A Summer Washington Update and Comment

Before you know it, Nov. 6 will be here with another important presidential election and critical races for control of both the House and the Senate. Between now and then, some effort is being made to complete several budget and education policy issues. This period of time always brings out the best in politics!!

There are not many days left on Congress’ working calendar to complete legislation and appropriations. The shortened calendar enables members of Congress to attend party conventions and campaign for their reelection, except for those who are retiring. Plan on an interesting lame-duck session beginning before Thanksgiving and ending prior to the holidays in December.

Several education and related items are on the “to do list” before the end of this session which include:
  • FY 2013 Budget and Sequestration
  • Doubling the Interest Rate on Student Loans
  • Funding for School-Based Health Centers
  • Reauthorization of the Elementary and Secondary Education Act (aka No Child Left Behind)
  • Reauthorization of Workforce Investment Act (WIA)
  • Reauthorization blueprint for Career and Technical Education
FY 2013 Budget and Sequestration
As has been the case for the last several years, Congress has had no success in completing and agreeing on a budget for an upcoming fiscal year in a timely fashion before it begins every Oct. 1. The House and Senate are not even close to coming to agreement for the "Labor H" budget, which includes the Departments of Labor, Health and Human Services, Education and related agencies such as the National Science Foundation. With such a protracted process, states and local school systems are having a difficult time figuring out the amount of federal dollars that will be coming to them. Since the two houses do not seem to be coming to closure, even in an election year, to resolve an FY 2013 budget, one can expect another continuing resolution based on funding from the previous fiscal year. Usually this means a reduction in funding.

As Congress tries to determine how much federal money various departments and programs will receive, the U.S. House of Representatives and the U.S. Senate have set discretionary spending limits that are approximately $19 billion apart. This is causing the delay in the appropriations process, especially for Labor H until after the November elections.

Also, the House adopted a congressional budget resolution (Ryan Budget) that capped discretionary spending in FY 2013 at $1.028 trillion while the Senate chose to stick to the $1.047 trillion amount set in last summer’s Budget Control Act, which raised the debt ceiling. The different spending priorities became clearer when the House allocated $8 billion more for defense spending than the Senate, and the Senate chose to provide $8 billion more in funding for labor, health and education programs than the House.

When House Appropriations Committee Chair Hal Rogers (Ky.) announced the funding allocations that the 12 appropriations subcommittees would have to work with — known as 302(b)’s, he stated the allocations “demonstrate how seriously this House takes its charge to rein in extraneous and unnecessary spending, encourage economic competitiveness and job growth, help strengthen the nation’s infrastructure and ensure a strong national security for the protection of all Americans.”

During the House Appropriations Committee’s consideration of Rogers’ allocations, Representative Norm Dicks (Wash.), ranking Democrat on the committee, expressed his opposition to the lower number adopted by the House.

Democrats and Republicans on the Senate Appropriations Committee chose to abide by the $1.047 trillion amount set in the Budget Control Act.

Under the House plan, the Labor, Health and Human Services and Education departments would receive a combined $150.002 billion in funding, while the Senate plan would fund these departments at $157.722 billion, a difference of $7.72 billion. Meanwhile, the House would fund the U.S. Department of Defense at $519.220 billion versus $511.161 billion in the Senate, a difference of $8.059 billion. The large differences in the subcommittee allocations will make it more difficult for the House and Senate to agree on FY 2013 appropriations bills for these agencies.

While the House and Senate were working on their respective plans, the Obama administration urged both chambers to honor the spending levels set by the Budget Control Act (BCA).

Compounding the lack of an agreed-upon budget is something called sequestration. In the Budget Control Act, the Congress agreed that if they could not complete a budget, then sequestration is instituted which means budget cuts of 7 to 9 percent across the board beginning January 2013. This leaves many federal funding recipients in limbo as to their budgets for the upcoming fiscal year. States and local districts are in a quandary as to how to budget for half of the school year. The only real solution is for Congress to address the budget and finalize it prior to requirement to initiate sequestration.

Doubling the Interest Rate on Student Loans

This has become a very political issue over the last several months. At issue is whether the interest rate on subsidized Stafford student loans would double from 3.4 percent to 6.8 percent beginning July 1, 2012, for loans issued for the coming 2012-2013 year. The current amount of outstanding student loan debt is estimated to be $1 trillion.

