September 23, 2019

H.R. 4378 – Continuing Appropriations Act, 2020, and Health Extenders Act of 2019

NOTEWORTHY

Background: The federal government’s new fiscal year begins October 1, but the House and Senate have not yet completed action on the 12 annual funding measures. Without full-year appropriations or a temporary continuing resolution in place by the deadline, the government will shut down. H.R.4378 is a short-term continuing resolution that would provide stop-gap funding for all federal agencies through November 21 and extend the authorization of certain health programs that would otherwise expire on September 30.

Floor Situation: The bill passed the House September 19 by a vote of 301-123. The Senate is expected to vote on the measure this week.

Executive Summary: Division A provides temporary appropriations for all federal agencies through November 21, in an amount equal to a prorated proportion of full-year budget authority for 2019. The division includes anomalies that are common to CRs – for example, a funding exception for FEMA’s Disaster Relief Fund to ensure it has the resources to respond to a natural disaster while operating under the CR – as well as one-time anomalies for unique or mission-critical programs, like the 2020 census, to ensure progress is not impeded by the delay in full-year funding. The CR does not contain any new restrictions on transfer authorities that would limit funding for construction of the wall on the southern border.

Division B contains the extension of several health-related programs that would otherwise expire after September 30.

OVERVIEW OF THE ISSUE

Continuing resolutions extend funding for the affected federal agencies but at the level and rate of spending equal to the prior appropriation. In general, this includes the continuation of prior year cancellations, rescissions, and funding previously designated in accordance with budget laws for overseas contingency operations, disaster relief, or other emergencies. Congress has enacted one or more CRs in 40 of the last 43 fiscal years (1977-2019).

The temporary funding provided in a CR ensures the government remains open and operational, but the restrictions and uncertainty imposed by a CR can delay or disrupt an agency’s ability to provide services or respond to new circumstances. For this reason, CRs often include anomalies, or deviations from the prior level of spending, which modify the timing, amount, or purpose of the stopgap funds. Anomalies often are used to address the funding needs of essential services or programs that have high rates of spending at the beginning of a fiscal year (e.g., distributions of funds to states or grantees). The list of anomalies requested by the president can be found here.

Once a CR is enacted, the Office of Management and Budget apportions funds available for obligation to agencies as a percentage of the annualized amount provided in the CR, unless there is an anomaly in place to do otherwise. For an example, see OMB’s apportionment letter to federal agencies from September 2018.

NOTABLE BILL PROVISIONS

Division A – Continuing Appropriations and Anomalies

Sections 101-115

  1. Extends 2019 appropriations for programs and activities through November 21 or until full-year appropriations are enacted, whichever happens first.

  2. Identifies by reference the 2019 appropriations measures that are extended by the CR.

  3. Iterates traditional restrictions on funds made available by the CR. For example, agencies cannot produce items that were not funded in 2019 or initiate any new starts. Agencies can, however, spend at a rate to prevent furloughs.

  4. Declares that amounts extended by the CR and previously designated by Congress in accordance with budget laws for overseas contingency operations, disaster relief, or other emergencies carry those same designations under the CR. Rescissions and cancellations of 2019 budget authority are treated similarly.

  5. The CR does not contain any new restrictions on transfer authorities that would limit funding for construction of the southern border wall.

Section 116 – Sugar beets

Allows cooperative processors for reduced quantity and quality sugar beets to draw upon funds allocated to the office of the secretary of the Department of Agriculture to compensate for necessary expenses related to losses of crops as a consequence of hurricanes Michael and Florence and other natural disasters in 2018 and 2019. Funds expended for this purpose will not be subject to discretionary spending limits.

Section 117 – Specialty crop research initiative grants matching funds

Allows the secretary of agriculture to waive a requirement that the recipient of a specialty crop research and extension initiative grant (organized under 7 U.S.C. Section 7632) match any federal grant with its own contribution, which can be an in-kind contribution.

Section 118 – Child nutrition programs

Allows funding for the child nutrition summer EBT demonstration program at a rate necessary so it is operational by May 2020. This program operates based on the school year, not the fiscal year. It provides food during the summer for children who qualify for free or reduced-price meals at school.

