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As the Economic Crisis Hits Home, Colleges Seek Help From Congress
By KELLY FIELD
The Chronicle of Higher Education
November 13, 2008
Congress is crafting a second economic-stimulus bill, and the nation’s colleges, hit by the deepening fiscal crisis, want a share of the money.
Over the last few weeks, colleges and their lobbyists have bombarded members of Congress with letters and phone calls seeking money for research, student aid, and infrastructure. Their appeals emphasize the role colleges play in the nation’s fiscal health, not only as educators but also as employers and innovators.
Democratic leaders in the U.S. House of Representatives hope to bring a second stimulus measure to the floor next week, when lawmakers are expected to return to Washington for a lame-duck session.
But a deal with President Bush remains elusive, and without one, the bill may have to wait until January, when Barack Obama takes office as president. Congress could also opt for a piecemeal approach, passing the portions that Mr. Bush agrees to now, and the remainder next year.
Competing for Aid
Either way, Congress is expected to focus its new spending on food stamps, unemployment benefits, and infrastructure projects. Colleges will have to compete for the remaining aid with hundreds of other supplicants, including the airline industry, homebuilders, and budget-strapped states.
Thirty-nine states are predicting budget shortfalls for the next fiscal year that total more than $100-billion, according to the Committee for Education Funding, a nonprofit coalition of colleges and other education groups.
But the competition hasn’t stopped colleges from seeking a share. Faced with declining endowment income, reduced state support, and more financially needy students, institutions are desperate to avoid drastic cuts in salaries and student aid.
Some college lobbyists see hope in the fact that Rep. George Miller, the California Democrat who is chairman of the House education committee, is playing a key role in negotiations.
“I think it bodes well,” said Jennifer T. Poulakidas, vice president for Congressional and governmental affairs at the National Association of State Universities and Land-Grant Colleges. Representative Miller "is a true believer in the importance of investments in science and research to drive the economy,” she said.
The state-university association has asked its member institutions to contact their representatives in Congress to request money for student aid and the National Institutes of Health.
Other groups, including the Association of American Universities and the American Association of Medical Colleges, have sent letters seeking more money for research. Letters from both groups highlight the ways colleges contribute to the nation’s economy, through work-force training, job creation, and business development.
“As large employers and as primary drivers of our innovation economy, our nation’s research universities and their students, faculty, and staff can be valuable components of an economic recovery, in both the short and long terms,” said the letter from the Association of American Universities.
The medical-college association’s letter goes a step further, citing statistics to quantify its members’ economic impact. Medical colleges, it notes, pumped $451-billion into the economy in 2007, generating three million full-time jobs and more than $20-billion in state tax revenue.
A Long Wish List
The group also offers the longest wish list of the college associations, requesting $1.9-billion for the National Institutes of Health, a reversal of cuts in Medicare payments to teaching hospitals, and an expansion of federal Medicaid funds, among other items.
While an increase in federal Medicaid spending would not directly benefit colleges without teaching hospitals, it could have a trickle-down effect, easing the budget demands that have forced state lawmakers to cut spending on public colleges. Medicaid costs represent a large and increasing share of state budgets.
“If the states are taken care of, then it relieves the pressure” on colleges, said Harvey Hollins III, vice president for government and community affairs at Wayne State University, in Michigan. He said his institution was bracing for an expected midyear rescission of up to 4 percent of its state appropriation.
Meanwhile, some groups—including the Association of American Universities and the National Association of State Universities and Land-Grant Colleges, are asking Congress to set aside a portion of the bill’s infrastructure money for campus construction. Several colleges have put off planned projects because of the tightening of credit markets and the rising cost of capital.
Pleas for More Student Aid
Other groups, including the American Association of State Colleges and Universities and the Student Aid Alliance, a coalition of associations, say Pell Grants must be the top priority.
With more families facing unemployment and foreclosure on their homes, participation in the grant program has spiked, creating a shortfall that is expected to exceed $5-billion by the end of the 2009 fiscal year.
The Student Aid Alliance wants Congress to wipe out that shortfall and provide enough money for a $500 increase in the maximum award, which is now $4,731.
Lawmakers are also said to be weighing an increase in federal-loan limits and an extension of the grace period for student borrowers, perhaps to nine months. Congress cut the grace period from nine months to six months in the 1980s, to reduce costs. Now, with the economy creating a gloomy job outlook for college graduates, lawmakers may extend it again.
A Hard Sell
This would be the third time in recent months that Congress has acted to shore up the economy. Lawmakers approved a $700-billion bailout bill for the banking sector last month and a $168-billion stimulus bill in February that included federal income-tax-rebate checks. But the economy has continued to worsen, and lawmakers have been inundated with pleas for help from every corner of the economy.
With so many urgent needs confronting Congress, colleges know they aren’t likely to be a top priority.
“There are so many people going to the trough who have legitimate needs that it’s going to be hard,” said Cynthia A. Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities.
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