CSU Office of Federal Relations

A Tale of Two Budgets

April 4th, 2013

Just prior to leaving town for a two week spring recess, both the House and Senate passed budget resolutions for FY 2014 on near party-line votes, outlining their respective priorities for the fiscal year that begins this October 1, and for the next decade. Both chambers set overall (defense and non-defense) discretionary spending for FY 2014 at $966 billion, in line with the caps set forth in the Budget Control Act (BCA) of 2011, which is where the similarities end.

The House’s budget plan envisions eliminating the federal deficit over ten years by cutting spending another $4.6 trillion (beyond the $1.2 trillion already enacted as part of the BCA), making substantial reforms to entitlement¬†programs such as Medicare and Medicaid, and reserving any revenue generated by closing tax loopholes (possibly including the charitable deduction) to lower overall tax rates. H.Con.Res.25 would also protect overall defense discretionary spending from post-BCA caps (in violation of the BCA, which would need to be amended) by shifting $55 billion in FY 2014 non-defense money to the defense side, thereby further increasing competition for even scarcer funds among domestic priorities such as cancer research, unemployment insurance, and education funding.¬†From an education perspective, such a move would further reduce resources available to CSU priority programs such as TRIO, GEAR UP, Work-Study, SEOG and Hispanic-serving Institutions programs, as well as research priorities in agriculture, NIH, and NSF, to name a few.

To meet its targets, the House budget assumes several significant reductions to higher education programs. Of particular concern to the CSU are changes calling for the elimination of recent expansions to the formula that determines eligibility for federal student aid programs; the elimination of fees paid to institutions of higher education for administering the Pell and campus-based aid programs; the elimination of student aid for students attending less than half-time; and a rollback of recent improvements in the terms of Income Based Repayment for student loan borrowers.

With respect to the Pell grant program, the House budget recommends continuing the maximum award amount at $5,645, but eliminating future inflation increases called for by law. It also directs the House Education committee to eliminate mandatory funds used to supplement Pell grants, making those funds discretionary and increasing the discretionary caps accordingly (this would also violate the budget agreement, and require statutory changes to the BCA). The House budget also recommends a maximum income cap for Pell grant recipients. The cumulative changes outlined above would almost certainly reduce the number and overall amounts of Pell grant awards. Finally, the House budget also recommends the elimination of the Corporation for National and Community Service (CNCS).

By contrast, S.Con.Res.8, the budget passed by the Senate, does not envision the elimination of the deficit within ten years, though it would reduce it by $650 billion beyond the $1.2 trillion called for in BCA. This would be accomplished by replacing BCA cuts to discretionary spending (both defense and non-defense) with a mix of both spending cuts and tax increases. Further, the Senate budget does not envision major entitlement reform, nor does it entail significant changes to student aid programs. Of interest to the CSU, the Senate budget does contain a provision that could allow for a delay or replacement of the interest rate increase scheduled to take effect later this year with respect to subsidized student loans.

With such significant differences, it is not expected that the House and Senate will reconcile their budgets anytime soon. The vast gulf in spending approaches between the two bodies may also stall the appropriations process for FY 2014. However, some are hopeful that the two different budget plans could help lead to some sort of larger bargain in the context of increasing the nation’s debt ceiling, which must happen in mid-May. At a minimum, it seems likely that the appropriations process will force the House somewhat closer to the Senate’s spending levels. As one senior House member is fond of saying, “a budget resolution is like a new year’s resolution. Every year you make one, and you break it a month later.”

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Last Updated: May 08, 2015