Section 119 – Commodity Credit Corporation

Allows funds provided to the Commodity Credit Corporation Fund to be used to reimburse the corporation for net losses sustained as of September 17, 2019. It also requires the secretary of agriculture to submit a report to Congress on losses to farms resulting from retaliatory tariffs, as well as an accounting of commodity purchases made by substantially foreign-owned companies. Because CCC has already paid out significant funds to protect farmers from the ramifications of retaliatory tariffs, this provision is necessary to continue paying farmers for additional trade losses as well as farm bill payments during this upcoming harvest season.

Section 120 – Hemp production

Allocates $16.5 million in additional funding to implement a program, authorized in the 2018 farm bill, for the Department of Agriculture to oversee and regulate the production of hemp.

Section 121 – International Trade Commission

Allows for apportionment of ITC salaries and expenses up to the rate needed to carry out the agency’s duties under the American Manufacturing Competitiveness Act of 2016 (P.L. 114-159). Those duties include issuing reports on petitions for temporary duty suspensions and reductions, noting whether domestic producers compete with the article and whether those producers object to the duty suspension. With increased trade tensions, ITC’s workload has increased.

Section 122 – 2020 census

Allows the Commerce Department to spend funds at a rate sufficient to cover key operations and meet statutory deadlines of the 2020 census. Without this anomaly there is a risk the Census Bureau would miss key statutory deadlines for the 2020 census.

Section 123 – Defense Working Capital Funds

Permits working capital fund agencies at the Defense Department (such as the Defense Logistics Agency, Defense Information Systems Agency, and Defense Finance and Accounting Service) to conduct background investigation services during the period covered by the CR. Without this anomaly, these defense agencies could be hindered or limited in their ability to spend funds on background investigations of employees and contractors.

Section 124 – Ukraine Security Assistance Initiative

Extends 2019 funding available for Ukraine security assistance into 2020. Without this anomaly these funds would be in danger of expiration.

Section 125 – Western Area Power Administration

Prohibits the direct transfer of funds from the WAPA’s Colorado River Basins Power Marketing Fund to the general fund of the Treasury during fiscal year 2019. This provision ensures that amounts in the fund are available for authorized purposes in future years.

Section 126 – Calfed Bay-Delta Authorization Act

Extends the coverage of the Calfed Bay-Delta Authorization Act from 2019 to 2020. This has the effect of continuing the federal cost-sharing of the Calfed Bay-Delta Program through the period covered by the CR.

Section 127 – Committee on Foreign Investment in the U.S.

Provides Treasury with $15 million to operate the Committee on Foreign Investment in the United States Fund, which was created in a 2018 law. It also provides that the fees Treasury is authorized to collect will offset this amount.

Section 128 – District of Columbia

Allows the District of Columbia to expend its local funds at the rate set forth in its 2020 Local Budget Act of 2019. Because the District is subject to federal control, the federal government must approve its budget.

Section 129 – Office of Personnel Management

Provides $48 million in additional funding for administrative expenses for OPM operations, with the caveat that roughly $30 million be transferred from OPM trust funds. This additional funding will help mitigate the OPM budget shortfall created by the transfer of the National Background Investigations Bureau to the Department of Defense. The investigations had generated revenue for OPM because agencies pay NBIB to conduct investigations for their personnel.

Section 130 – Small Business Administration business loan program

Provides $99 million for the Small Business Administration’s business loan program to ensure it has enough budget authority to cover the subsidy costs of new guaranteed loans to businesses during the continuing resolution.

Section 131 – Small Business Administration disaster loan program

Provides the SBA’s disaster loan program account an operations spending rate of $177 million to ensure it will have enough funds to cover the costs of disaster loan program requests.

Section 132 – Secret Service funding for 2020 presidential candidates

Permits the Secret Service to spend at a higher rate in 2020 than in 2019 to prepare for the security needs of the 2020 presidential election. Without this anomaly, the Secret Service could be limited in its ability to spend funds and hindered in hiring and preparing for next year’s election.

