December, 2017

Federal Level: High Stakes for Higher Education

Proposed Reauthorization of Higher Education Act

On December 1, the House Workforce and Education Committee released a 542-page bill to reauthorize the Higher Education Act (HEA). The most recent version of HEA expired in 2013. The bill, called the Promoting Real Opportunity, Success and Prosperity Through Education Reform (PROSPER) Act, would make significant changes, including moving to a “one grant, one loan, one work-study” system, modifying the financial aid disbursement process, changing the way Title IX investigations are conducted, and establishing a new program incentivizing apprenticeship programs.  While the proposal does include some reforms that have long been advocated, the bill also eliminates entire programs, remove certain benefits for students and borrowers, and regresses on improvements to higher education access. While no date has been set, the bill is expected to be voted out of committee this month.

Below are key points on where the reauthorization of the Higher Education Act would impact your college or your students.

Pell Grants  

The proposal would allow students in a short-term program to qualify for grant aid. The bill would create a “Super Pell” award option of $300 for students taking 15 units or more per semester that are on track to complete 30 or more credit hours per year. The bill would also cut-off Pell eligibility after three disbursement periods with no credits earned.  Colleges would be required to provide annual financial aid counseling to students.

Further, the bill would mandate that aid be disbursed on a weekly or monthly basis, rather than at the beginning of the semester. Finally, under the bill, a college would be responsible for returning all unearned aid, thus introducing a concept of risk-sharing where the institution takes on the full risk of student withdrawals through the first 25 percent of their payment period.

Loan Programs

The proposal would consolidate all existing loan programs into one and would eliminate the in-school interest subsidies for students who demonstrate financial need. The bill would eliminate several repayment benefits, including loan forgiveness through income-driven repayment plans and through the Public Service Loan Forgiveness (PSLF) program. Borrowers enrolled in the income-driven repayment plan would see monthly payments set at 15 percent of discretionary income.

The institutional cohort default sanction of 30% would be replaced with program-level cohort default rates. The new sanction rate would start at a cohort default rate of 45% and protections for institutions with small numbers of borrowers would continue. Colleges would also be permitted to limit the amount students borrow based on whether the debt level would be significant compared to expected earnings and other criteria.

Work-study

The bill changes the formula under which colleges are allocated funds for work-study and includes more flexibility for students to utilize these funds for jobs in the private sector.  Currently, the formula favors institutions that are older and more affluent – the new formula would distribute funds based on the number of Pell Grant recipients at the institutions.

Apprenticeship Funding

Under the bills, a new apprenticeships program at community colleges would be created. Proposed at a $183 million funding level, an apprenticeship would be awarded on a competitive basis and focus on private-public partnerships between businesses and community colleges. The funds could go to subsidizing the wages of the students in the programs and community colleges could utilize resources provided under the program to purchase equipment. 

House and Senate Pass Large Tax Cuts

Both the U.S. Senate and House have passed plans that substantially reduce taxes for wealthy individuals, corporations and those who derive most of their income from the sale of stocks and bonds. While the process has been accelerated and absent meaningful hearings or public scrutiny, both bills would reduce resources available to our institutions, our students, and our employees, while increasing the cost of pursuing higher education. League staff urges you to contact your member of Congress to tell them about the impact of the tax cuts on your institution and your students.  You can find talking points created by the League by clicking here and look up your member of Congress by clicking here.

Each plan will likely add roughly $1.5 trillion to the deficit over 10 years and are paid for in part by eliminating various tax deductions or credits.  Both plans propose to eliminate deductions for state and local taxes, which will place a significant restraint on the ability of the state or local communities to invest in their institutions. It should be noted that even with this deduction, the state of California pays more to the federal government in taxes than it receives via spending.

The House plan goes much further than the Senate plan in eliminating tax credits or dedications that make attending college affordable.  The Association of American Community Colleges estimates that if it became law, the cost of attending college would increase by $65 billion nationwide.  Specifically, the house plan would:

  • Eliminate deductions for tuition and student loan interest.
  • Eliminate the Lifetime Learning Credit
  • Limit the American Opportunity Tax Credit to only students who graduate in five years.
  • Eliminate an employee’s ability exclude up to $5,250 for tuition assistance from employers from taxable income.
  • Count waived tuition for post-graduate students as taxable income.

