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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 Bob Moran, AASCU Jim Hermes, AACC Jennifer Poulakidas , APLU Brian Flahaven , CASE American Recovery and Reinvestment Act State Fiscal Stabilization Fund ($53.6) $5 billion to ED

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Federal Update on Higher Education IssuesHigher Education Government Relations ConferenceDecember 3, 2009

Bob Moran, AASCU

Jim Hermes, AACC

Jennifer Poulakidas, APLU

Brian Flahaven, CASE

american recovery and reinvestment act
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
obama budget
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)
student aid and fiscal responsibility act hr 3221
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)
senate bill
Senate Bill
  • Holding language close
  • Will be similar in structure/content to House bill
  • Timing
    • Dependent on healthcare measure
    • February timeframe
obama s american graduation initiative proposals
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.
american graduation initiative
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
american graduation initiative8
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)
h r 3221 sec 503 grants
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
h r 3221 sec 503
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
h r 3221 sec 504 state grants
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”
h r 3221 sec 504 grants
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
h r 3221 cc facilities sec 351
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
h r 3221 cc facilities funding
H.R. 3221 CC Facilities Funding
  • 3:1 Match Required
  • 50% of Campus Assistance Must be Used for Projects Meeting Green Standards
h r 3221 national activities
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

h r 3221 transfer requirements
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
aacc proposed changes to h r 3221
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
appropriations
Appropriations
  • ARRA
  • FY 2009
  • FY 2010
other science and research issues
Other Science and Research Issues
  • Political Environment
  • Re-COMPETES
  • Stem Cell News
case govt relations
CASE & Govt. Relations

Nonprofit

Sector

Higher

Education

Tax Issues - CASE

our issues
Our Issues
  • Itemized Deduction Cap
  • Estate Tax
  • IRA Charitable Rollover
  • Endowment Payout
itemized deduction cap
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
marginal tax rates prior to 2001
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
current marginal tax rates 2009
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
tax brackets in 2011
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
outlook for cap
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
estate tax
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
ira charitable rollover
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)
extenders outlook
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?
endowment payout
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