The 116th Congress Plans to Adjourn: Lawmakers Agree to Full-Year FY21 Funding, Targeted COVID-19 Relief

Having extended its post-election lame duck session by nearly two weeks, the 116^th Congress finally reached agreement on full-year FY21 funding and its fourth large-scale package of emergency COVID-19 relief before recessing for the holidays and giving way to the 117^th Congress in the new year.Earlier today, the negotiated legislation was released and appropriates $1.4 trillion for federal agencies in FY21 along with roughly $900 billion in COVID-19 relief. The House and Senate are on track to pass the package later today or tomorrow. Due to the statutory caps on discretionary spending, the FY21 funding results remain mostly close to last year’s funding levels, except for a $1.25 billion gain for the National Institutes of Health (NIH) and a $150 increase in the Pell maximum grant. The COVID-19 relief package – the result of politically charged negotiations – extended certain provisions that were scheduled to expire at the end of the month, addressed other urgent needs for individuals and in public health, business and employee assistance, and education, but sidestepped the thorniest political issues—liability protections and state and local aid.

Meanwhile, the presidential transition moved forward with the Electoral College recording its official results in favor of President-elect Joe Biden. Even as President Trump and his legal team continue to dispute the results of the election, the incoming Biden Administration is taking shape, with the President-elect regularly announcing senior staff appointments and Cabinet nominees, including many with Harvard ties. With these key staffing announcements and in other statements, the incoming Administration is also signaling policy priorities; combatting COVID-19 remains the leading issue, but indications are that the early focus will also be on infrastructure, climate change, and repairing the immigration system.

FY21 Funding

Appropriators in the House and Senate finally agreed to a $1.4 trillion FY21 omnibus spending package—more than three months after the start of the fiscal year. The topline spending levels were set under last year’s bipartisan budget agreement, providing only a modest increase – $5 billion – over the FY20 level. Although growing deficit concerns significantly restrained off-budget funding, Congress made room for some key bipartisan priorities, including NIH, which will be increased $1.25 billion. The agency’s year-over-year increases now total more than $10 billion over the last five years and bring the FY21 NIH total to $42.9 billion. Included here is a chart of University priority accounts:

Many expect more favorable budget proposals from a Biden-Harris Administration than the Trump Administration, particularly for education and research, but fiscal issues will be a political flashpoint in the 117^th Congress, as majority control in the House and Senate will be razor thin, Republicans emphasize fiscal conservatism, and the federal debt limit will need to be addressed. Although the FY22 budget cycle will be the first in a decade without preestablished caps on discretionary spending, Republicans – particularly those who are considering running for President in 2024 – intend to push for policy solutions on the national debt and deficit. It seems likely there will be efforts to reestablish spending limits with a potential multi-year deal being struck around the federal debt limit. In the short term however, the dominant concern for many Democratic members and the Administration will likely be addressing the economic pain of the pandemic through more, not less, federal spending. We anticipate this fight to be one of the leading and most consequential battles of the year.

COVID-19 Relief Package

In just over ten weeks earlier this spring, Congress enacted nearly $3 trillion in COVID relief, focused on testing and diagnostics and emergency support for individuals and employers, including higher education. Since May, Congress has been unable to reach agreement on additional pandemic relief, with Democrats arguing for at least $3 trillion and Republicans offering more limited relief, with proposals in the $500 - $900 billion range. Facing a surge in COVID rates, the upcoming holidays, and the expiration of unemployment, sick leave, and housing assistance, a bipartisan group of Senators developed a $900 billion “common ground” compromise, which became the basis of the omnibus package passing this week. As a part of moving forward, both sides were forced to abandon, for now, long standing priorities including, for the Democrats, aid to state and local governments and, for the Republicans, liability protections for businesses and other organizations.

The package extends the federal unemployment insurance supplement at $300 per week through March 14, 2021; adds $325 billion to the PPP program, with additional aid targeted to the hardest hit and small businesses; sends a new round of means-tested individual checks worth up to $600 per adult and $600 per child dependent; $9 billion for the CDC and vaccine distribution funding to state and local governments; $22 billion to the states for testing, contact tracing, and COVID mitigation strategies; and $7 billion for expanding broadband access, including through the E-Rate program for education. The agreement also includes $4.5 billion in mental health funding, $9 billion for health care providers, and more than $1 billion for NIH to research COVID-19. The final package also extends several tax supports including the employee retention credit.

Of note, the package provides $82 billion for education, including $20 billion for institutions of higher education—more than provided in earlier relief packages. The distribution formula clarifies and expands allowable uses for the funding. Unfortunately, it also provides that any private college or institution that paid the excise tax on net investment income would have their allocation halved, with their uses of funds limited to student support or general health and safety related to the pandemic. The package does not include a freeze on federal student loan payments and interest, which Education Secretary DeVos recently extended until January 31, 2021.

Other Legislation

Notably for higher education, the legislation will include nearly a $7 billion investment over ten years in federal student aid with a mix of policies to broaden aid eligibility, including simplifying the application for federal financial aid, expanding the interest subsidy on some federal undergraduate student loans, repealing a 1998 law that bars individuals with a drug conviction from receiving federal student aid, reinstating Pell grants both for students who were defrauded by their college and for incarcerated students, and forgiving over $1 billion in federal loans to Historically Black Colleges and Universities. Deals were also reached on legislation to ban so-called “surprise billing” that results from out-of-network or emergency healthcare and to extend a series of popular and expiring tax breaks and health programs.

Early this month, Congress also passed the FY21 Defense authorization bill, which authorizes roughly $750 billion for national security activities, including a new national research and development initiative on AI and a modified version of a provision championed by Senator Elizabeth Warren to change the Confederate-affiliated names of military installations. (A number of nongermane items that passed the House, including the amendment sponsored by Reps. Moulton and Pressley on international students and distance learning, were not included in the final agreement.) Despite passing the House and Senate by overwhelming bipartisan majorities, President Trump has threatened to veto the defense bill over the confederate naming issue and an unrelated effort to eliminate the liability shield for social media companies. He has until December 23 to act on the legislation, leaving open the possibility that Congress will need to reconvene to override a presidential veto before adjourning for the year.

Contact Us

As always, we will be following developments closely and will stay in touch. Please feel free to reach out to Suzanne Day (suzanne_day@harvard.edu) or Kara Haas (kara_haas@harvard.edu) in our Washington, DC federal relations office with any questions.