The House of Representatives recently passed its version of tax cuts and reforms, the central piece of the Republican plan to boost the U.S. economy. No Democrats voted for the bill. Speaker of the House Paul Ryan lost 13 House Republicans, but still had enough support to pass the bill.

The focus now shifts to the Senate where Majority Leader Mitch McConnell has laid the framework for a potential vote on tax reform over the next couple of weeks.

What are the Implications for Education Funding?

As you may recall, Congress passed its budget last month with reconciliation instructions in order to pass tax reform. While they are not bound by the orders of the budget resolution to do so, both House and Senate leaders have said they will not finish the appropriations process for FY2018 until tax reform is passed. Debate on tax reform could drag on as some Senate Republicans are concerned about potential tax increases for the middle class as well as repeal of the individual mandate found in the Affordable Care Act. Congress’ continuing resolution to fund the government expires on December 8. Thus, Members need to negotiate a compromise by then, or pass another continuing resolution to avoid a government shutdown.

To further complicate the process, House Democrats have threatened to vote against any funding measure without a provision that keeps individuals in the US that have been identified as part of the Deferred Action for Childhood Arrivals (DACA). House Republicans prefer to keep that debate separate from the budget process.

The table below shows where current appropriations funding stands for the areas of ESSA funding which NAfME has been tracking, and that were at the heart of our 2017 Hill Day requests:

Program	FY17 Enacted	President’s FY18 Budget	House FY18	Senate FY18	NAfME FY18 Appropriations Request
Title I, Part A	$15.460 billion	$15.9 billion (Portability)**	$15.460 billion (No Portability)	$15.485 billion (No Portability)	$15.460 billion (No Portability)
Title II, Part A	$2.056 billion	$0 (Eliminated)	$0 (Eliminated)	$2.056 billion	$2.295 billion
Title IV, Part A	$400 million	$0 (Eliminated)	$500 million	$450 million	$1.6 billion (Authorized)
Arts in Education	$27 million	$0 (Eliminated)	$0 (Eliminated)	$27 million	$27 million

**The President’s request includes suggested language that would dedicate $1.0 billion of Title I, Part A funds towards portability, where the dollars would follow a low-income student to a public school of his or her choice. NAfME in our Appropriations Agenda has advocated against this, as it would weaken Title I programs. Neither the House or Senate followed the President’s portability request in their proposals.

NAfME continues to lobby on Capitol Hill for all of these funding areas, particularly Title IV, Part A, which was only funded a quarter of its authorized level in its introductory year (FY17).

K-12 Education Policy Changes in the Proposed Tax Code

The House version of tax reform includes an expansion of Section 529 college-savings plans that would allow parents to use those plans to pay for K–12 education expenses and for apprenticeship programs for up to $10,000 per year. The Senate bill does not include this provision. Proponents of school choice see this measure as a means of providing parents flexibility on where to send their children to school. Opponents of school choice argue that this provision provides a mechanism to move public funding to private schools. And, some advocates on both sides of the school choice debate have questioned how much help this provides to low-income families.

The House plan also eliminates the provision in the tax code that allows teachers to deduct eligible, unreimbursed classroom spending of up to $250. Proponents of the elimination contend that the doubling of the standard deduction ($24,000 for a married couple and $12,000 for an individual) will lower the tax bill for many families and make up for some of the lost deductions including the classroom spending deduction. Opponents question the priorities of a bill that prioritizes school choice for wealthy families over teachers that are increasingly paying more out of pocket each year for classroom expenses. The Senate version of tax reform moves entirely in the opposite direction by doubling the teacher expense deduction to $500.

Two school choice amendments have also been introduced on the Senate side. The first amendment, sponsored by Senator Orrin Hatch (R-UT) would allow a charitable deduction for certain tuition and related expenses for qualified religious instruction. The other amendment, sponsored by Senator Tim Scott (R-SC), would add a K-12 education tax credit for corporate and individual contributions to state non-profit organizations which provide scholarships for children in low-income to middle class families. The amendment does not provide income limits or ranges for those making contributions.

If either amendment is adopted, they would require an “appropriate offset” in terms of federal revenue. Neither have yet to specify what that may be. While budget instructions do limit offsets to cuts in federal education funding, it is expected that at least a portion of the amendments would be paid for in this way. Majority Leader McConnell has yet to announce how he will handle the amendment process and which amendments will be selected for consideration. NAfME staff will continue to provide updates as necessary.