President Obama Signs Spending Bill; Increased Funding for Education and Training

President Obama has signed an omnibus funding bill for FY 2016 (the fiscal year that began on October 1). Following the budget agreement made earlier this fall, an increase in the overall discretionary budget authority allowed Congress to increase funding for much-needed investments. The bill provides modest boosts in funding for key programs for low-income adults and youth in the areas of workforce development, postsecondary education, and offers important supports for other investments that will help disadvantaged and out-of-school youth. The bill also includes changes to the tax code that make improvements to key refundable tax credits programs that support working families and students.

The omnibus spending bill includes:

Support for Workforce Innovation and Opportunity Act (WIOA) programs at increased funding levels compared with FY 2015, although below the full funding levels authorized by WIOA:

  • An increase of $39 million in WIOA Title I-Adult funding, providing a 5 percent increase in funds for states and local areas to offer career services, job training, and work-based learning opportunities, giving a priority to low-income adult populations, including public assistance recipients and others with barriers to employment.
  • An increase of $42 million in WIOA Title I-Youth funding, providing a 5 percent increase in funds for states and local areas to implement effective employment, education, and youth development strategies for the most vulnerable young people in highly distressed communities, with an increased focus on out-of-school youth. 
  • An increase of $13 million for WIOA Title II Adult Education/Literacy grants to states, offering a 2 percent increase in funds for states to help the 36 million Americans with low basic skills strengthen their English language and educational levels to take advantage of emerging economic opportunities, support the educational and skill achievement of parents and family members, improve health and financial literacy, and participate fully in society.  

Important investments for disadvantaged and out-of-school youth:

  • Also authorized under WIOA, the Department of Labor’s YouthBuild program is funded at $84.5 million, an increase of more than $4.8 million over FY 2015. In addition, Job Corps funding will increase by $1 million to help out-of-school youth to earn secondary and postsecondary credentials.
  • The legislation maintains the authority for Performance Partnership Pilots for Disconnected Youth (P3) in discretionary programs in Labor, Health and Human Services, Education, and Related Agencies and expands P3 to include discretionary programs in the Office of Justice at the U.S. Department of Justice and “Homeless Assistance Grants” at the U.S. Department of Housing and Urban Development. The P3 initiative provides states and localities an opportunity to develop innovative approaches to better serve disconnected youth by braiding and blending federal funding streams.
  • The AmeriCorps State and National program is funded at $386 million, an increase of 15 percent, more than $50 million above FY 2015 funding levels. National service is an effective strategy to get out-of-school youth reconnected to needed education and training, and leverages their talents to support civic engagement in their communities. 
  • The bill provides $14.9 billion, a $500 million increase over last year’s funding, for Title I (Education for the Disadvantaged) grants to Local Education Agencies to improve education for low-income students. 

Important improvements in funding to help low-income students succeed in postsecondary education and earn while they learn:

  • Full funding for Pell Grants—enabling the maximum Pell grant for the 2016-2017 academic year to reach $5,915 (a $140 increase), which will provide vital student aid to support higher education access for low-income students.
  • The bill includes $90 million for a new Apprenticeship Grant program, which will support competitive grants to states to increase their capacity to register and oversee apprenticeship programs, to industry to launch apprenticeship models, and to community-based organizations to serve underserved populations and fund innovative apprenticeship approaches.    
  • The legislation also allows students to receive the full Pell award under the “ability to benefit” provision that offers aid to qualified students without a high school diploma or equivalent who enroll in career pathway programs coordinating college and adult basic education.  The bill defines “eligible career pathway program” to align with the definition in the Workforce Innovation and Opportunity Act, making it easier for students to qualify for Pell grants under this provision, and also allows such students to receive the full Pell award. Previously, students qualifying for grants under the ability to benefit provision were only eligible up to the $4,860 portion of the award funded with discretionary dollars.
  • The bill includes level funding for Work-Study and Supplemental Educational Opportunity Grants (SEOG), which provide important need-based aid in a time when the average unmet financial need for the lowest-income students is over $10,000.
  • The bill also provides level funding for Perkins basic state grant program to support our nation’s high schools, technical centers, and community colleges in developing the highly skilled workforce demanded by employers.

Tax-related provisions that support low-income workers and families:

  • The tax package that Congress considered at the same time as the omnibus spending bill makes permanent improvements to the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) made in 2009 to reach more low-income workers and their families. Both of these credits have been shown to significantly reduce poverty.  
  • The tax legislation also makes permanent the American Opportunity Tax Credit (AOTC), a partially refundable credit for students attending postsecondary education. The AOTC provides a tax credit of up to $2,500 per student per year, for up to four years. It is partially refundable, meaning that students who do not owe federal income taxes can still receive 40 percent of the credit – up to $1,000 per year -- as a cash refund.