Republicans and Democrats have agreed upon an extension for one year in the House, and in principle. However, on Tuesday, May 8, the Senate failed to advance the bill to keep federally subsidized college student loan rates lower for another year, prolonging debate on an issue that has emerged as an election-year flashpoint. On a party-line vote, senators voted 52 to 45, short of the 60 votes necessary to proceed to debate on the bill and not have a filibuster. It should be noted that Mitt Romney agreed with President Obama that the rate should remain the same. The problem between the two parties is how to pay for keeping the interest rate at 3.4 per cent.

Roughly 7 million borrowers could see rates on student loans jump from 3.4 to 6.8 percent when the current rates expire July 1. Democrats and Republicans agree that the loan rates should remain low, but — as with most noncontroversial issues these days — lawmakers disagree on how to pay for the plan.

The issue is of growing concern among younger voters and their parents.

House Republicans pay for the lower interest rate by cutting almost $6 billion from a preventative health-care fund. Senate Republicans want to do the same. Senate Democrats oppose this approach and want to pay for it by ending tax breaks (some call it a tax loophole) for firms with three or fewer shareholders — commonly referred to as “S-corporations.” At this point there is no compromise at hand, but as we get closer to July 1, an agreement might be reached.

There are some who have called the debate a "sideshow." This includes an editorial in USA Today on May 4. The editorial echoes analyses published by Jason Delisle and the New America Foundation, as well as commentary featured in an April 29 Washington Post editorial. It also includes figures from an analysis New America published last month on what the rate increase means for students.

Another article was just published entitled, “Closing Tax Loophole to Pay for Student Loan Bill Is Simply Common Sense — Senate's Tax Code Fix Is a Way to Keep Student Loans Affordable,” and can be accessed here. As one can see there are a variety of opinions and positions on this issue and its solution.

According to the U.S. Department of Education, if Congress does not step in to keep rates low, more than 7.4 million students will be affected. Based on the average student loan amount, the increase will add over $1,000 in costs over the life of that loan. The White House fact sheet outlines the issue.

Part of this is a policy wonk debate and the other is a significant philosophical political division over how to pay for keeping the interest low. Fundamentally the policy questions include:
  • How much debt should we be saddling college students with from undergraduate and graduate school?
  • Will an interest hike make it even more difficult to repay the loans?
  • Would the increase in the interest rate significantly increase the cost of a monthly payment?
  • What is the best way to pay for this policy or is the policy necessary?
As was stated earlier, it comes down to how one views the issue and the problem, and how the public sees both the problem and the solution in an election year.
Funding for School-Based Health Centers
Health and Human Services Secretary Kathleen Sebelius announced in May that she is making available $75 million for school-based health centers. Check into how one can apply for these dollars.

Reauthorization of the Elementary and Secondary Education Act (aka No Child Left Behind/NCLB)
There are two versions for reauthorization. Each house has its own bill and they are not very similar. Both the Senate and Housing authorizing committees have voted a bill out of committee but nothing has been scheduled for the floor in either body.

No one believes that either bill will get a vote in its respective house before the election and it is unlikely to be addressed during a lame duck session. So we will move into year six of an extension of NCLB beyond is authorized life. The results of the November election, both for president and the House and Senate, may determine how easy or difficult the path will be to reauthorize ESEA in 2013.

Workforce Investment Act Reauthorization
House Republicans and Democrats have introduced competing bills to reform a range of federal workforce programs, including the Workforce Investment Act (WIA). This House action is the first significant push to reauthorize WIA since the Senate’s effort to craft a bipartisan bill during 2011.

The bills differ in a range of ways. The two bills are H.R. 4297 and H.R. 4227. Many of the advocacy groups do not agree with the House Republican version of the bill because it short changes workforce development. This reauthorization will have to wait until the 113th Congress for the issues to be resolved.

HR. 4297 would consolidate 27 existing federal workforce programs into a single $6-billion Workforce Investment Fund allocated to states and localities by a formula, and allows for the consolidation from a list of other mandatory and discretionary programs at the governor’s discretion. This consolidation does not include programs from several other agencies, including Health and Human Services, Housing and Urban Development, Commerce, Transportation and Energy.

