What Is the “Byrd Rule” & Why Is It One Line of Defense in Contesting the Inclusion of Revisions to the 90/10 Rule In the FY21 Budget Reconciliation Bill (The American Rescue Plan Act of 2021)

Overview

Because lawmakers included a provision to modify the 90/10 Rule in the House FY21 Budget Reconciliation bill (The American Rescue Plan Act of 2021), our community finds itself having to begin the 117th Congress contesting why an HEA provision having nothing to do with the pandemic or the economic crisis is included in Congress’ latest COVID-19 funding package.

The good news is that the process being used to advance the legislation – including the seemingly out-of-place 90/10 provision – will require thorough review of this very topic this week as the House completes its deliberations, passes their final version of the bill, and yet again once the House’s bill is sent over to the Senate for its consideration.

The very unique set of rules of Budget Reconciliation mean that only provisions with a fiscal (monetary) impact, and that meet a series of tests known as the “Byrd Rule,” can pass the Senate on a simple majority basis (50 votes) under reconciliation procedures.

Effectively this means that every provision must directly relate to either a cost or a savings.  Any provision that fails to meet the criteria of the Byrd Rule is subject to potential removal if an objection is raised and affirmed.

Since many in the community have asked me to help explain the Byrd Rule and how it will affect the 90/10 provision, I have developed this summary and analysis solely on the Byrd Rule and how it could result in the procedural removal of the 90/10 Rule provision.

 

Background

The impetus for this new pandemic recovery and economic stimulus legislation came from President Biden’s American Rescue Plan.  In his Press Release establishing the plan, President Biden made it clear that the proposal was the first step of an aggressive, two-step plan to rescue the nation from “the COVID-19 pandemic and the corresponding economic crisis (that) are devastating families across the country,” by changing the course of the pandemic, building a bridge towards economic recovery, and investing in racial justice.

To achieve this goal, President Biden requested that Congress take immediate steps to pass his plan providing $1.9 trillion in new emergency sending, laying out specific requests for additional funding and actions he wanted contained within the legislation.  With respect to education, the President requested:

  • $130 billion to support schools in safely reopening;
  • $35 billion to ensure colleges have critical resources to implement public health protocols, execute distance learning plans, and provide emergency grants to students in need; and
  • $5 billion in funds for governors to use to support educational programs and the learning needs of students significantly impacted by COVID-19, whether K-12, higher education, or early childhood education programs.

It is important to note that President Biden’s plan did NOT request that Congress find savings to offset this new spending, or provide directives seeking other authorizing revisions.

 

Congressional Action

Acting upon the President’s request, Congress is moving quickly to develop and pass legislation that would deliver a final bill for his signature by mid-March using a process known as Budget Reconciliation.

 

Budget Reconciliation

Budget Reconciliation is an optional part of the annual congressional budgetary process. Typically, the reconciliation process begins when the president submits a budget to Congress early in the calendar year.  In response, each chamber of Congress begins a parallel budget process, starting in the Senate Budget Committee and the House Budget Committee.

Each budget committee proposes a budget resolution setting spending targets for the upcoming fiscal year. To begin the reconciliation process, each house of Congress must pass identical budget resolutions that contain reconciliation instructions for one or more congressional authorizing committees (e.g., House Education and Labor Committee, House Ways and Means Committee, etc.) to alter programs within their jurisdiction. These committees then approve bills that meet the spending targets proposed by the House and Senate Budget Committees, which consolidate the committees’ individual bills into a single omnibus bill.

 

The reconciliation process has a relatively minor impact in the House of Representatives, but it has important implications in the Senate. In contrast to most other legislation, senators cannot use the filibuster to block consideration of a reconciliation bill, because Senate debate over reconciliation bills is limited to twenty hours. Thus, reconciliation bills only require the support of a simple majority of the Senate for passage, rather than the 60-vote super-majority required to invoke cloture and defeat a filibuster.

 

Special Rules for Reconciliation (The Byrd Rule)

The reconciliation process comes with some extra strings attached in the Senate. Since reconciliation effectively bypasses the Senate filibuster, only provisions directly impacting government spending or taxes can be passed through reconciliation.

