AGB Policy Alert: Trump Administration FY2021 Budget Proposal and Update on Reporting Requirements for Foreign Gifts and Contracts

By AGB February 20, 2020 AGB Alerts

Recent actions by the Trump administration, including the U.S. Department of Education (ED), could have an impact on all higher education institutions. AGB is providing this Policy Alert to inform you about President Trump’s proposed fiscal year (FY) 2021 budget, affecting funding for several student loan, aid, and training programs (Pell Grants, work-study, loan forgiveness, and loan repayment plans, among others), and proposed regulatory changes that would increase reporting requirements for foreign gifts and contracts under Section 117 of the Higher Education Act. Details are included below, followed by questions boards should consider in assessing the impact on their own institutions. In addition, you will find resources to learn more about these topics.

President’s Budget Request

On Monday, February 10, the Trump administration released its FY2021 budget. In total, the budget request calls for an 8.4 percent decrease in funding for programs under ED.

Finalizing the federal budget is a responsibility that lies with the U.S. Congress, and therefore the administration’s budget is presented as a proposal for Congress to consider. In recent years, Congress has not adopted many of the administration’s higher education budget proposals, and this is likely to continue in FY2021.

Key elements of the president’s budget that affect higher education include:

  • Maintaining the current maximum Pell Grant amount for individuals ($6,345) while expanding Pell Grant eligibility to short-term credential programs and certain incarcerated individuals.
  • Reiterating support for risk-sharing requirements on institutions by maintaining language from the FY 2019 budget that states the administration will work with Congress to develop a system for institutions to share a portion of the financial risk associated with student loans.
  • Eliminating funding for Supplemental Educational Opportunity Grants (SEOGs), undergraduate subsidized loans, and the 2007 Public Service Loan Forgiveness Program.
  • Consolidating the current five income-based repayment plans into a single repayment plan.
  • Reducing funding for Federal Work-Study by $680 million and reforming the Federal Work-Study Program to allocate funds to schools based in part on Pell Grant enrollment.
  • Consolidating the TRIO, GEAR UP, and CAMP programs into a $950 million state formula grant program.
  • Consolidating some programs for Minority-Serving Institutions (MSIs), taking six MSI programs and combining them into a formula grant for institutions.
  • Maintaining level funding for the Strengthening Historically Black Colleges and Universities (HBCUs) and Strengthening Historically Black Graduate Institutions programs.
  • Eliminating funding for international education by zeroing out the Higher Education Act’s International Education programs.
  • Expanding Career and Technical Education (CTE) national activities, increasing CTE State Grant funding to $1.96 billion and increasing CTE National Programs to $90 million.
  • Providing $33.4 billion in discretionary funding for the National Institutes of Health (NIH), $4.5 billion below FY 2020.
  • Providing $7.74 billion for the National Science Foundation (NSF), a 6.5 percent decrease compared with FY 2020.

Section 117 Foreign Gifts and Contracts Reporting

This update concerns an opportunity for institutions to comment on proposed regulatory changes for reporting foreign gifts and contracts through an information collection request (ICR) under Section 117 of the Higher Education Act (former alerts on this topic can be found here and here). On Monday, February 10, ED published a further revised information collection request with a 30-day response period. If institutions would like to comment, they have until March 11, 2020, to do so here. Should ED choose to implement the ICR in its current form, higher education institutions will need to comply with the request by July 31, 2020.

Changes from the last ICR include:

  • Specifying that an institution must report gifts and contracts when the benefit of the gift or contract is received by an institution through an intermediary, including institutionally related foundations.
  • Specifying that institutions must report only gifts from and contracts with a foreign source, the value of which is $250,000 or more, considered alone or in combination with all other gifts from and contracts with that foreign source within a calendar year.
  • Revising questions that ask whether the gift or contract was with a foreign government, including but not limited to any agency of such government.
  • Removing the items on the disclosure form that asked for true copies of gifts and contracts. ED noted, however, that it intends to promulgate a regulation, through the notice and comment rulemaking process, to establish this requirement in the future.
  • Removing requirements for institutions to list all legal entities (including foundations or other organizations) that operate substantially for the benefit for or under the auspices of an institution, and disclose whether such other legal entities are owned or controlled by a foreign source.
  • Removing questions about a U.S. party’s connection to a foreign government. ED emphasized, however, that there are instances where a U.S. citizen or a U.S. corporation could act as an agent on behalf of a foreign source and thus be considered a foreign source.
  • Removing the questions about influence of any program or curricula from the questionnaire.

AGB has and will continue to work with the higher education community to monitor the ICR’s progress and respond accordingly. Given that this regulatory situation is evolving, consider connecting with your institution’s government relations and legal staff to see how these new requirements could affect your specific institution. ED is continuing to open investigations into institutions over foreign gift reporting, so AGB members should ensure they are familiar with the relevant information that they may be required to report to ED. AGB will update members when more information is available.

Questions to Consider

  • President’s FY 2021 Budget Request
    • Is your board informed of the array of federal student aid programs in which your institution participates—such as work-study, SEOG—and the number of students on your campus who benefit from these programs?
    • How might these proposed reductions affect the ability of your institution to fulfill its mission, especially in the areas of research, access, and student success?
  • Information Collection Request for Foreign Gifts and Contracts (Section 117)
    • Does your institution or foundation have defined processes for reporting foreign gifts and contracts?
    • Since the definition of “institution” would be expanded to include all campuses, foundations, affiliated entities, and separate organizations that exist to benefit the institution, how will your institution report information from these various entities?
    • If your foundation or other affiliated entities are separate 501(c)(3) organizations or similar, how does that affect reporting requirements?

Additional Resources