Also, the bill eliminates prior provisions relating to automatic designation of local workforce areas. One critical change in the bill is the elimination of separate funding for state and local youth activities, including funding for national programs. It gives governors broad latitude to reserve up to 18 percent of a state’s total allotment to carry out youth activities via Youth Challenge Grants, but it could mean zero dollars for youth employment.

As the economic recovery continues, federal workforce programs are helping millions of the unemployed, low-income adults and disadvantaged youth find jobs, prepare for work and build skills needed for emerging employment opportunities. Any reauthorization bill should focus on raising the skills of the American workforce and making these programs work better for low-income, low-skilled individuals and employers.

Career and Technical Education (Perkins) Act Reauthorization Proposal

On April 19, U.S. Secretary of Education Arne Duncan released the Obama administration’s blueprint to transform career and technical education (CTE), which sketches out its proposal to reauthorize the Carl D. Perkins Career and Technical Education (Perkins) Act of 2006. No legislation will be enacted until the 113th Congress, which will most likely hold a series of hearings on the issues in the blueprint.

According to the blueprint, the 2006 Perkins Act reauthorization “took modest yet important steps” to improve the quality of CTE programs, but it “did not go far enough to address the needs of youths and adults preparing to participate in the knowledge-based, global marketplace of the 21st Century.”

In his remarks describing the administration’s blueprint, Duncan stressed the importance of lifelong learning in today’s knowledge-based, globally competitive economy. He said the traditional goal of CTE — students earning a diploma and getting a job after high school — has to change. Instead, CTE’s goal should be that students “earn an industry certification and postsecondary certificate or degree, and land a job that leads to a successful career,” Duncan said.

The administration’s blueprint to revamp CTE is shaped by four principles.
  1. Effective alignment between CTE and labor market needs to equip students with 21st-century skills and prepare them for in-demand occupations in high-growth industry sectors.
  2. Strong collaboration among secondary and postsecondary institutions, employers and industry partners to improve the quality of CTE programs. 

  3. Meaningful accountability for improving academic outcomes and building technical and employability skills in CTE programs, based upon common definitions and clear metrics for performance. 

  4. Increased emphasis on innovation supported by systemic reform of state policies and practices to support CTE implementation of effective practices at the local level.
The blueprint acknowledges that CTE programs would be designed differently across the country; the administration’s blueprint believes successful programs should share certain characteristics. For example, CTE programs must offer a streamlined and structured sequence of courses that span secondary and postsecondary education, lead to an industry certification or license and a postsecondary certificate or degree, and enable graduates to gain employment in a high-growth industry upon program completion. Secondary school teachers and college faculty would work together to teach integrated academic, career and technical content that enables students to better grasp the material and demonstrates connections to real-life career scenarios and choices.

Additionally, school districts, postsecondary institutions and employers would collaborate to offer students opportunities to participate in work-based learning and to accelerate completion of their studies through dual or concurrent credits. Technology would be used to increase access to high-quality learning opportunities, particularly for students in rural or remote areas.

The blueprint for transforming career and technical education can be downloaded here.

Conclusion and Comment
The key to resolving each of the budget and policy issues described above is breaking the ongoing partisan deadlock in Congress. This can be accomplished through compromise, a meeting of the minds, changes in leadership in each house, by who is elected president or a change of which party holds a majority in either or both houses. It is not resolved, as some might think, by “replacing the rascals in Congress.” None of these are simple, and November may provide a resolution, but there is no guarantee. One would hope there could be a meeting of the minds to move the country forward in a constructive manner rather than a continued stalemate. There are some dire implications for our nation if the stalemate and nasty partisanship continues.

Frederick (Fritz) S. Edelstein, Ph.D., is a principal in Public Private Action, LLC. Fritz works with clients on strategic government and constituent relations, advocacy research and policy analysis, strategic planning and resource development, and advocacy, outreach, and public engagement. He writes and disseminates “Fritzwire,” the nation’s leading Internet newsletter on education that provides timely education and related information, five days a week. His career includes time working at the U.S. Conference of Mayors, U.S. Department of Education, and the National Alliance of Business. Fritz earned is B.A. from Washington University, and a M.Ed. and Ph.D. from the University of Nebraska, Lincoln.