Higher Education Fares Well in the 105th Congress

by Edward Abrahams and Micheline Murphy-McManus

The 105th Congress adjourned on October 21 after bringing a contentious appropriations process to a close. Congress passed only five of the thirteen Fiscal Year 1999 (FY1999) appropriations bills as free standing legislation, and the eight remaining appropriations bills were included in a massive omnibus bill (HR 4328). These appropriations measures, summarized below, provide funds to the agencies that support critical university-based programs and research. In addition to these important spending bills, Congress also passed the reauthorization of the Higher Education Act, an extensive piece of legislation addressing a range of issues that impact Penn's missions of teaching, research, and service. In general, federal programs upon which the University relies fared well in an environment that was particularly supportive of university research.

Research Budgets

Congress increased the research budgets that support critical innovation at our nation's universities, including the University of Pennsylvania. Last year Penn's faculty received $278 million to fund federally-sponsored research projects, and this year it is expected that the University's federal funding for research will increase to over $320 million, an increase of 15 percent. Last year Penn ranked tenth in the nation in federally-funded research and third in total National Institutes of Health (NIH) funding.

Federal investment in research enjoys bi-partisan support. Such funding is viewed widely as a wise investment in better health, economic development, and international competitiveness. Total federal support for research and development (R&D) for Fiscal Year (FY) 1999 is expected to exceed $80 billion for the first time in history, for a total of $80.2 billion, 5.3 percent more than FY 1998. Of that amount, a relatively small portion, $17.5 billion, supports university-based basic research.

In keeping with the current favorable climate for research, the 105th Congress gave a big boost to agency research budgets, especially the NIH and the National Science Foundation (NSF), the two largest sources of funds for Penn faculty. Every major R&D agency, except NASA and the Department of Commerce, received increases well ahead of the expected 2.0 percent inflation rate. This is good news indeed especially in the context of generally flat federal budgets for research since 1986. Sizable increases at NIH and NSF in FY 1999's budget suggest that Washington regards basic research as a measure of "our strength as a nation," as President Rodin stated last spring in testimony before the Senate Subcommittee on Science, Technology, and Space.

The FY 1999 individual agency boosts included:
National Institutes of Health (NIH): The NIH research budgets received the largest dollar increase in history, a nearly $2 billion or 14.1 percent increase in its R&D budget to $14.9 billion. The NIH overall was allocated $15.6 billion for FY 1999, putting the NIH budget on a course toward the bipartisan Congressional goal of doubling NIH's budget in five years. The Department of Health and Human Services, which funds NIH, awarded approximately $208 million to University of Pennsylvania research projects in FY 1997.
National Science Foundation (NSF): NSF received $2.8 billion for its R&D budget in FY 1999, $216 million or 8.4 percent more than FY 1998. The NSF awarded Penn research projects nearly $22.6 million for FY 1997.
Department of Energy (DOE): DOE received $7 billion for its R&D programs, an increase of $714 million or 11.4 percent. The DOE budget contains large increases for numerous programs across DOE's three missions in energy, science, and defense. DOE awarded approximately $9.4 million to University of Pennsylvania research projects in FY 1997.
Department of Defense (DOD): The DOD has an R&D budget of $38.5 billion in FY 1999, a $1.1 billion or 2.9 percent increase over last year. The DOD awarded approximately $10.7 million to University of Pennsylvania research projects in FY 1997.
Department of Education: The Department of Education has an R&D budget of $231 million in FY '99, a 10.7 percent increase over last year. The Department awarded approximately $16.2 million to Penn research projects for FY 1997.
National Endowment for the Humanities (NEH): The NEH was level-funded at $110.7 million for FY 1999.

Reauthorization of the Higher Education Act

The Higher Education Act (HEA), first enacted in 1965, authorizes most federal student-aid programs and contains numerous regulations that apply to colleges and universities. The reauthorization of the law, which is required every five years, becomes an occasion for Congress to examine its policies regarding higher education generally. This year was no exception. The Higher Education Act Amendments of 1998, signed into law by President Clinton on October 7, contain many important provisions impacting colleges and universities. The following are some of the changes important to the higher education community:

  • Student Financial Aid. By providing grants and loans to needy students and families, HEA strives to make higher education accessible to everyone, regardless of their ability to pay tuition. A recent report issued by the Education Resources Institute and the Institute for Higher Education Policy indicates that, with the exception of relatively small increases in the Pell program in the past two years, the real value of financial aid grants has declined substantially over the past twenty years. Because the real value of federal aid dollars has declined, a greater commitment from the federal government for student financial aid is necessary to make college accessible to all students.
Reauthorization of HEA this year included favorable treatment of student aid programs. The Act authorizes an increase in the maximum Pell grant to $4,500 for 1999-2000, a 4.2 percent increase, and provides $619 million in funding (an 0.8 percent increase) for the campus-based student aid programs, which include the Supplemental Educational Opportunity Grant (SEOG), College Work-Study, and the Perkins Loan programs. These programs are a particularly effective means of assisting students from low and moderate income families to attend Penn and many other colleges and universities in the Commonwealth. In addition, the legislation also lowers the interest rate that borrowers pay on their student loans to 6.8 percent from 7.6 percent while students are in school, and to 7.46 percent from 8.25 percent once they are in repayment. Projections show that this interest rate reduction could save a student with a debt of $20,000 about $1,000 over the life of the loan. Last year Penn students received about $10 million in federal grants (including Pell, SEOG, and federal work-study), and borrowed another $100 million in federal loans.
  • Graduate Education. The Graduate Assistance in the Areas of National Need (GAANN) Program and the Jacob K. Javits Fellowship Program are the only federally-funded graduate scholarships through the Department of Education. By identifying the best students in the country in the humanities, arts, and social sciences, the Javits Program remains one of the few free-standing sources of support for graduate education. The GAANN Program supports students in areas of national need such as the sciences, engineering, foreign languages and area studies. The HEA amendments maintain the current levels of funding for these important programs. In addition, the law establishes the Thurgood Marshall Legal Education Opportunity Program to provide support to minorities attending law school.
  • Voluntary Early Retirement Incentives. The HEA amends the Age Discrimination in Employment Act (ADEA) to clarify that tenured faculty, whose principal retirement plan is a defined contribution plan, are permitted to have the same kind of age-based early retirement incentives already available to other employee groups.
  • New Crime Reporting Requirements. The HEA extends the list of crimes that colleges and universities must report to include manslaughter and arson, and expands the category of "hate" crimes. In addition, among other requirements, the campus crime provisions define "campus," for crime reporting purposes to include: buildings or property owned or controlled by an institution within the same reasonably contiguous geographic area; property within the same reasonably contiguous geographic area but controlled by another person; and all public property that is adjacent to a facility owned or controlled by the institution.
  • Other Reporting Requirements. The Higher Education Act requires universities to provide data annually to the Department of Education regarding tuition, fees, and financial assistance as well as expenditures and revenues from and for intercollegiate athletics. The Act also permits, but does not require, disclosure of information regarding violations of alcohol or drug-related laws or institutional policies as well as the names of students who violate campus codes of conduct regarding crimes of violence and serious offenses.

Dr. Abrahams is the Assistant Vice President for Federal Relations at the University, and Ms. Murphy-McManus is a Policy Analyst for Federal Relations.

Almanac, Vol. 45, No. 15, December 15, 1998