With the passage of both plans, the bills will head to a conference committee made up of members of both the Senate and the House.  There, the committee is expected to resolve the differences between the bills and send a reconciled version to be voted on by both the Senate and house.  Passage of the bill is expected and President Trump could sign legislation before the end of the year.  The League will continue to work to advocate for the interests of our colleges and students and keep you informed of any new developments.

Preparing for the 2018-19 Budget Session

On November 15, the nonpartisan Legislative Analyst's Office (LAO) released the annual publication, California’s Fiscal Outlook, including the revenue summaries for the first quarter of the fiscal year as well as a five-year fiscal forecast.  The release of the report serves as a prelude to the annual budget deliberation process that begins every January with the release of the Governor’s Budget Proposal.

Economic Conditions

The LAO establishes the near-term budget outlook using Moody’s Analytics. The projections indicate a slower job growth through 2019, while wage growth will continue to climb due to: 1) implementation of minimum wage increases ($11 per hour in 2018, $12 per hour in 2019, and $15 per hour by 2022), and 2) employers seeking to recruit and retain employees. While the budget outlook is generally positive, the 2018-19 budget faces significant uncertainty due to: (1) revenue changes, (2) decisions by the federal government or the Governor, and (3) other notable costs such as California’s destructive wildfires and pending state litigation. California’s state budget depends on three major revenue sources: personal income tax, corporate tax, and sales and use tax. Personal income tax has increased significantly because of voter-approved initiatives, Proposition 30 (2012) and Proposition 55 (2016), which increased the tax rate on high-income earners and as a result of revenues generated from income tax on stock market capital gains. Should the federal government enact tax changes in this area, revenues generated from capital gains will fluctuate based on higher or lower stock prices.

Proposition 98 and Community Colleges

The LAO estimates that the 2017-18 Proposition 98 Minimum Guarantee will increase by $651 million from the enacted 2017-18 Budget Act and assumes that the minimum guarantee will grow from $75.2 billion in 2017-18 to $77.7 billion in 2018-19. Of the $77.7 billion projected for the 2018-19 year, the LAO estimates that $5.3 billion will be available for any combination of one-time or ongoing purposes. Funds have been freed up due to the allocation of $1 billion for one-time funding in 2017-18 and the upcoming expiration of Proposition 39 funding requirements in 2018-19, making $423 million available. The LAO notes significant increases in pension contributions and suggests the Legislature consider using some uncommitted funds to address these growing liabilities.  In 2018-19, costs are expected to increase by about $1.3 billion as result of higher rates.

 

2017-18

Prop 98 Allocated in Budget Act

$74.5 billion

2018-19

LAO Estimated Prop 98 Guarantee

$77.7 billion

Estimated New Prop 98 Funds

$5.3 billion

LAO Estimated CCC 2018-19 Split

$579 million

     

In past years, the LAO revenue estimates have generally been higher than those used by the Governor and Department of Finance in crafting the Governor’s January proposal or those adopted in the Annual Budget Act. The Fiscal Outlook serves as a preview of the upcoming budget discussions.

The League will continue to advocate for flexible resources that enable colleges to meet local needs. There is a critical nexus between general operating funds and educational quality. General operating resources fund innovation on campuses and base funding is essential for the fiscal stability of our colleges. In 2018-19, we will make the case for an investment in general resources that enable high functioning campuses and protect quality public higher education opportunities for all Californians.

A copy of the League’s 2017 Recess Talking Points are available here.  For questions or consideration for the 2018-19 budget session, please contact Lizette Navarette, Vice President at lizette@ccleague.org.