Section 133 – Disaster Relief Fund

Authorizes the Department of Homeland Security to obligate funding in FEMA’s Disaster Relief Fund account at a rate of operations necessary to ensure the agency can fully respond to a catastrophic event while operating under the CR. This language has appeared in prior continuing resolutions and was requested by the administration.

Section 134 – National Flood Insurance

Extends the authority of the National Flood Insurance Program through November 21. Without this provision, the NFIP could continue to adjust and pay flood insurance claims on existing policies with available funds, but its authority to issue new insurance policies would expire on September 30 and its authority to borrow from the Treasury would be reduced to $1 billion.

Section 135 – DHS Working Capital Fund

Allows certain offices within DHS to spend at a daily rate under the CR equal to their 2020 budget request instead of their 2019 budgeted amount:

  1. Office of the secretary and executive management – Increase of $3.1 million (from $20 million to $23 million).

  2. Management directorate operations and support – Increase of $8 million (from $86 million to $94 million).

  3. Intelligence analysis operations and support – Increase of $4 million ($30 million to $34 million).

Section 136 – Indian Health Service

Provides an additional $18 million to cover operational costs at new and recently updated Indian Health Service health care facilities. Without this anomaly, IHS would be unable to fulfill its obligation to deliver services to certain tribal health care facilities.

Section 137 – Centers for Disease Control and Prevention preparedness and response

Allows the Department of Health and Human Services to continue its reorganization of the Strategic National Stockpile.

Section 138 – CDC Ebola

Allows up to $20 million of unobligated amounts in the Infectious Diseases Rapid Response Reserve Fund to be made available for CDC to respond to the Ebola outbreak.

Section 139 – Higher Ed Act

Extends the authority for the National Advisory Committee on Institutional Quality and Integrity to operate through November 21. It is set to expire September 30.

Section 140 – Department of Veterans Affairs “Blue Water Navy”

Allows the VA to spend appropriated funds to implement the Blue Water Navy Vietnam Veterans Act of 2019. The act establishes presumptive eligibility for disability compensation for U.S. Navy veterans who served in Vietnam and now have health conditions possibly related to exposure to Agent Orange. It became law in June this year and did not have any 2019 appropriations.

Section 141 – Export-Import Bank

Extends the authority for the Export-Import Bank of the United States activities through November 21. The bank is the country’s official export credit agency. Its authorization is set to expire after September 30.

Section 142 – International Religious Freedom Act

Extends the authority for the U.S. Commission on International Religious Freedom through November 21. USCIRF protects religious freedom abroad and makes policy recommendations to the president, secretary of state, and Congress.

Section 143 – Mass Transit Capital Investment Grant program

Contains a technical correction for 2018 and 2019 clarifying that the Federal Transit Administration is required to allocate Capital Investment Grant program funding to projects by December 31, 2019 and December 31, 2020. Once projects have grant agreements, funds can be obligated.

Section 144 – Mass transit

Temporarily waives a statutory test that compares the Highway Trust Fund mass transit account’s current liabilities with the account’s current and future receipts. If the liabilities exceed the receipts, the Department of Transportation must hold back apportionments to fix the imbalance. The Treasury’s September report forecasts an imbalance. This provision would maintain existing transit apportionment amounts.

Section 145 – Housing for seniors

Allows the Department of Housing and Urban Development to obligate funds for its project rental assistance for the elderly during the continuing resolution. This allows HUD to renew some of its existing year-long contracts during the period of the CR.

Division B – Health Extenders

Section 1101 –Community Health Centers

Upholds Hyde protections, which restrict abortion funding for federal programs providing health services and extends authorizations for:

  1. The Community Health Centers Fund.

  2. The Health Resources and Services Administration’s National Health Service Corps. The NHSC supports health care providers working in areas where health care access is limited.

  3. Teaching health centers that operate graduate medical education programs.

Section 1102 – Diabetes

Extends funding for the Special Diabetes Program, $21 million, and the Special Diabetes Program for Indians, $21 million. These programs support research and prevention efforts.

Section 1201 – Health education

Extends funding for the Sexual Risk Avoidance Education Program, providing $11 million for the duration of the continuing resolution. The program awards grants to implement sexual risk avoidance education for adolescents.

