The New Budget and PHEAA Funding

The state Senate and House last week voted on another budget proposal for the current fiscal year 2015-16, now nearly nine months beyond the June 30, 2015, budget deadline.  While the legislature passed and the Governor signed a bill before Christmas, the Governor line-item vetoed large parts of that bill.  The new nearly $7 billion budget bill (House Bill 1801) fills gaps left in the 2015-16 budget passed in December–Act 10 A of 2015. 

Governor Wolf has threatened to veto this new spending legislation. Democrats in the debate criticized the bill as “irresponsible and unbalanced” without increased revenue, i.e. taxes.  The line-item veto, the current budget for 2015-16 (Act 10 A), is clearly out of balance at $23.4 billion, which is almost $6.0 billion below 2014-15. 

While legislative leaders should be working on the budget for 2016-17, this task is extremely difficult without resolving the current year numbers.  School districts, charter schools, prisons, medical assistance recipients and county government operations are all at risk because of the standoff.  Appropriations for Penn State, Pitt, Temple, Lincoln and the University of Pennsylvania Veterinary School, amounting to nearly $600 million, also passed last Wednesday.  The funding for these state-related institutions included a 5% increase over 2014-15.  It is not clear at this time whether the Governor will sign or veto these bills.

The Pennsylvania Higher Education Assistance Agency (PHEAA) was front and center in the budget debate because of earnings from its loan servicing operations. Last week’s budget bill (HB 1801) reduced the state’s appropriation to PHEAA by $39 million. Republican leaders indicated that these funds would be replaced by additional PHEAA agency earnings so that no student would lose the grant awards that they have already received. While this is true, extra PHEAA earnings are being used to replace state appropriations for other state priorities instead of for low- and moderate-income college students. This move also makes the most financially needy students vulnerable to cuts should PHEAA not be able to sustain future contributions to the program since state funding will have been reduced.

Did you know? AICUP thanks the wonderful folks at Delaware Valley University for hosting the Southeastern AICUP Advocacy meeting on March 18, 2016.  There are two more advocacy meetings at Point Park University on March 31, 2016, and at Marywood University on April 7, 2016.  To register, contact Mary Young at young@aicup.org