Pell caught in debt ceiling fight.

UPDATED 8-9-2011: The "Budget Control Act of 2011" (P.L. 112-25) was signed into law by President Obama on August 2. The final measure included $10 billion in mandatory funding for Pell Grants in FY 2012, and $7 billion in mandatory funding for FY 2013; no new eligibility changes were made to Pell under the law. It is estimated that this additional funding will reduce the FY 2012 shortfall to around $1.3 billion.

More broadly, the Budget Control Act establishes statutory caps on federal discretionary spending for FY 2012-2021, resulting in an estimated reduction in budget authority of $840 billion over that period. For FY 2012, total discretionary spending would be capped at $1.043 trillion, which is roughly $7 billion below FY 2011 enacted levels but about $24 billion above the levels authorized in the House budget resolution in April. With the start of FY 2012 less than two months away, it is expected that Congress will fold all appropriations bills into a continuing resolution or omnibus spending package; however, it is not clear at this time whether the House will agree to appropriations at the new cap levels, or will insist on lower spending levels in line with the April budget resolution. In either case, funding for federal workforce development programs is likely to remain vulnerable, and advocates should continue to educate their lawmakers on the importance of these critical programs and services.

House Republican leaders are struggling to find enough votes to pass a debt ceiling/deficit reduction bill put together by House Speaker John Boehner (R-OH), and media reports are suggesting that Pell Grant funding included the bill is part of the problem.

According to an article posted on TheHill.com, some fiscal conservatives are angry that Boehner included $17 billion in additional mandatory Pell Grant funding for Fiscal Years (FY) 2012-2013 in a measure that will otherwise cut about $917 billion in federal spending over the next decade. The article makes it clear that opposition is driven not just by fiscal concerns but also objections to the program itself, citing recent remarks from Rep. Denny Rehberg (R-MT), chair of the House Labor-HHS-Education appropriations subcommittee, suggesting that Pell Grants are the “welfare of the 21st century.”

Because prior year appropriations have not kept up with rising demand – an estimated 9 million students will be eligible to receive Pell Grants in 2011, compared to 6.2 million recipients in 2008 – the program faces an $11 billion shortfall heading into the FY 2012 appropriations cycle. Both the Boehner bill and an alternate debt ceiling bill proposed by Senate Majority Leader Harry Reid (D-NV) include supplementary funding to address this funding gap (the Reid proposal would provide $18 billion in FY 2012-13), but it is unclear at this point whether legislation including the Pell provisions will be able to pass both chambers. If the Pell funds are not included in the final package, the resistance from key conservatives suggests that the program may be targeted for cuts or other structural changes under the House FY12 Labor-HHS-Education appropriations bill. House appropriators are already expected to push for severe cuts to a number of other federal workforce and education programs; if enacted, these combined cuts would significantly reduce the ability of U.S. workers and businesses to get the skills needed to compete in today's economy.

Earlier this month, National Skills Coalition joined with other national organizations in a letter to President Obama urging him not to agree to funding cuts or harmful eligibility changes under Pell as part of the ongoing deficit reduction negotiations. NSC urges Congress and the administration to work together to ensure that the Pell Grant program provides the maximum assistance to the broadest diversity of students possible, while also ensuring that federal investments in other key workforce development programs are not reduced as a result.

We will continue to monitor developments relating to this ongoing debate and will provide updates and analysis as new information becomes available. For the latest news, subscribe to NSC’s RSS feed, or follow us on Facebook and Twitter.