Pell Grants cost shift gives appropriators funding leeway

Last week's final passage of the higher education reconciliation bill creates short-term breathing room for the Appropriations committees, relieving them of partial responsibility for funding Pell Grants for low-income undergraduate students.

But the measure could be a long-term mixed bag for appropriators, who dislike losing jurisdiction over anything. The reconciliation bill would transform Pell Grants into a hybrid of mandatory and discretionary budget authority, splitting jurisdiction between appropriators and the House and Senate education committees.

"It's a concern," said one appropriations aide. On the other hand "it does take the pressure off us" because now the Appropriations Committee does not have to come up with the money to fund Pell Grant increases, the aide said.

The higher education bill would trim subsidies to banks that provide student loans to fund a gradual increase in the maximum annual Pell Grant to $5,400 over five years. The maximum grant would rise to $4,800 in fiscal 2008, up from $4,310 in the fiscal 2007 continuing resolution.

Not waiting for the authorizing committees to act, House Appropriations Chairman David Obey, D-Wis., provided a discretionary funding boost of $2 billion above the current year, raising the maximum Pell Grant to $4,700 in the House-passed version of the fiscal 2008 Labor-Health and Human Services spending bill.

With an allocation $2 billion lower than Obey's, Senate Labor-HHS Appropriations Subcommittee Chairman Tom Harkin, D-Iowa, maintained Pell Grant funding at current-year levels, under the expectation that the higher education reconciliation bill would be completed. That freed up additional money for other priorities such as the National Institutes of Health that otherwise would have been squeezed to make room for Pell grant funding.

Even with an allocation $12 billion above the White House request, interest groups are sounding the alarm that Obey's more generous version shortchanges programs such as NIH, Head Start, the Social Security Administration and block grants for child care and development, as well as for community services.

"We do need breathing room for a great many priorities, so to any extent which more money becomes available, it's desirable," said Debbie Weinstein, executive director of the Coalition on Human Needs.

Groups are hoping Obey and Senate Appropriations Chairman Robert Byrd, D-W.Va., agree to stick with the higher House allocation in conference, with even more money now available with the authorizing committee taking on some responsibility to fund Pell Grants. For example, under both the House and Senate bills, NIH funding would increase by less than the rate of biomedical inflation, a concern of many on both sides of the aisle.

"Any opportunity to free up money on the discretionary side is a positive development, as it represents the opportunity for appropriators to include more funding for NIH under current fiscal restraints," said Allen Segal, associate director for federal relations at the American Cancer Society Cancer Action Network.

On the other hand, there could be increased pressure to simply trim the overall price tag of the bill given President Bush's proposed veto, rather than devote the additional resources freed up from Pell Grants to other programs. Bush has proposed to cut overall funding in the Labor-HHS measure by $3.6 billion below current-year funding; while those cuts are unlikely to survive, to avert a veto Democrats might have to scale back their proposed spending increases.