Federal Update on Higher Education Issues Higher Education Government Relations Conference December 3, 2009 - PowerPoint PPT Presentation

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Federal Update on Higher Education Issues Higher Education Government Relations Conference December 3, 2009 PowerPoint Presentation
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Federal Update on Higher Education Issues Higher Education Government Relations Conference December 3, 2009

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Federal Update on Higher Education Issues Higher Education Government Relations Conference December 3, 2009
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Federal Update on Higher Education Issues Higher Education Government Relations Conference December 3, 2009

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  1. Federal Update on Higher Education IssuesHigher Education Government Relations ConferenceDecember 3, 2009 Bob Moran, AASCU Jim Hermes, AACC Jennifer Poulakidas, APLU Brian Flahaven, CASE

  2. American Recovery and Reinvestment Act • State Fiscal Stabilization Fund ($53.6) • $5 billion to ED • Race to the Top • $48.6 out to states by formula • 2/3: dispersed late spring/early summer • 1/3: announcement issued and second applications pending

  3. OBAMA BUDGET • Eliminate FFEL – all loans provided through DL beginning July 1, 2010 • Full mandatory Pell funding • Access and Completion Fund ($2.5 B) • Perkins loan reform ($6 B)

  4. Student Aid and Fiscal Responsibility Act (HR 3221) • Eliminates FFEL – Loans will be originated through DL beginning July 1, 2010 ($87 B) • Provides mandatory funding for annual CPI+1% increase in Pell ($40 B) • Access and Completion Fund ($3 B) • Perkins Loan reform ($6 B) • American Graduation Initiative ($10 B)

  5. Senate Bill • Holding language close • Will be similar in structure/content to House bill • Timing • Dependent on healthcare measure • February timeframe

  6. Obama’s American Graduation Initiative Proposals • $12 Billion, 10-Year CC Investment • “Challenge Grants” to Increase Community College Degree and Credential Attainment • Broad Use of Funds Allowed: Workforce Partnerships, Dual Enrollment, Remedial Education, Counseling, etc.

  7. American Graduation Initiative • $2.5 Billion (Over 5 Years) State-Based Access and Completion Innovation Fund to Complement Challenge Grants • $2.5 Billion in CC Facilities Funding—3:1 Match Required • Facilities Funds to Pay Interest on Debt, Seed Capital Campaigns, or Create State Revolving Loan Fund

  8. American Graduation Initiative • Create “Online Skills Laboratory”—Grants to Fund Open Online Courses—$50 Million Annually • Courses To Be Made Available by at Least One Community College and Distributed Learning Network • (More on Proposal at www.whitehouse.gov)

  9. H.R. 3221, Sec. 503 Grants • Provides $630 Million Annually Over 4 Years for Competitive Grants to “Eligible Entities” • •Minimum Grant $750,000 • •1:1 Match, In‐Kind Permitted • •Joint ED/DOL Administration • •Grants to Support Innovative/Proven Effective Programs Leading to Degree, Certificate, or Industry‐Recognized Credential

  10. H.R. 3221, Sec. 503 • Colleges Must Establish Annual Quantifiable Benchmarks in 11 Areas • Grants can be Withdrawn After 3 Years if “Demonstrable Progress” Not Met • 3 Grant Priorities: Serving Nontraditional Students; Title III/V-eligible; Partnerships with Business, Labor, Philanthropy • Misguided Transfer Reporting Requirement

  11. H.R. 3221, Sec. 504 State Grants • Years 5 to 10 of AGI—Six-Year Grants to States to “Systematically Reform” Community College Systems • State Policies to be Derived from Federal Study of Sec. 503 Grants • Other State Eligibility Criteria: Articulation, Data Systems, Persistence Plan • $630 Million Annual Funding; 1:1 Match; “Supplement, Not Supplant”

  12. H.R. 3221, Sec. 504 Grants • State Must Meet Same Benchmarks as in Sec. 503 Grants; Annual Reporting • Grants Can Be Withdrawn After 3 Years if Demonstrable Progress Not Made • States Must Pass Through 90% of Funds to CCs

  13. H.R. 3221 CC Facilities (Sec. 351) • $2.5 Billion in FY 2011 (available until spent) • States Receive Funds on Basis of Relative CC Enrollments; Broad Latitude on Allocation to CCs • Funds to Reduce CC Financing Costs, Capitalize Revolving Fund, Provide Matching Funds for Capital Campaigns • New Construction, Modernization, Renovation

