Federal Update: Congress Heads into Home Stretch with Release of FY16 Funding and Tax Bills

December 16, 2015

After weeks of intense private negotiations, Congressional leaders late last night released two major bills – an omnibus FY16 funding bill and a tax bill.  Significant progress is made on several of the University’s priorities, including a nearly 7 percent boost in funding for NIH and enactment of the IRA Charitable Rollover to encourage additional charitable gifts.  Although everyone, including most members, are still learning the details of these bills, it is expected the House will consider and pass these measures on Thursday (for the tax bill) and Friday (for the spending bill), followed by Senate action late in the week or over the weekend.  Because the current continuing resolution funding the government expires later today, Congress will quickly pass another CR through December 22 to ensure that there is no lapse in government funding and to provide adequate time to approve the final bills.

Highlights from the FY16 funding bill include fairly strong increases for research accounts, including a $32 billion total for the NIH.  As expected, student aid accounts were flat but with continued growth in the Pell maximum grant bringing it to $5,915.  The final bill also filled in some gaps in earlier proposed funding levels for educational research and international education.  More detail on other accounts of interest is below.  Beyond funding, policy riders were the major sticking point in the final negotiations on the funding bill.  In general, it seems most were turned back including those on abortion providers and those reversing various administration initiatives on immigration, labor, environment and Dodd-Frank financial regulation.  The bill includes no ban on Syrian refugees, instead adopting and narrowing a bipartisan proposal on clearances for visitors from visa waiver countries.  The omnibus bill also includes a 2 year delay in the implementation of ACA’s Cadillac tax on high cost health insurance plans – a priority for larger employers and labor unions.  On NIH, the final bill also rejected House proposals to lower the current salary caps in place on NIH grantees, leaving current policy in place.

On taxes, rather than enact the standard end-of-the-year extenders bill, negotiators hammered out a major tax bill.  The bill’s estimated cost totals $650 billion over 10 years and is not offset with reductions elsewhere.  At its core, the bill addresses the extenders, making some permanent.  This includes the IRA Charitable Rollover, a provision long supported by the University that allows donors over age 70½ to contribute up to $100,000 from their IRAs to charities without those distributions being subject to tax.  The Research and Development tax credit is also made permanent.  Several provisions of benefit to families in affording college were also made permanent or extended; notably, the American Opportunity Tax Credit, which provides a large refundable tax credit to low and middle income families for allowable higher education expenses, was made permanent.  The removal of the oil export ban, one of the leading policy riders debated mostly in the context of the funding bill, is also included in the tax bill.

As the debate moves forward, we will stay in touch and are happy to provide further details should you have specific questions.  Please feel free to be in touch with Suzanne Day (Suzanne_day@harvard.edu) or Jon Groteboer (Jon_groteboer@harvard.edu) in Harvard's DC office at 202 863-1292.

Specific funding levels and Relevant Tax provisions:

  • NIH = $32.1 B (+$2 B on FY15)
  • NSF = $7.46 B (+$119 M)
    • Limits Social, Behavioral and Economic directorate to no more than FY15
  • DOE Office of Science = $5.35 B (+$279 M)
  • ARPA-E = $291 M (+$11 M)
  • NASA = $19.3 B (+$1.27 B)
  • NEH = $147.9 M (+$1.9 M)
  • CDC = $7.2 B (+$308 M)
  • Defense 6.1 Basic Research = $2.3 B (+$32M)
  • Pell Maximum = $5915 (up from $5775)
  • SEOG = $733 M (flat)
  • Federal Work Study = $990 M (flat)
  • International Education – Title VI = $72 M (flat)
  • Institute of Education Sciences = $618 M (+$44 M)
  • Permanent Extension of IRA Charitable Rollover
  • Permanent American Opportunity Tax Credit
  • Extension of the above-the-line deduction for qualified tuition expenses
  • Permanent R&D Tax credit
  • Permanent parity excluding employer-provided mass-transit benefits from income