Federal Update: 117th Congress Finishes Its Work With FY23 Omnibus Legislation

The Senate passed (68-29) an omnibus appropriations bill to fund the government for the remainder of fiscal year 2023 (FY23), following protracted negotiations over topline spending levels. The House is expected to pass the spending measure later tonight, after which it will head to the President for his signature, fully funding the federal government before the continuing resolution expires at midnight on December 23.The final package, which was unveiled on Tuesday, includes more than $1.7 trillion in discretionary funding overall, with a split of $858 billion for defense (+10 percent over FY22) and $772 for non-defense (+5.5 percent), plus an additional $44.9 billion in additional aid to Ukraine and $40.6 billion in disaster relief. Within the bill, there are some significant positive outcomes for research university priorities, particularly for NIH (+$2.5 billion), Pell (+$500 maximum grant), and NSF (+12 percent), and NIST (+32 percent). The omnibus will also serve as the vehicle for the enactment of non-funding legislation, including reform of the electoral college process, pandemic preparedness authorization, a measure to encourage retirement savings, and several health provisions, including one to provide partial relief from the scheduled reduction in Medicare physician payment rates.

Passage of the omnibus will conclude the lame-duck session, where lawmakers wrangled over shifts in leadership and sought to clear much of their to-do list before adjourning for the holidays and giving way to the 118^th Congress, which will gavel into session on January 3.

FY23 Omnibus Funding Bill

Previously, Congress had put off final spending decisions until after the midterm elections, and after Democrats’ better than expected performance, bipartisan Congressional leadership – over Minority Leader Kevin McCarthy’s (R-CA) objections – moved to settle the FY23 process rather than punting final resolution into the new calendar year and the next Congress.

In general, the omnibus bill provides at least modest increases in nondefense discretionary spending over FY22. More significant increases are given to K-12 education programs for low-income schools and special education, as well as a 30 percent boost for the Child Care and Development Block Grant and an 8.6 percent boost for Head Start programs. On public health, the agreement provides a $760 million increase for the CDC ($9.2 billion total), and a $560 million increase for the office of the Assistant Secretary for Preparedness and Response ($3.3 billion total) within HHS. The bill also provides nearly $5 billion (+$345 million) to address the opioid epidemic.

University priorities fared well overall, with some research and education accounts exceeding earlier expectations. Specifically, the bill provides $47.5 billion (+$2.5 billion) for NIH, representing a 57 percent increase in the agency’s budget over eight years, and $1.5 billion for the relatively new Advanced Research Projects Agency for Health, or ARPA-H, an increase of $500 million over FY22. Also notable, the bill includes a supplemental appropriation to help fund the “Science” portion of the recently enacted CHIPS and Science Act. For NSF, this includes base funding of $8.38 billion, which is level with FY22, and a supplemental appropriation of $1 billion that will be available to fund research and education through FY24. The Department of Commerce also receives supplemental funds, of which $459 million (+$41 million) will be used to fund the regional technology and innovation hubs authorized in the CHIPS and Science Act.

Below is a chart detailing more of the results for research university priorities.

*Totals include base support and supplemental support

* Best estimate based on information publicly available

As is customary with these large year-end funding deals, the bill became a magnet for additional policy provisions. The package includes a full authorization of the Advanced Research Projects Agency for Health (ARPA-H), which places the agency administratively within NIH rather than as a separate entity but also requires that it be physically located outside of the NIH and in multiple geographic areas. The language also provides a number of authorities and flexibilities related to personnel, hiring, funding mechanisms, facilities, peer review, and annual reporting, including novel award language related to the public reporting of some facilities and administrative costs. In other matters, the omnibus package contains an expansion of retirement-savings incentives, an extension of telehealth authorizations for certain health plans, climate resiliency and agriculture programs, electoral college reform, a reduction (from 4.5 percent to 2.5 percent) in the scheduled cut in physician reimbursements, and more. The bill also includes a provision banning TikTok on government devices and, of interest to the research community, language directing the Deputy Secretary of Defense to review the current use of controlled unclassified information to ensure its appropriate application, recognizing that overreliance hinders transparency and oversight.

Congress failed to reach bipartisan agreement on a tax package to expand or extend the child and R&D tax credits and was unable to provide permanent protection for the Dreamers, despite a late effort to generate support for a new bipartisan framework. Also left on the cutting room floor was legislation to improve maternal health and additional covid pandemic funding.

The 118th Congress, in Brief

After netting nine seats, Republicans will control the House (222-213) next year; Democrats will control the Senate (51-49), after gaining 1 seat. The new Congress – the 118^th – will take office on January 3, with 84 new members (77 House, 7 Senate).

In the Senate, Majority and Minority Leaders Chuck Schumer (D-NY, AB’71, JD’74) and Mitch McConnell (R-KY) will continue to lead their caucuses. While Kyrsten Sinema switched her party affiliation from Democratic to independent, she will still organize with Democrats, providing a 51-49 majority. This will give Democrats the majority and stronger control of committees than last Congress when membership was evenly divided and means that Democrats will prevail on party line votes, likely smoothing the way for Presidential nominees, legislation, and subpoenas for investigations. Key committees will see new members as well as new leadership. Senator Patty Murray (D-WA) will serve as the Chair of the Appropriations Committee, where she will be joined by Senator Susan Collins (R-ME) as ranking member—the first time two women will lead the committee. Also, in the wake of departures and other assignments, the Health, Education, Labor, and Pensions Committee will be led by Senator Bernie Sanders (I-VT) as Chair and Senator Bill Cassidy (R-LA), a physician, as ranking member.

In the House, Minority Leader McCarthy (R-CA) faces a significant challenge from within his party to becoming Speaker, where he will need 218 votes – and at least five of his members have announced their opposition to his candidacy. Since there is no obvious alternative, McCarthy is still favored to become Speaker, but the difficulty in reaching the position presages the challenges he is expected to face in wrangling a majority split among moderate, conservative, and MAGA factions.

Also, the delay in the vote for Speaker will delay the selection of Republicans to serve as committee chairs, as many of the most important leadership positions are contested, including the Education and Labor and the Ways and Means Committees. Until chairs are formally named, committees cannot organize or hire staff, which could mean a slow start to hearings in the 118^th Congress, particularly those focused on oversight and investigations.

House Democrats experienced their own upheaval following announcements by Speaker Nancy Pelosi (D-CA) and Majority Leader Steny Hoyer (D-MD) that they would not seek reelection to their leadership posts, which cleared the way for Reps. Hakeem Jeffries (D-NY), Katherine Clark (D-MA, MPA’97), and Pete Aguilar (D-CA) to be elected to the top three positions of Minority Leader, Whip, and Caucus Chair.

The new Congress will include 52 Harvard alumni, including 38 in the House and 14 in the Senate. That number is expected to change early in 2023 when Senator Ben Sasse (R-NE, AB’94) steps down to become president of the University of Florida.