This rule is called the Byrd rule, after former Senator Robert Byrd (D-WV), who advanced the measure to protect the Senate’s rules for extended debate and amendments. The Byrd rule has been law since 1990, and has been used successfully dozens of times to block so-called “extraneous” (unrelated) provisions that shouldn’t get passed through reconciliation.

 

“The Byrd Bath”

How does the Senate weigh whether something is related to the budget or “extraneous?” They apply six criteria to decide whether a provision breaks the Byrd rule.  A legislative provision is considered “extraneous” if it meets any or all of the Byrd rule’s six tests:

  1. It does not have a budgetary effect;
  2. It has a budgetary effect, but the effect is not what the budget resolution called for;
  3. It’s outside the jurisdiction of the committee recommending it;
  4. It does have a budget effect, but a “merely incidental” one;

‘Merely Incidental’

The most debatable of the Byrd rule criteria is whether a provision has a budgetary effect that is “merely incidental.” The Byrd rule gives considerable discretion to the Senate’s Parliamentarian – who advises the Presiding Officer on points of order — to decide what is “merely incidental.”

5. It increases the deficit beyond a year 10; or

6. It affects Social Security’s old age or disability insurance.

 

On the Senate Floor

If a reconciliation bill is brought to the floor containing provisions that violate the Byrd Rule, a Senator (usually from the opposing party) will raise a Point of Order on the bill, citing the Byrd Rule violation. The Senate Parliamentarian advises the Presiding Officer how to rule.

Senators may vote to waive the Byrd rule, thus negating any potential point of order. Waiving the Byrd rule requires a three-fifths (⅗) majority (60 votes) – by design, the same 60 vote margin usually required to overcome a Senate filibuster.

Technically, the Parliamentarian provides advice to the Presiding Officer, who is free to disregard that advice and rule however he or she wishes. While Senators of both parties have threatened to overrule the Parliamentarian with respect to Byrd rule points of order, they have typically not done so, as the Parliamentarian provides advice in a neutral, non-partisan manner.

Some would view overruling the Parliamentarian on Byrd rule points of order as a de facto abolition of the legislative filibuster, because it would allow all manner of provisions with a minimal budgetary impact (e.g., abortion, etc.) to pass the Senate on a simple majority basis. For this reason, Sen. Joe Manchin (D-WV) – who replaced Sen. Byrd following his death, and who has said he will not seek to abolish the legislative filibuster under any circumstances – has stated he will not vote to overrule the Parliamentarian.

 

Applying the Byrd Rule to the 90/10 Provision

So, does the 90/10 Rule provision pass the Byrd Rule or not?  Well, let’s take an objective look at Section 2013 of the House Education and Labor Committee’s recommendation, apply the six criteria, and see what we find.

  1. Does Section 2013 have a budgetary effect;

Analysis – PASSES: The 90/10 Rule does have a budgetary effect. According to the Congressional Budget Office (CBO), the inclusion of other forms of federal funds beyond just Title IV – Federal Student Financial Assistance does impact the 90/10 calculation.

The Congressional Budget Offices’ Cost Estimate (revised Feb. 17, 2021) clearly indicates that Section 2013 has a budgetary effect.  CBO states it,  “expects that amending the 90/10 rule would reduce the number of students enrolled in proprietary schools, resulting in an estimated savings of $124 million over the 2021-2030 period.”

  1. Given that Section 2013 does have a budgetary effect, is the effect what the budget resolution calls for;

Analysis – PASSES: Strictly speaking, the 90/10 Rule modification meets this test. While the provision has only an ancillary impact to COVID-19, and was not included in the Biden Administration’s recommendations, this test only relates to whether the Committee met its instruction to report a deficit increase of no more than $357.9 billion. The Committee met that criteria, therefore meets this test.

However, it is worth noting that from a policy perspective, the House and Senate Budget Reconciliation instructions (Senate Concurrent Resolution 5 (S. Con. Res. 5)) sought Committee recommendations on how to best and most effectively spend the funds allocated to the various cabinet level agencies – not requests for revisions to cut federal spending.

