By Erika Hoffman, CSBA Deputy Legislative Director, State and Federal Programs
By narrow margins last week, the Senate and House both approved the final version of HR 1, the One Big Beautiful Bill Act, that enacts the President’s domestic agenda, which includes making permanent the 2017 tax cuts, increasing funding for border control and defense, extending the debt ceiling, and enacting changes to Medicaid, supplemental food programs and other policies.
Major education and workforce related provisions in HR 1 include:
- Medicaid
- Cuts approximately $930 billion and includes more frequent eligibility redeterminations, increased state and patient costs, and new work requirements for parents with children over age 14.
- Drops a House provision that would have reduced Medicaid funding to states supporting care for undocumented individuals.
- Establishes a rural hospital fund to help mitigate impacts on rural communities.
- Supplemental Nutrition Assistance Program (SNAP)
- Shifts a portion of SNAP costs to states with payment error rates over 6 percent, capped at 15 percent.
- Cost-sharing begins in Fiscal Year (FY) 2028, with flexibility in how error rates are calculated in early years. From FY 2029 on, the error rate from three years prior will determine each state’s share.
- Pell Grants
- Advances a “Workforce Pell Grant” program, which expands eligibility to shorter-term, high-quality career and technical education programs.
- Requires state verification that programs prepare students for “high-skill, high-wage” jobs and confer a recognized credential.
- Adds a new accountability component by which programs must demonstrate that students earn more than they would have without attending, or risk losing loan eligibility.
- Education Choice for Children Act (ECCA)
- Establishes a federal tax credit for individuals and corporations donating to qualified state-approved scholarship granting organizations (SGOs). If a state does not maintain an approved SGO list, taxpayers in that state cannot contribute to any SGO.
- Scholarships may be used for private school tuition and fees, homeschooling costs and therapies and services for children with disabilities.
- Available to families earning up to 300 percent of area median income and individual credit is capped at $1,700.
There are two provisions that did not make it into the final version of the bill: a 10-year moratorium on states enacting legislation to address issues around artificial intelligence and provisions that would have reauthorized the Secure Rural Schools Act (SRS). However, prior to passage of HR 1 in the Senate, separate legislation (S 356 by Sen. Mike Crapo, R-Idaho) to extend SRS for three years was passed. S 356 is pending in the House.
What’s next
Up next for Congress will be final consideration of the rescission bill submitted by the administration in June. A rescission bill is a proposal that cancels previously approved budget authority for federal spending. If a president wishes to cancel spending already approved by Congress, the president must send a message to Congress proposing the program funds to be rescinded. After messaging Congress, the president can withhold the targeted funds for 45 days. If Congress fails to enact a measure to formally rescind the money by the end of the 45 day period, the administration must legally release the funds.
HR 4 (Scalise, R-Louisiana) would rescind $9.4 billion in funds provided to the Department of State including funds for the U.S. Agency for International Development, various other independent agencies and for the Corporation for Public Broadcasting. The House passed the measure on June 12 and it is awaiting action in the Senate.
