Members of Congress returned to Washington, DC after the Memorial Day recess. They will continue to discuss a host of issues including a fix to keep student loan interest rates from doubling on July 1, FY14 appropriations, and immigration reform.

FY14 Appropriations

The path to enacting FY14 appropriations measures is paved with legislative friction as Congress is showing no signs of undoing the sequester. At this point, there are three approaches to the FY 14 budget — House, Senate, and Administration — all of which assume no sequestration, but include different ways to account for the cuts in later years. House Republicans would meet the overall cap but ignore the mandated split between security and non-security spending. Senate Democrats would use a higher overall level of expenditures. The administration’s budget request also ignores the overall cap. The parties have until the end of the fiscal year, September 30, to reach an agreement or take other steps such as passage of a continuing resolution.

The difficulties of the current budget process and sequestration were on full display before members of Congress returned home for the Memorial Day district/state work period.  Boxed in by an extremely low, sequester-driven funding allocation for FY14 and a decision to protect defense- and security-related bills from the impact of the sequester, the House Appropriations Committee on May 21 approved a plan to distribute funding among its 12 subcommittees that would increase appropriations for defense- and security-related bills but make large cuts in several major domestic bills. 

Under the plan, for example, funding for the Labor-Health and Human Services-Education appropriations bill would be cut by $27.8 billion, or 18.6 percent, from the already deep sequester cuts taken in FY13.  Both Energy and Water and Interior-Related Agencies appropriations bills would see cuts of nearly $4 billion, for cuts of 11 percent and 14 percent, respectively.  Commerce-Justice-Science, where the National Science Foundation and NASA are funded, would fare less badly, with a cut of $200 million, or 0.4 percent. 

The apparent strategy is to try to move appropriations bills with strong bipartisan support in the House—Defense, Homeland Security, Military Construction-Veterans Affairs, and Agriculture—at these spending levels, with the hope that an agreement could be struck later this year that would raise the overall allocation. Committee Chair Harold Rogers (R-KY), a strong critic of the budget sequester, said, “I think we all agree that its consequences have been, and will continue to be, very harmful, and it should be replaced in the very near term.”

Meanwhile, the Senate Appropriations Committee plans to begin marking up its FY14 funding bills in June using the discretionary spending level set by the 2011 Budget Control Act, without the added cuts of the sequester.  That funding level is $91 billion higher than the House allocation. 

There is no clear way for the House and Senate to reconcile their differences, so it seems likely that most of the final FY14 spending decisions will run up against the end of the fiscal year and the debate this fall about raising the federal debt limit.  Moreover, FY14 spending decisions are likely to be made as part of a large legislative package similar to FY13, in which some of the 12 appropriations bills are wrapped in a larger continuing resolution. 

The higher education coalitions, including AAU and APLU, continue to press for research university and student aid priorities in the appropriations process.  The University of Oregon is continuing to contribute to the call for a large federal budget deal that ends sequestration and permits sustained investments in research and education programs. 

FY15 Budget Process Underway

In Washington, DC there are usually three budget cycles ongoing at any given time. Right now, federal agencies are spending FY13 money (authorized via continuing resolution); Congress is working to approve spending levels for FY14, which starts on October 1; and federal agencies are beginning to build their FY15 budget requests. To guide this process, the White House released its annual guidance memo last week. This guidance memo noted that the administration still hopes to replace the sequester with a combination of spending cuts and changes in entitlements and the tax code.

OMB Director Sylvia Matthews Burwell effectively told agencies to plan for sequester by asking them for proposals that “reflects a 5 percent reduction below the net discretionary total provided for [agencies] for 2015 in the 2014 budget” as well as a plan that would double that reduction in 2015 to 10 percent. Agency budget requests will be submitted to the White House later this fall and ultimately combine to form the President’s budget delivered to Congress historically in early February but in recent years late March or even April.