Pell Grant Funding Up in the Air

While the threatened showdown between Congress and President Bush over the College Cost Reduction Act never materialized, a different fiscal fight between the two branches of government is looming, this one over annual appropriations spending bills.

The Numbers Behind the Conflict

As outlined in a newly released issue brief by the New America Foundation, the latest education funding fight is spawned from the 12 annual appropriations bills that set the funding levels for about a third of the federal government for the upcoming fiscal year. Though Congress has yet to pass any of these bills for fiscal year 2008 (which began October 1), the Democratic Congress' proposed version calls for $23 billion more in spending than outlined by President Bush in his proposed budget for fiscal year 2008 (click here for more information on the federal budget process). The Labor, Health and Human Services, Education, and Related Agencies Appropriations Bill (Labor-HHS-ED), the largest domestic appropriations bill, accounts for much of the $23 billion over which Congress and the President disagree. The House-passed bill is $13 billion ($11 billion regular and $2 billion advance appropriation) over the President's request of $140.5 billion, and the bill reported by the relevant Senate subcommittee is $11 billion over ($9 billion regular and $2 billion advanced appropriation).

Here is where the fight arises: President Bush has threatened to veto any appropriations legislation that exceeds his requested spending levels.

There is a lot at stake in that veto threat, particularly for higher education funding. The Labor-HHS-ED bill establishes the maximum level of the Pell Grant for the 2008-2009 academic year and provides funding to support that maximum grant level. The Senate version of the legislation would provide enough funding ($14.5 billion) to maintain the current year maximum ($4,310 for the 2007-2008 academic year) while the House would provide funding ($16.1 billion) for a Pell Grant maximum of $4,700. The President called for funding ($13.0 billion) to support a Pell Grant maximum of $4,050 for the upcoming academic year. The President's request is not a decrease per se; it was meant to support the same Pell Grant maximum from the prior year . However, when the President established his budget request for fiscal year 2008, Congress had not yet enacted legislation establishing the maximum Pell Grant level for the 2007-2008 academic year.

So what Pell Grant funding level will prevail and be enacted into law? President Bush is thus far holding to his veto threat of the Labor-HHS-Education appropriations bill, but his Republican support in the House is wavering. Earlier this year, 147 Republicans in the House signed a letter announcing that they will vote against any appropriation bill that exceeded the Presidents budget request. The signatories are enough to block any attempt to override the President's veto. For 13 of these House Members, however, their bark was clearly worse than their bite, as they ultimately voted to pass the Labor-HHS bill in the House after signing the letter, even though the bill exceeded the President's funding level. These members were:

Michael Rogers (AL), Christopher Shays (CT), Richard Keller (FL), Vern Buchanan (FL), Dave Weldon (FL), Thomas Latham (IA), Judy Biggert (IL), Ray LaHood (IL), Wayne Gilchrest (MD), Charles Pickering (MS), Jon Porter (NV), Steven LaTourette (OH), and Phil English (PA)

Given the reluctance of some Republicans to follow up on their pledge, its possible that the bill could be passed with a veto-proof majority. If it does not, then the Labor-HHS bill, and its key Pell Grant funding, will make for an interesting showdown between the President and Congress.

Pell Grant Shell Game?

Pell Grant funding for fiscal year 2008 could get more complicated than reconciling differences between the levels provided in the President's request and the proposed House and Senate bills. For the first time, the Pell Grant program will receive a supplemental boost in funding from non-appropriations legislation (also called mandatory spending) in fiscal year 2008. The College Cost Reduction Act provides $2.0 billion in non-appropriation spending for Pell Grants in 2008. This would provide an extra $490 to a maximum $4,310 Pell Grant in 2008... but it might not.

When the appropriations subcommittee drafted their respective Labor-HHS-Education bills, the $2.0 billion in mandatory funding provided in the College Cost Reduction Act was not yet enacted into law. Now, however, the appropriations subcommittee knows there is an extra $2.0 billion available to support Pell Grants in 2008 that does not count against the spending limit on the Labor-HHS-ED appropriations bill. A crafty appropriations committee could provide enough funding for a maximum Pell Grant of, say $3,820 at a cost of about $12.5 billion, and rely on the $2.0 billion in mandatory money to provide a maximum Pell Grant of $4,310, the current year's level. This would free up $2.0 billion for the appropriations subcommittee to spend on other education programs, or any program within its jurisdiction, such as the National Institutes of Health. (And you thought the NFL salary cap was confusing.)

Only a watchful eye and pressure will prevent the Appropriations committee from undermining the contemplated size of mandatory increases in Pell Grant funding as provided in the College Cost Reduction Act.