Government Relations Archive

On November 13, President Bush vetoed the Labor-HHS-Education appropriations bill (H.R. 3043) because of overall concerns with spending levels. The bill would have provided the biggest increase ever in the Pell Grant.

On November 15, the House Education Committee released and approved a 747-page rewrite of higher education laws (which grew to 805 pages in the process.) It is possible that the bill could come up for final consideration on the House floor as early as next week.

According to the National Association of Independent Colleges and Universities (NAICU), below are the particularly troublesome provisions of the bill:

College Cost
The bill establishes a new Higher Education Price Index, and creates a federal Affordability Watch List for any college whose sticker price exceeds a federally prescribed price index.

Accreditation and Student Learning OutcomesAlthough the House bill (like the Senate) originally sided firmly with colleges on their authority to set their own standards for student learning, this issue was revisited when the committee adopted an amendment striking the protective language. Apparently, the for-profit and some regional accreditors felt there was some better alternative – despite the fact that months of discussion of the issue did not produce one. Now, the Secretary has yet another opportunity to put the federal government in the driver’s seat in this critical area.

Teacher Education
The bill requires virtually all colleges in the country to follow several federally-prescribed curriculum elements – including quantifiable goals in the production of teachers in certain fields, and in the program of study used by the college. This precedent of using a college’s participation in the federal student aid programs as a means of prescribing a curriculum in any field of study is extremely problematic.

Articulation Agreements
The bill calls for the development of statewide articulation agreements, using language that is unclear as to whether all institutions would be required to participate in these agreements. Many private institutions participate in voluntary articulation agreements. However, NAICU strongly oppose any federal effort to make colleges – particularly private colleges – subject to such agreements developed by the Secretary of Education and state governments.

Reporting
Ironically, while admonishing colleges for rising prices, this bill adds a significant number of costly reporting requirements – with no federal money to offset the expenses of these mandates. Extensive new reporting requirements are required in such areas as campus crime, campus emergency procedures, fire safety, missing students, textbooks, net price reporting in admission materials, file sharing, distance education, and receipt of gifts.

Last Dollar
The bill requires GEAR UP and three other new federal scholarship programs to be the last grants made in a student’s financial aid package. This means that institutional aid must be packaged before these additional dollars are awarded, complicating financial aid packaging. It also means federal program reviewers can oversee how a college is awarding its own aid.

NAICU said the bill does have many good components that include a thoughtful set of new disclosures and ethics rules in response to the recent student loan scandals and a sensible solution on the transfer of credit issue that provides students information on institution’s policies.

The Maryland Independent College and University Association (MICUA) provided the following summary of the Maryland General Assembly’s special session which adjourned on November 19, 2007.

The Maryland General Assembly passed the six bills introduced by the Governor with many amendments.

In aggregate, legislation passed during the Special Session raises about $1.3 billion in revenues and cuts the fiscal 2009 budget by about $550 million. The Budget Reconciliation Act reduces state appropriations in fiscal 2009 in four areas:

• Cuts state aid to local schools by altering the Thornton formula;
• Reduces utility grants provided to local jurisdictions;
• Reduces appropriations to Program Open Space; and
• Cuts overpayments to the Health Benefits Fund for state employees.

These specified cuts total about $330 million. In addition, Governor O’Malley must identify $212 million in additional cuts in the fiscal 2009 budget. The Sellinger Program is preserved with full funding. In addition, the General Assembly passed a provision within the Budget Reconciliation Act stating that funds appropriated to the public universities through the newly created Higher Education Investment Fund will be included in the formula used to calculate Sellinger grants. This provision will increase state aid under the Sellinger Program in future fiscal years.

The Budget Reconciliation Act contains a troubling provision stating the legislature's intent that the Governor consider legislation to "defer and alter formula mandates to slow the growth" in the state's baseline budget. This provision was added as a concession to the House Appropriations Committee, which tried to alter several mandated programs (including Sellinger) during the Special Session.

The General Assembly passed legislation proposing a constitutional amendment to authorize video lottery terminals (slots) at five locations in Maryland. This constitutional amendment will go to the voters during the General Election in 2008.

Several adjustments were made to the State's tax structure. The following is a summary of the major adjustments:

Income Tax:
The state income tax rate is increased to 5% for earnings over $150,000 (individuals) and $200,000 (joint filers); 5.25% for earnings over $300,000 (individuals) and $350,000 (joint filers); and at 5.5% for earnings over $500,000. In addition, the legislation includes an increase in personal exemption amounts and expands the refundable earned income tax credit for low-income Marylanders.

Sales Tax:
The sales tax rate increases from 5% to 6% and is expanded to include certain computer services, such as software planning and design, hardware and software installation, data recovery, and management services.

Titling Tax:
The titling tax rate is increased to 6%, but allows a reduction for the trade-in value of a vehicle. In addition, the vehicle title fee is increased from $23 to $50 and the cost to correct title certificates is increased from $20 to $50.

Tobacco Tax:
The tobacco tax is increased by $1.00 to $2.00 per pack.

Corporate Tax:
The corporate tax rate is increased from 7% to 8.25%. In the first six months (FY 2008), $16 million of this corporate tax revenue is dedicated to the Higher Education Investment Fund to reduce tuition at public universities and for capital projects at public universities and community colleges. In future years, about half of the increased corporate revenue is dedicated to the Higher Education Investment Fund. The Department of Legislative Services estimates that $50 million in corporate tax revenues will be dedicated to the Higher Education Investment Fund in FY 2009. These provisions will benefit the MICUA state-aided institutions by increasing the Sellinger grants in future years and by providing some relief in the Governor's capital budget program.

In addition, the General Assembly passed legislation requiring a study to evaluate the use of "combined reporting" to calculate Maryland taxable income by affiliated corporations.

Controlling Interest Provisions:
The General Assembly passed legislation imposing recordation and transfer taxes on the transfer of real property through the sale of a "controlling interest" beginning in FY 2009.

The General Assembly also passed legislation introduced by the Governor to expand Medicaid health care coverage for low-income Marylanders and to provide incentives for small businesses to offer health care insurance to employees. In addition, the General Assembly passed a provision to create a Chesapeake Bay Trust Fund to support programs to clean up Maryland's bays and rivers.