Thursday, August 5, 2010

Higher education maintenance of effort provision included in bill

Earlier today, the U.S. Senate passed H.R. 1586, the Federal Aviation Administration reauthorization legislation, by a vote of 61-39. The bill includes an amendment by Sen. Patty Murray, D-Washington, and Sen. Tom Harkin, D-Iowa, that includes $26 billion for education jobs and Medicaid assistance to states. The bill now heads back to the House, where it is expected to pass Tuesday.

The House is currently in recess for the month of August, having adjourned July 30; however, anticipating this Senate action, House Speaker Nancy Pelosi has taken the highly unusual step of recalling the House for a vote on the bill early next week.

The Murray-Harkin amendment will provide $26 billion to help states deal with their economic conditions. $10 billion is for the education jobs fund, which states can use to retain and hire K-12 teachers and other educational personnel. While the jobs fund does not extend directly to higher education, the maintenance of effort provision that states must comply with in order to receive these funds does set minimum spending levels for higher education at the FY 2009 level, or the overall percentage of the budget in FY 2010 for both higher education and K-12. For those states where state revenues in FY 2009 were below FY 2006, states must fund K-12 and higher education at either the funding level or overall percentage of the budget in FY 2006. The education jobs funding has been included in multiple spending bills, but was struck from the supplemental spending bill passed earlier by the House and Senate.

The remaining $16.1 billion is allocated to the Federal Medical Assistance Percentage (FMAP). FMAP funding for states has an enormous impact on budgets. The majority of states, including Minnesota, passed budgets for the upcoming year factoring FMAP funds into their budgets. States are counting on this funding to close budget shortfalls projected for the current fiscal year (FY2011).

To pay for the new spending, the bill would cut off an expansion of food-stamp benefits in March 2014, which were enacted in last year's stimulus package, as well as end tax breaks for some multinational corporations that are based in the United States but have operations and pay taxes abroad.

The Senate is scheduled to begin their August recess Aug. 9, and will return to Washington Monday, Sept. 13.

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