The budget and appropriations processes go hand-in-hand, but are two distinct steps. Both the House and Senate have separate committees that deal with the budget and appropriations, respectively. The budget committees focus on developing a broad blueprint for federal spending, and under regular procedures, these spending levels must be passed before any individual program-level appropriations are assigned. The appropriations committees, operating under those broad spending levels given by the budget committees, then decide how to divvy up spending among the various programs and issues.
You might imagine this process as being similar to furnishing a brand new house. In order to stay on track with your overall budget, you would start by detailing how much money you would allocate to each room — for example, $8,000 for the kitchen and $5,000 for the living room (the role of the budget committee). Then, once you've determined the levels for each room and ensured they would keep you on track for your overall budget, you could determine, for example, how much you are willing to spend on the dishwasher (the role of the appropriations committee).
There are 12 different appropriations subcommittees in both the House and Senate. So, what that means is all federal spending is divided into 12 different buckets. When you consider the size of the federal budget, and how many programs and issues that emcompasses, 12 buckets isn't really very many. This also means that no single issue area in the federal government gets its own bucket. The federal student aid programs fall within the Labor, Health and Human Services, Education, and Related Agencies appropriations subcommittee (nicknamed Labor-H), and as the name suggests, student aid shares its pot of funding with not only pre-K and K-12 education, but also all labor and health programs, and other related agencies.
The Labor-H bucket is filled with very important programs that are crucial to the health and wellbeing of our nation. As a result, when funding battles ensue, the student aid programs are wrangling for the same dollars that these other important programs share. Congressional staff generally acknowledge that the Labor-H bill is the most difficult to complete given its vital content.
It's been over a decade since Congress has completed the budget and appropriations process "on time." There is, however, a process that the executive and legislative branches are supposed to follow in order to complete the process by October 1, the start of the federal fiscal year. The schedule is supposed to go as follows:
There is no one reason why the budget and appropriations process gets delayed. Unfortunately, like most legislative issues these days, the budget process has become subject to the slog of politics. More often than not, the budget and appropriations process gets bungled by debate over policy issues, rather than issues related to funding. Debates that focus on the existence of programs often get shoehorned into this process, often causing political rifts and grinding the process to a halt.
In recent years, we've seen intense controversy over seemingly minor provisions (in the context of the significant number of programs funded in the bill), such as funding for Planned Parenthood and the appearance of confederate flags in federal cemeteries, derail the budget process.
Because legislation is increasingly difficult to pass, the funding process has become an alternative route for legislators to use to tack on policy provisions affecting programs across the federal government. For example, in the fiscal year 2017 final funding bill, Congress restored year-round Pell.
Both an omnibus spending bill and continuing resolution are tools used to fund the federal government (and avoid a government shutdown) in the absence of Congress passing the 12 individual appropriations bills. A continuing resolution (CR) is a stop-gap funding measure often used when Congress is down to the wire on needing to fund the federal government and avoid a government shutdown. CRs are generally (though not always) short-term in nature, often lasting days, weeks, or months and essentially keep the government running at the current funding levels.
An omnibus spending bill typically serves as the final appropriations bill in the case of Congress' inability to pass out the 12 separate appropriations bills. Instead of requiring the passage of all 12 bills separately, an omnibus bill combines all of them into one, requiring only one vote from each chamber. The downside of an omnibus bill is that individual members of Congress have little opportunity to amend such a large bill. Further, an omnibus bill makes members of Congress take tough votes, as they may oppose funding for a specific program or department, but a "no" vote would risk passage of funding for the other programs they do support, or could risk a government shutdown.
Discretionary spending is spending that takes place through the annual appropriations process. In other words, programs that are funded by discretionary spending are subject to change every year by appropriators. In the federal student aid world, programs that are funded by discretionary spending include: part of the Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work-Study (FWS). Mandatory programs, on the other hand, are not subject to the annual appropriations process and for the most part, include what are referred to as "entitlement programs," such as Medicare, Medicaid, and Social Security. Related to Title IV, mandatory funding also includes part of the Pell Grant program, the TEACH Grant program, and any funding related to federal student loans.
The rules surrounding the budget and appropriations process require that funds remain within their respective buckets. The allocations between "buckets" are determined by congressional leadership and then each of the 12 subcommittees divvy out those allocations. So unfortunately, it's not always helpful to look at spending in terms of the whole fiscal pie. We must instead focus on the pool of funds within the Labor-H bucket.
The Congressional Budget Office (CBO) provides non-partisan budgetary analysis for Congress, most often related to draft legislation. It is CBO's job to "score" a bill, or in other words, assign a cost or savings to the piece of legislation, based on what it would yield over a 10-year period of time. Bills can be criticized or praised because of their CBO score. And at times, the CBO score drives change to the legislation. For example, the House has a rule that any bill that costs money must include an offset for how the cost will be paid (also known as a "pay for"); the CBO score dictates the amount of offset spending they must find.
It is very difficult for stand-alone policy issues (those that aren't incorporated into other larger bills) to make it to the House or Senate floor for a full vote on their own in today's political climate. Sometimes we refer to "must pass" bills, such as government funding bills, as "vehicles" that include smaller provisions or bills that need the vehicle in order to move. Not much passes out of Congress these days, but the budget and appropriations process must occur each year, making those bills an easy place to stick other policy issues that need addressed. In other instances, Congress might be looking for savings to help make the bill more palatable, and may tweak or even eliminate other programs to do so. When an issue that isn't necessarily related to budget or appropriations gets added on to a budget-related bill, it is called a "rider."
There are good and bad things about this process. To start with the good, if there is a pressing, time-sensitive issue, the budget bill allows a place for the issue to get pushed through Congress. The bad is that it is generally frowned upon when budget politics dictate policy. For example, the elimination of programs or benefits, such as the elimination of the interest subsidy for graduate students, simply to balance a budget, is very problematic. The strong preference is that policy decisions be left to the committees of jurisdiction (in our case, the House and Senate education committees), but unfortunately, most of the changes that have happened to the federal student aid programs over the past several years have been through the budget process.
The federal student aid programs are forward funded, meaning Congress should determine funding for an award year by September 30 of the year prior to the start of the next award year; however, Congress often misses the end-of-September deadline, and delays in completing the budget and appropriations process can have varying effects on the Title IV programs, depending on the length of the delay. Without final allocation numbers from Congress, the Department of Education cannot put out final numbers for institutional campus-based aid allocations or final Pell Grant schedules.
The move to "Early FAFSA" by using prior-prior year (PPY) income information on the FAFSA was intended to provide accurate information to students and families earlier. Delays in final funding allocations undermine some of the goals of Early FAFSA.
If you have any further questions, or would like us to address another budget-related issue, please contact [email protected].
Publication Date: 1/3/2018