Federal Grant Opportunities

The League in partnership with Downs Government Affairs present the following federal grant opportunities for districts and colleges:

Campus Cyberinfrastructure
Agency: National Science Foundation
Maximum Grant Award: $3,500,000
Closing Date for Applications: January 30, 2018

Program Description: The Campus Cyberinfrastructure (CC*) program invests in coordinated campus-level networking improvements, innovation, integration, and engineering for science applications and distributed research projects. Learning and workforce development (LWD) in cyberinfrastructure is explicitly addressed in the program. Science-driven requirements are the primary motivation for any proposed activity. CC* awards will be supported in four program areas: (1) Data Driven Networking Infrastructure for the Campus and Researcher awards will be supported at up to $500,000 total for up to 2 years; (2) Network Design and Implementation for Small Institutions awards will be supported at up to $750,000 total for up to 2 years; (3) Network Integration and Applied Innovation awards will be supported at up to $1,000,000 total for up to 2 years; and (4) Network Performance Engineering and Outreach awards will be supported at up to $3,500,000 total for up to 4 years.

Link to grants.gov: https://www.grants.gov/web/grants/view-opportunity.html?oppId=298221

Partnerships for Innovation
Agency: National Science Foundation
Maximum Grant Award: $750,000
Closing Date for Applications: February 1, 2018

Program Description: The NSF Partnerships for Innovation (PFI) Program offers researchers the opportunity to transform new knowledge into societal benefits through translational research and technology development efforts which catalyze partnerships to accelerate innovations that address significant societal needs. PFI has six broad goals: (1) identifying and supporting NSF-sponsored research and technologies that have the potential for accelerated commercialization; (2) supporting prior or current NSF-sponsored researchers, institutions of higher education, and non-profit organizations that partner with an institution of higher education to undertake proof-of-concept work, including the development of technology prototypes that are derived from NSF-funded research and have potential market value; (3) promoting sustainable partnerships between NSF-funded institutions, industry, and other organizations within academia and the private sector with the purpose of accelerating the transfer of technology; (4) developing multi-disciplinary innovation ecosystems which involve and are responsive to the specific needs of academia and industry; (5) catalyzing professional development activities, mentoring, and best practices in entrepreneurship and technology translation for faculty, students and researchers; and (6) expanding the participation of women and individuals from underrepresented groups in innovation, technology translation, and entrepreneurship. This solicitation offers two broad tracks for proposals in pursuit of the six aforementioned goals. The Technology Translation (PFI-TT) track offers an NSF-funded researcher the opportunity to advance his or her prior NSF-funded research results towards developing technological innovations with promising commercial potential and societal impact. The Research Partnerships (PFI-RP) track provides an opportunity to support technology development activities through a multi-organization collaboration. NSF recognizes that interdisciplinary collaboration is often needed to achieve successful technology development.

Link to grants.gov: https://www.grants.gov/web/grants/view-opportunity.html?oppId=298272

Leading Engineering for America's Prosperity, Health, and Infrastructure (LEAP HI)
Agency: National Science Foundation
Maximum Grant Award: $7,500,000
Closing Date for Applications: February 20, 2018

Program Description: The LEAP HI program challenges the engineering research community to take a leadership role in addressing demanding, urgent, and consequential challenges for advancing prosperity, health and infrastructure. LEAP HI proposals confront engineering problems that are too complex to yield to the efforts of a single investigator – problems that require sustained and coordinated effort from interdisciplinary research teams, with goals that are not achievable through a series of smaller, short-term projects. LEAP HI projects perform fundamental research that may lead to disruptive technologies and methods, lay the foundation for new and strengthened industries, enable notable improvements in quality of life, or reimagine and revitalize the built environment. LEAP HI supports fundamental research projects involving collaborating investigators, of duration up to five years, with total budget between $1 million and $2 million. LEAP HI proposals must articulate a fundamental research problem with compelling intellectual challenge and significant societal impact, particularly on economic competitiveness, quality of life, public health, or essential infrastructure. One or more CMMI core topics must lie at the heart of the proposal, and integration of disciplinary expertise not typically engaged in CMMI-funded projects is encouraged. LEAP HI proposals must highlight engineering research in a leadership role. LEAP HI proposals must demonstrate the need for a sustained research effort by an integrated, interdisciplinary team, and should include a research integration plan and timeline for research activities, with convincing mechanisms for frequent and effective communication.

Link to grants.gov: https://www.grants.gov/web/grants/view-opportunity.html?oppId=297735