Again, as detailed in the Congressional Budget Offices’ Cost Estimate (revised Feb. 17, 2021), the CBO, “expects that amending the 90/10 rule would reduce the number of students enrolled in proprietary schools, resulting in an estimated savings of $124 million over the 2021-2030 period.”

Given that the Budget Reconciliation instructions did not call for savings, but focused on increases in the deficit up to the specified amount, Section 2013 has a budget effect that is NOT what the budget request calls for.

And finally, Section 2013 is the only provision that seeks to amend underlying policy unrelated to the budget instructions and/or annual budget and appropriations activities, policy which also does not have any direct, or even indirect correlation to recovery from the COVID-19 pandemic or economic relief/stimulus to benefit our nation.

  1. Is Section 2013 outside the jurisdiction of the committee recommending it;

Analysis – FAILS: This provision has an impact outside the jurisdiction of the House Education and Labor and Senate HELP Committees – specifically, veterans’ programs within the jurisdiction of the House and Senate Veterans Affairs Committees.

As detailed in the Congressional Budget Offices’ Cost Estimate (revised Feb. 17, 2021), the CBO further states, “savings would stem from a reduction in mandatory spending for Pell grants ($78 million), student loans ($25 million), and veterans’ education benefits ($21 million) (emphasis added).”

CBO makes clear that there is an impact outside the jurisdiction of the House Education and Labor and Senate HELP Committees – specifically, veterans’ programs within the jurisdiction of the House and Senate Veterans Affairs Committees.

Given that the provisions effects individuals – specifically our nation’s veterans, and likely active-duty military personnel participating in the Department of Defense’s Tuition Assistance Program (TAP) – the provision extends beyond the jurisdiction of the House Education and Labor Committee that provided this recommendation.

Since Section 2013 does have a budget effect, is it a “merely incidental” one;

Analysis – FAILS: The House Committee on Education and Labor’s inclusion of revisions to the 90/10 Rule are the embodiment of a provision that is “merely incidental” and secondary in nature.

The 90/10 Rule is a HEA policy provision, not a funding provision, which was established as an institutional integrity and consumer protection provision.

The 90/10 Rule does not directly affect any federal spending – by itself, it does not raise or lower taxes, appropriate funds, etc. Rather, 90/10’s fiscal impacts are secondary in nature, and incidental to the underlying policy changes Democrats wish to achieve.

According to its most recent budgetary baseline, CBO believes mandatory spending on Pell Grants will total $63.5 billion from 2021-2030. By comparison, as noted above, CBO believes that Section 2013 will reduce mandatory Pell Grant spending by $78 million over the same time period – roughly 0.12% of all mandatory Pell Grant spending. Such comparatively small – and indirect – fiscal savings epitomize the definition of “merely incidental” under the Byrd rule.

  1. It increases the deficit beyond year 10; or

Analysis – PASSES: The 90/10 Rule does not increase the deficit beyond the calculation period contained within the Budget Reconciliation bill.

  1. It’s about Social Security.

Analysis – PASSES: The 90/10 Rule modification does not affect the OASDI program (i.e., Social Security).

Conclusion

It seems possible that the Parliamentarian might rule that Section 2013 fails two of the six criteria under the Byrd Rule.  Therefore, we remain hopeful that the Senate could strike this provision.

Because Democrats are proceeding to consider this legislation on a strictly party-line basis, rather than reaching bipartisan agreement on another COVID package, we think it unlikely that 10 Republicans will agree to waive the Byrd rule should Section 2013 be found not in compliance by the Parliamentarian.

Advocates for our students and institutions, including TEN Government Strategies, are sharing information with Senate Health, Education, Labor, and Pensions Committee staff, along with other Senate offices and their staff. Those discussions focus on process – why we do not believe Section 2013 complies with the Byrd rule – but also on policy: Why we believe Section 2013 will harm veterans, schools, and the entire higher education community; the fact that the Biden Administration did not seek provisions such as Section 2013 in its American Rescue Plan request; and the ways in which Section 2013 will slow economic recovery rather than accelerate it.

If you would like a copy of the Talking Points TEN Government Strategies has developed, please contact me directly at Tom@TENGovtStrategies.com and I would be happy to share them.

Tom E. Netting

CEO, TEN Government Strategies

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