Fairness” Argumento GOP – Eliminate deductions, lower rates o Bush Tax Cuts

Outlook o Very vulnerableo What makes charitable deduction different?o Nonprofit coalition

Estate Tax

Extended through 2012- $5M exemption- 35 percent tax rate

President Obama: extend 2009 levels ($3.5M exemption; 45 percent tax rate)

Bequest giving & educationWhat will happen in 2012?

IRA Charitable Rollover

Originally enacted in 2006o Taxpayers Age 70 ½ or oldero $100,000 annual limito Two years (2006, 2007)

Don’t have to count towards income

Tax Deal of 2010: Two-year retroactive extension of IRA charitable rollover through Dec. 31, 2011.o Extra month – January 2011

• Outlook: Tax Extenders

State Charitable Solicitation Laws

• To protect public from fraud & abuse

• Exemptions from state laws• Institutions vs. IRFs• Form 990• Progress

o Oklahoma in 2010o Hawaii in 2011

Other Washington Activity

Department of Education announce intention to conduct negotiated rulemaking

Teacher education programs and TEACH Grants

Student loan program integrity