Section 1202 – Reducing teenage pregnancy

Extends funding for the Personal Responsibility Education Program, a program to reduce teen pregnancy. Provides the program $11 million for the duration of the continuing resolution.

Section 1301 – Medicaid mental health

Extends authorization of the certified community mental health services demonstration program through November 21 for the eight demonstration states.

Section 1302 – Medicaid match for U.S. territories

For the duration of the CR, temporarily increases the Federal Medical Assistance Percentage match rate to 100% for U.S. territories in Medicaid. FMAPs determine the amount of federal matching funds states and territories receive to cover Medicaid services.

Section 1303 – Delay in Medicaid disproportionate share hospital reductions

Delays $4 billion in Medicaid DSH allotment reductions until November 22. The cuts originally were set to go into effect on October 1. The amount to be reduced in 2020 does not change.

Section 1401 – Medicare quality measures

Extends $1 million for Medicare quality measure endorsement, input, and selection. This allows CMS to award grants and contracts to outside entities to develop and improve Medicaid and Medicare performance measures.

Section 1402 – Medicare low-income programs

Extends funding for state health insurance assistance programs, area agencies on aging, and aging and disability resource centers enrollment services for low-income Medicare beneficiaries.

Section 1403 – Medicare Patient-Centered Outcomes trust fund

Allows the three sources of funding – mandatory appropriations, the health insurance fee, and transfer of funds from the Federal Hospital Insurance Trust Fund and Federal Supplementary Medical Insurance Trust Fund – for the Patient-Centered Outcomes Research Institute (PCORI) to expire.  However, the authorization of the program itself is extended until November 21 to prevent current funds from being transferred back to the general fund of the Treasury.

Section 1501 – Health professions demonstration projects

Extends funding for the Health Profession Opportunity Grant demonstration project. In fiscal year 2020, local HPOG grantees will enter the fifth year of demonstration grants, which requires them to use a career pathways approach to help disadvantaged workers enter health professions in need of workers. In addition to the grants, HPOG funding supports rigorous evaluation and technical assistance to grantees.

Section 1502 – Temporary Assistance for Needy Families

Extends funding for the TANF program, the Child Care Entitlement to States, and related programs, including the TANF Contingency Fund, without any policy changes. The extension will allow the Department of Health and Human Services to make first-quarter payments to states.

Section 1601 – Alaska Native regional health

Extends the authorization for Alaska Native Regional Health Entities. The health entities may receive disbursements from the Indian Health Services to provide care in their service areas.

Section 1602 – World Trade Center health program

Allows for an additional 50,000 first responders and survivors to be eligible for the World Trade Center health program, for a total of 75,000 people. The program provides medical and mental health care services for certified 9/11-related health conditions.

Section 1603 – Medicaid rebate generic drug exclusion

Modifies the definition of average manufacturer price to exclude authorized generic drugs from the calculation of average manufactured price for brand-name drugs. This provision would also clarify the definition of a wholesaler to exclude manufacturers.

Section 1604 – Medicaid Improvement Fund  

The MIF is an accounting construct lawmakers use to “bank” savings from changes in mandatory spending. Those savings can then be used as offsets for future legislation. In this section, $2,386 million, which represents the net savings in the health extenders title, is credited to the fund in 2025, to be used until the fund is depleted.

Section 1701 – Budgetary effects

Scorekeeping language that prevents the budgetary effects of Division B from being entered on the Senate and statutory pay-as-you-go scorecards. Specifies that the budgetary effects of Division B are not counted as discretionary spending and hence do not count toward the caps.

ADMINISTRATION POSITION

At the time of publication, a Statement of Administration Policy was not available.

COST

According to CBO, the annualized rate of spending authorized by Division A – Continuing Appropriations is $1,345 billion in budget authority:

  1. $1,253 billion in regular (base) spending;

  2. $78.3 billion in OCO-designated spending;

  3. $12.2 billion in disaster-designated spending; and

  4. $1.8 billion in program-integrity spending.

The health extenders in Division B would increase net direct spending in 2020, the budget year, by $693 million in budget authority and $667 million in outlays. Over the 10-year budget window, however, the provisions in Division B are fully offset with savings from the Medicaid generic drug provision in Section 1603.