  14. H.R. 3221 CC Facilities Funding • 3:1 Match Required • 50% of Campus Assistance Must be Used for Projects Meeting Green Standards

  15. H.R. 3221 “National Activities” • $50 Million in Grants Over 10 Years to Develop Open, Online Courses for Training, High School, and College Courses • $50 Million Over 4 Years for (1) “Learn and Earn Research Center” to Develop Metrics to Measure CC Effectiveness (2) Fund Development of “Interoperable” State Data Systems

  16. H.R. 3221 Transfer Requirements • Sec. 503 Grantees Must Indicate in Schedules Each Course’s Transferability to 4‐Year • •Authorizes Secretary of Education to Develop National Transfer Platform • •Requires States Getting Sec. 504 Grants to Develop and Implement Public Institution Articulation

  17. AACC Proposed Changes to H.R. 3221 • Restructure Second Phase of Grants—Eliminate State “Systematic Reform” and Replace With Competition or Grant Extension • •Reduce 1:1 Match • •Overhaul Transfer Provisions • •Broaden Use of Facilities $ • •Expand Priority Language to Include Remedial Education and Persistence

  18. Appropriations • ARRA • FY 2009 • FY 2010

  19. Other Science and Research Issues • Political Environment • Re-COMPETES • Stem Cell News

  20. CASE & Govt. Relations Nonprofit Sector Higher Education Tax Issues - CASE

  21. Our Issues • Itemized Deduction Cap • Estate Tax • IRA Charitable Rollover • Endowment Payout

  22. Itemized Deduction Cap • Current Law • Taxpayers making over $200,000 (married couples $250,000) - itemized deductions at 33 percent or 35 percent rate • Proposal in Pres. Obama’s FY10 budget plan • Taxpayers making over $200,000 (married couples $250,000) - itemized deductions capped at 28 percent rate • Revenue raised to cover portion of health care reform. • Modified Proposal • Itemized deductions capped at 33 percent and 35 percent when income tax rates rise in 2011. • Resistance from charitable community and on Capitol Hill

  23. Marginal Tax Rates Prior to 2001 Taxable IncomeTax Bracket 0-26,250 15% 26,250-63,550 28% 63,550-132,600 31% 132,600-288,350 36% 288,350 and above 39.6% • EGTRRA 2001 (Bush tax cuts) • Itemized Deduction Rate = Tax Bracket

  24. Current Marginal Tax Rates (2009) Taxable IncomeTax Bracket 0-8,350 10% 8,350-33,950 15% 33,950-82,250 25% 82,250-171,550 28% 171,550-372,950 33% 372,950 and above 35% • Itemized Deduction Rate = Tax Bracket

  25. Tax Brackets in 2011 Taxable IncomeTax BracketDed. Rate 0-8,350 10% 10% 8,350-33,950 15% 15% 33,950-82,250 25% 25% 82,250-171,550 28% 28% 200,000 – xxx,xxx36% 28% or 33% xxx,xxx – xxx,xxx 39.6% 28% or 35% • 11.6% gap with 28% cap • 4.6% gap with 35% cap

  26. Outlook for Cap • CASE Opposes Itemized Deduction Cap • Senate & House Health Bills Do Not Include Cap • Senate Amendments, House-Senate Conference • Other Revenue Raisers Unpopular • House surtax • Senate excise tax on “cadillac” plans

  27. Estate Tax • Fully repeals in 2010, returns to pre-2001 level in 2011 • President Obama: Freeze at 2009 levels ($3.5 million; 45 percent rate) • House: Permanent Solution; Senate: Unknown • CASE Supports Freeze at 2009 levels

  28. IRA Charitable Rollover • Enacted in 2006 • taxpayers age 70 ½ or older • $100,000 per year • 2 years (2008, 2009) • Extended as part of “Bailout” Bill (H.R. 1424) • Public Good IRA Rollover Act of 2009 • H.R. 1250 (Pomeroy, Herger) • S. 864 (Dorgan, Snowe)

  29. Extenders Outlook • IRA Charitable Rollover an “extender” • tax provisions set to expire on Dec. 31, 2009 • other charitable incentives, R&D tax credit • House: Tax Extenders Act of 2009 • Pay-as-you-go • Retro in 2010?

  30. Endowment Payout • Sen. Grassley: Mandatory 5% payout for endowments with more than $500 million in assets. • Rep. Welch: Mandatory 5% payout, averaged over a 3 or 5 year period, for all endowments. • Economic Downturn • New Arguments • Action Unlikely in 2009 COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION

  31. For More Information 31