Policy Update: January 25, 2013

Following Monday's Presidential Inauguration, the 113th Congress began work in earnest this week as did the State Legislature. Below is a brief update.

Debt Limit Extension

On January 23rd, the House of Representatives passed legislation to raise the federal debt ceiling until May 18th. The Senate is expected to follow suit today and President Obama has signaled he will sign the bill. The legislation requires both houses of Congress to adopt a budget resolution by April 15th. Recently, the federal budget process has broken down, with the Senate failing to pass a budget in over four years. If both chambers can move their respective budget blueprints this year, it may help advance negotiations on long-term tax and entitlement reform. The budget also sets the funding limits for the Appropriations bills that fund the various federal agencies.

Sequestration & Appropriations

Passage of a debt limit extension clears the way for Congress to focus work on dealing with Sequestration (scheduled to take effect on March 1st) and finalizing pending FY13 federal appropriations (the current Continuing Resolution runs out on March 27th).

The latest thinking is that Sequestration, at least for FY13, may take effect as scheduled. As reported previously, this would mean about an 8.4% reduction in funding for agency budgets on which Northeastern relies. This would result in layoffs at federal agencies, disrupt current research awards, and affect planned solicitations.

While some Senators have expressed particular concern about cuts to the Department of Defense, given House demands for spending reductions, it appears Congress may not act to undo the Sequester (partially or totally) until after a debate on a long term budget and preparation of the FY14 appropriations bills.

However, it is possible this could change, and the sequester's implementation could again be delayed after March 1st. Either way, it appears likely that a final continuing resolution will be passed in March that will set the agency funding levels for the remainder of FY13.

We continue to urge Members of Congress, individually and in conjunction with the Science Coalition and other partner advocacy groups, to prevent the Sequester from taking effect.

State Budget

Also on the 23rd, Governor Patrick released his proposed FY14 state budget, which contained good news for state higher education programs.

In particular, the Governor proposed a $112 million increase to the MassGrant program. Similar to the federal Pell Grant, the MassGrant provides student to Massachusetts students with demonstrated financial need. Such an increase would provide a 300% increase for qualifying Northeastern students and restore the purchasing power of the MasssGrant, which has declined in recent years as state appropriations decreased and the number of eligible students skyrocketed with the downturn in the economy. Importantly, increasing the MassGrant was one of the recommendations of a Special Commission on State College Scholarships led by former Education Secretary Paul Reville, on which I represented Northeastern during the last year.

The proposed budget would also include a new Completion Incentive Fund, which would provide grants of up to $1,000 to low-income students who persist and complete their degrees within 4 years.

The Governor's proposed investment in education and transportation would be financed by a revenue increase of nearly $2 billion annually. The revenue proposal includes hikes in the personal income tax, gas tax, and increases in tolls and MBTA fares (while eliminating some personal tax exemptions and deductions, and decreasing the sales tax).

While many on Beacon Hill have expressed support for the proposed investments, there will be a lengthy debate over this budget before the Legislature enacts their own version.

We will continue to advocate for research and student aid funding at the federal and state level. In addition, we are finalizing our state and federal policy agenda for the year and look forward to working with you on the University's priorities. As more information on the federal budget and FY14 appropriations becomes clear, we will provide additional updates.