Congress Makes Progress on Appropriations, NDAA

Congress adjourned late yesterday for the August recess, capping a legislative session that included an agreement to suspend the debt limit in exchange for two years of capped discretionary spending, House and Senate passage of the National Defense Authorization Act (NDAA), and progress in committee on the Fiscal Year 2024 (FY24) appropriations bills. Although some had hoped that the bipartisan agreement on topline spending levels would streamline the annual budget process, significant funding differences have emerged between and within the two bodies and political parties. In addition, hot-button issues, from support for Ukraine to abortion, climate, and diversity, equity, and inclusion (DEI), have found their way into nearly every legislative debate, and there have been no discussions on how to bridge these differences before the end of the fiscal year on September 30, raising the specter of at least one continuing resolution and the possibility of a government shutdown.

FY24 Appropriations

For FY24, the debt limit agreement – known as the Fiscal Responsibility Act – set an overall discretionary spending cap of $1.59 trillion, which is nearly level with FY23 funding. Within that total, and after various budgetary transfers, defense spending receives approximately $886 billion (+3 percent) and nondefense spending receives $652 billion (-0.2 percent), although many Republicans and Democrats who voted for the deal in the Senate received assurances that emergency and supplemental support for Ukraine, natural disasters, defense, and other national priorities could be funded outside the caps. To encourage timely completion of the annual spending process, the deal also includes a novel trigger mechanism, which provides a 1 percent across-the-board cut if all 12 spending bills are not enacted into law by January 1, although it is not clear how this sequestration of funding will work or when it would actually kick in.

The expectation was that the debt-limit agreement on spending levels would provide a common framework for the annual appropriations process that could speed consideration of the bills through the Congress. In the Senate, that has been the case thus far, with the Appropriations Committee drafting bipartisan bills at the agreed upon levels and even reaching agreement on the addition of $13.7 billion in supplemental funding, split $8 billion for defense and $5.7 billion for non-defense. The House, however, has taken a different path. Exploiting the narrow majority, conservative members in the Republican caucus have pressed for further reductions in funding of non-defense programs, leading leadership to instruct the Appropriations Committee to produce bills at FY22 levels, nearly $119 billion below the debt limit agreement. In recent weeks as the funding bills have moved from committee to the floor, they have continued to push for further deep cuts, undermining the support seemingly necessary for passage.

In addition to the very low overall spending totals, House Republicans have protected funding priorities for veterans and homeland security, which has meant that cuts are concentrated in the remaining bills, such as the Labor-HHS-Education bill, which is reduced roughly 30 percent from FY23. Within this bill, many traditionally bipartisan, and leading university, priorities, have been cut, like NIH (-7.8 percent), and funding for K-12 schools that serve low-income students (-80 percent), and some, like Federal Work Study, the Supplemental Educational Opportunity Grants (SEOG), and the Agency for Healthcare Research & Quality (AHRQ), have seen funding eliminated. Also, controversial policy riders have been added to the House’s partisan funding bills; nearly all include bans on DEI offices, programs and training, limits on funding and support for reproductive health and gender-affirming care, and provisions to setback or block various Administration climate initiatives. There are also specific proposals to ban federal funding for fetal tissue research, to restart the China Initiative at the Department of Justice, to block the Administration’s efforts to provide open access to federally funded research, and to stymie efforts promoting corporate ESG reporting.

Given the divergent approaches of the House and Senate and the Administration’s opposition to the House bills, negotiations on final spending bills are expected to be very difficult and time will be short with a deadline of October 1 for the start of FY24 and Congress out of session all of August. It seems likely that leadership will work to pass a stopgap funding bill to provide more time for negotiations, but there is growing concern that objections from a small group of fiscal and social conservatives within the House Republican caucus could block this normally routine legislation and force a government shutdown. In addition, there is the risk of triggering the 1 percent across-the-board cut if the government is funded under a continuing spending resolution into the new year.

The chart below this update provides details on preliminary FY24 funding levels for University priority areas.

The Remaining Fall Agenda

Lawmakers also continue work on other must-pass pieces of legislation, including the annual National Defense Authorization (NDAA), Federal Aviation Administration reauthorization, the Farm Bill, and an update of the Pandemic and All Hazards Preparedness Act. Of particular note, the NDAA has passed both the House and Senate but has a difficult road in conference. The House NDAA was loaded with hot-button political issues from DEI and CRT to abortion and transgender care and ultimately passed with almost no Democratic support, which is a rarity for this normally bipartisan bill. Beyond these controversial riders, both House and Senate bills recommend cuts to basic research at DOD, and the House includes research security provisions to restrict research collaborations with certain entities in China and Russia, enhances disclosures for DOD grant recipients, and bans so called gain-of-function research. Although the Senate does not include these provisions in its bill, it does establish a new notification regime for so-called “outbound investments” in China and other countries of concern, which could implicate institutional investors as well as university research collaborations. As with appropriations, the conference process to resolve the differences between the two bills could be lengthy and difficult, with final resolution of the NDAA possibly continuing late into the year.

Contact Us

As always, Harvard’s DC-based federal relations team remains closely engaged on the University’s priorities. If you have any questions, please feel free to reach out to Suzanne Day (suzanne_day@harvard.edu), Kara Haas (kara_haas@harvard.edu), or Peter DeYoe (peter_deyoe@harvard.edu).

*NSF received $335 million in supplemental funding in FY23, which was not included in the base amount for FY24.