The higher education landscape is constantly transforming. Learn more about the House Committee hearing on challenges and opportunities in higher education, supporting the tax-exempt status for municipal bonds, and resources to help illustrate how federal policy changes might impact higher education institutions. Additionally, Baker Tilly has developed two resource centers for tax reform and healthcare reform issues.
Baker Tilly Resource Centers: Tax reform and Healthcare reform
The new Presidential administration and Congress have created much speculation and anxiety about how tax and healthcare reform will proceed and who will be most affected by the results. As Valued Business Advisors, we are dedicated to keeping you abreast of significant tax and healthcare reform proposals and enacted legislation. While not all of this information is specific to Higher Education, we will do our best to notify you immediately when any new development has a direct impact on you and your institution.
Challenges and Opportunities in Higher Education
The U.S. House of Representatives Education and the Workforce Committee held its first hearing of 2017 on February 7 to discuss challenges and opportunities in higher education. The Committee is in the beginning stages of reviewing possible reforms to the Higher Education Act.
Chairwoman Virginia Foxx (R-NC) stated in her opening remarks, "We've worked in recent years to make changes that will strengthen America's higher education system and help ensure a college degree is accessible and affordable. It's clear that more has to be done. Fortunately, with reauthorization of the Higher Education Act, we have an opportunity to do just that – advance bold, responsible, and meaningful reforms."
Foxx went on to outline that empowering students and families to make informed decisions; simplifying and improving student aid; promoting innovation, access, and completion; and providing strong accountability and a limited federal role would be essential to the Committee’s future success.
Present at the hearing was a panel of witnesses who provided their insights on the Committee’s plan of action. Affordability, growth in administration, and retention and graduation rates were also discussed.
A Letter to Congress: Supporting the Preservation of Tax-Exempt Financing
The National Association of College and University Business Officers (NACUBO) and representatives from several industries that form the Municipal Bonds for America Coalition (MBFA) signed a letter of support for preservation of the tax exemption for municipal bonds.
Almost 400 organizations signed the letter sent to Congressional leaders and members of the House Ways and Means and Senate Finance Committees, which addressed concerns about limitations or changes regarding tax-exempt bonds in ongoing tax reform efforts. Such changes could be seen as a revenue-generating measure to fund other elements of tax reform.
“The municipal market and tax-exempt municipal bonds are the backbone of state and local government finance and key components in a vibrant federal economy,” the letter states. “A reduction or elimination for municipal bonds could raise infrastructure costs by 10 to 12 percent.”
The federal government uses tax-exempt bond financing as a way to invest in innovation and infrastructure building. Additionally, such financing continues to be a useful tool for colleges and universities looking to expand or renovate their campuses.
Tax-exempt bond financing will continue to be on Baker Tilly and NACUBO’s watch-list.
NACUBO: Preparing for a Game-Changing Era
NACUBO offers resources to help higher education institutions understand how federal policy changes may impact them. The most recent NACUBO resource discusses charitable giving and endowments, which we’ve summarized below.
In December of 2016, Rep. Tom Reed (R-NY) issued a white paper calling for college endowments to dedicate gains specifically to students from middle and working class families. During President Trump’s campaign, he pressured institutions with large endowments to spend more on students and mentioned that his tax reform plan would include a cap on all deductions – including the charitable deduction. Speaker Paul Ryan (R-WI) and Ways and Means Chairman Kevin Brady (R-TX) released a tax reform blueprint last year aimed at simplifying the tax code that did not eliminate the charitable deduction but could significantly limit the number of taxpayers who are eligible. Thus far, no draft legislation has been revealed. However, Ryan is optimistic about passing tax reform legislation in the House by August.
NACUBO is encouraging campus business officers to consider meeting with communications and government relations teams to discuss these and other issues of concern related to federal policies. Additionally, ask if your campus president needs any talking points on these issues when he/she next visits Washington. NACUBO’s Commonfund Study of Endowments demonstrated that colleges and universities were still able to support student aid and other endeavors in fiscal year (FY) 2016. Understanding this is essential to demonstrate to policymakers (and the public) the value of planning and managing financial gifts for the long-term so that institutions of higher education can carry out their missions well into the future.