Washington Advocacy Report

Ethics is the underlying theme as we begin the second session of the 109th Congress. Thus far, former House Majority Leader Tom Delay (R-TX) was indicted and has stepped down from his post as Majority Leader. In a sign that Republicans want change, former House Education and the Workforce Chairman John Boehner (R-OH) was elected to replace Delay as Majority Leader, instead of the obvious choice, his chief opponent, Roy Blunt (R-MO), who retained his post as Majority Whip.

The Abramoff scandal has caused Republicans and Democrats alike to draft proposals for lobbying reform. Senate Leader Bill Frist (R-TN) tasked Sen. Rick Santorum (R-PA) with assembling a leadership reform package for the Senate. House Speaker Dennis Hastert (R-IL) put Rules Chairman David Dreier (R-CA) in charge of House efforts to reform Congressional lobbying rules. Democrats released their own proposals the day after the Republicans. Both the House and Senate Republicans plan to have their proposals ready for floor action by mid-March.

As other Republicans also continue to be mired in scandal, Democrats continue to boast of the possibilities of reclaiming the House and Senate in 2006. This Congress will likely be even more divisive than usual with midterm elections around the corner.

House-Senate conferees expect to tackle soon a tax bill as part of budget reconciliation. The Senate bill contains two bond provisions but it does not further restrict advance refunding which NAHEFA and NCHFFA opposed, as part of a broad coalition ("Built-By-Bonds").

The House bill contains no bond provisions. The two remaining provisions have been diluted. The requirement that investors be identified to the IRS has been placed on broker-dealers as in the private sector. If enacted as is, restrictions on pools may affect several of our authorities programs because of pre-issuance project identification and post-issuance proceeds distribution requirements.

While our bank deductibility legislation, H.R. 1140, remains in the House Ways and Means Committee, the next round of legislation that may affect 501(c)(3) bonds are charitable reform legislation. As part of a comprehensive reform package of charitable operations, executive compensation, perks, etc., new bond restrictions may be proposed.

As a precursor to this effort, Congress has asked the Congressional Budget Office (CBO) to examine hospital bonds. The study is evaluating whether economic ÿ but legal ÿ "arbitrage" occurs when bonds are issued for hospitals with significant "endowments" or surpluses.

We led a team of five authority directors and Moody’s to meet with the CBO economist and explained why endowments are not sources of arbitrage but important resources, which are used for a critical purpose, such as charitable care and personnel, and needed for the hospitals’ financial well being. Several authorities are providing technical assistance to CBO to ensure that it does not under-account for outstanding tax exempt debt or overstate reserves.

On the Administrative front, the Treasury’s Tax Office has just appointed veteran tax lawyer John Cross as the new tax-exempt bond lawyer. This may accelerate the issuance of Circular 230 and other pending bond regulations.

Representative Howard "Buck" McKeon (R-CA) will replace Representative Boehner as Chairman of the House Education and the Workforce Committee. McKeon has been a vociferous critic of textbook and tuition price increases and introduced legislation placing price controls on universities. Boehner has been a critic of student loan programs and a proponent of proprietary schools.

Pending before Congress is higher education reauthorization but it is unclear that legislation will be finalized since higher education interest groups are unhappy with the student loan and other provisions.

On January 18, U.S. Secretary of Education Margaret Spellings announced an additional $30 million to aid higher education institutions impacted by hurricanes Katrina and Rita. This aid comes in addition to $200 million already approved by Congress. Spellings said, "We know that much work remains to be done and we stand ready to help the colleges, universities and other postsecondary schools that have been deeply affected by the hurricanes, as well as those schools that rallied to their aid and took in students in the spirit of cooperation." The announcement was made during a meeting with the leaders of the eight major New Orleans-based colleges and universities. Students from each higher educational institution also attended the meeting. Students were able to share their experiences and voice their concerns. The meeting is the latest in a series of Bush Administration efforts to reach out to the colleges and universities impacted by hurricanes Katrina and Rita.

In January, the U.S. Departments of Education and State co-hosted the U.S. University Presidents Summit on International Education in Washington, DC. The purpose of the summit was to engage university presidents in strengthening international education. According to Karen Hughes, Under Secretary of State for Public Diplomacy and Public Affairs, the purpose was to highlight the importance of attracting foreign students to U.S. schools. She added, "Of equal importance is seeking investment in educating globally competitive U.S. students to work in fields of international interest."

In December, the House Subcommittee on Select Education examined the correlation between a lack of higher education faculty and America’s nursing shortage. Chairman Jon Porter (R-NV) chaired the field hearing. He noted, "The National League of Nursing estimates that more than 125,000 qualified applicants were rejected by nursing programs in the 2003-2004 academic year. The shortage of nursing faculty is one of several factors that are most commonly cited as reasons behind this trend." Witnesses outlined the shortage of trained professionals in the nursing field and the lack of higher education nursing faculty. Connie Carpenter, the director of nursing at Nevada State College, said, "Only through addressing the nurse faculty shortage will the overall nurse faculty shortage be resolved." The College Access and Opportunity Act, H.R. 609, approved by the House in July, aids in increasing the number of nurses by offering nurses up to $5,000 in student loan forgiveness.

The budget bill includes Medicaid reforms to trim costs, like increasing co-pays and making it more difficult for patients to hide assets.

Senate Committee on Health, Education, Labor and Pensions (HELP) Chairman Mike Enzi (R-WY) joined members of the Rural Health Caucus to advocate for the Senate-passed funding levels for rural health. Enzi stated, "These programs play an important role in providing health services to those who live in medically underserved areas like my home state of Wyoming." In a letter to Senate Appropriations Subcommittee on Labor, Health and Human Services Chairman Arlen Specter (R-PA), Enzi and others wrote that "while current spending for all rural health discretionary programs is relatively small, it plays a critical role in solidifying the fragile health care infrastructure common in rural communities."

On November 18, 2005, the Senate approved Senate Health, Education, Labor and Pensions Chairman Enzi’s (R-WY) S. 1418, the Wired for Health Care Quality Act. The measure has broad based bipartisan support from 38 members of the Senate, including HELP Ranking Member Ted Kennedy (D-MA), who is the original cosponsor. Enzi said of the Senate floor action, "This brings us closer to enabling all Americans the freedom and security of going to the doctor’s office or hospital and presenting an electronic card or identification tag that holds all patient data, insurance and medical history records." The bill was referred to the House Committee on Energy and Commerce Subcommittee on Health where it now awaits action.

The purpose of S. 1418 is to more expeditiously move medical records into the information age. In addition to error reduction, by moving medical records from a paper-based health care system to an electronic one, lives, time and money will be saved. The bill would authorize funding of grants to facilitate the widespread adoption of certain information technologies. Funding for grants of $125 and $155 million would be authorized in 2006 and 2007, respectively. Between 2008 and 2010, such funds as necessary for grants are authorized by S. 1418. The bill establishes a Center for Best Practices via the Agency for Healthcare Research and Quality (AHRQ) to support the adoption of healthcare technology. Such a program would extend through 2010 to provide telemedicine grants. Meanwhile, in the House, Representative Darrell Issa (R-CA) introduced identical legislation to S. 1418 on December 18, 2005. His bill, H.R. 4642, was referred to the House Committee on Energy and Commerce, but has yet to garner any cosponsors.