‘‘PART J—STATE-FEDERAL COLLEGE AFFORD-
ABILITY AND COMPLETION PARTNERSHIPS 
‘‘SEC. 499–1. PURPOSE. 
‘‘The purpose of this part is to establish a State-Fed-
eral partnership that incentivizes State investment in pub-
lic higher education. 
‘‘SEC. 499–2. DEFINITIONS. 
‘‘In this part: 
‘‘(1) ELIGIBLE
STATE.—The term ‘eligible 
State’ means a State that provides, to public institu-
tions of higher education, net State operating sup-
port per FTE student in an amount equal to not 
less than 50 percent of the amount that reflects the 
maximum Federal Pell Grant award amount for the 
most recent academic year. 
‘‘(2) FULL-TIME EQUIVALENT STUDENT NUM-
BER.—The term ‘full-time equivalent student num-
ber’ means a number reflecting the number of stu-
dents enrolled full time at a public institution of 
higher education in the State, and shall be defined 
and calculated in the manner determined most ap-
propriate by the Secretary. 
‘‘(3) LOW-INCOME STUDENT.—The term ‘low- 
income student’ means a student who is eligible for 
a Federal Pell Grant under section 401. 
‘‘(4) NET STATE OPERATING SUPPORT.— 
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‘‘(A) IN GENERAL.—The term ‘net State 
operating support’ means an amount that is 
equal to the amount of State funds and local 
government appropriations used to support pub-
lic higher education annual operating expenses 
in the State, calculated in accordance with sub-
paragraphs (B) and (C). 
‘‘(B) CALCULATION.—A State’s net State 
operating support shall, for a fiscal year, be an 
amount that is equal to the difference resulting 
from the gross amount of State funds appro-
priated and disbursed by the State and ex-
pended by the recipient institutions in the fiscal 
year for public higher education operating ex-
penses in the State, minus— 
‘‘(i) such appropriations that are re-
turned to the State; 
‘‘(ii) State-appropriated funds derived 
from Federal sources, including funds pro-
vided under this part; 
‘‘(iii) local government funds not ap-
propriated for operating support for public 
higher education; 
‘‘(iv) amounts that are portions of 
multi-year appropriations to be distributed 
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over multiple years that are not to be 
spent for the year for which the calculation 
is being made; 
‘‘(v) tuition charges remitted to the 
State to offset State appropriations; 
‘‘(vi) State funding for students in 
non-credit continuing or adult education 
courses and non-credit extension courses; 
‘‘(vii) sums appropriated to private 
nonprofit institutions of higher education, 
or to proprietary institutions of higher 
education, for capital outlay or operating 
expenses; and 
‘‘(viii) any other funds excluded under 
subparagraph (C). 
‘‘(C) EXCLUSIONS.—Net State operating 
support does not include— 
‘‘(i) funds for— 
‘‘(I) student aid programs that 
provide grants to students attending 
in-State private nonprofit institutions 
of higher education, in-State propri-
etary institutions of higher education, 
independent institutions, in-State pub-
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lic institutions, and out-of-State insti-
tutions; 
‘‘(II) capital outlay; 
‘‘(III) deferred maintenance; or 
‘‘(IV) research and development; 
or 
‘‘(ii) any other funds that the Sec-
retary may exclude. 
‘‘(5) NET STATE OPERATING SUPPORT PER FTE 
STUDENT.—The term ‘net State operating support 
per FTE student’ means, for a fiscal year— 
‘‘(A) the net State operating support for 
the previous fiscal year; divided by 
‘‘(B) the full-time equivalent student num-
ber for the previous fiscal year. 
‘‘(6) POVERTY LINE.—The term ‘poverty line’ 
means the poverty line (as defined by the Office of 
Management and Budget and revised annually in ac-
cordance with section 673(2) of the Community 
Services Block Grant Act) applicable to a family of 
the size involved. 
‘‘(7) PUBLIC INSTITUTION.—The term ‘public 
institution’ means an institution of higher education 
(as defined in section 101) whose liabilities are 
backed by the full faith and credit of the State or 
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its equivalent, as determined in accordance with sec-
tion 668.15 of title 34, Code of Federal Regulations, 
or any successor regulation. 
‘‘(8) PRIVATE
NONPROFIT
INSTITUTION
OF 
HIGHER EDUCATION.—The term ‘private nonprofit 
institution of higher education’ means an institution 
of higher education, as defined in section 102, that 
is a private nonprofit institution. 
‘‘(9) PROPRIETARY
INSTITUTION
OF
HIGHER 
EDUCATION.—The term ‘proprietary institution of 
higher education’ has the meaning given the term in 
section 102(b). 
‘‘SEC. 499–3. AUTHORIZATION; USE OF FUNDS. 
‘‘(a) AUTHORIZATION.—The Secretary shall award 
annual block grants to eligible States to encourage States 
to provide additional funding for public higher education. 
‘‘(b) USE OF FUNDS BY STATES.—An eligible State 
receiving a block grant under this part shall allocate 100 
percent of block grant funding to public institutions for 
public higher education expenditures in accordance with 
subsection (c). 
‘‘(c) USE OF FUNDS BY PUBLIC INSTITUTIONS.—A 
public institution that receives funds under this part 
shall— 
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‘‘(1) use a portion of such funds to directly re-
duce tuition costs or mitigate the need to raise tui-
tion and fees for students residing in the State; 
‘‘(2) use a portion of such funds to support the 
enrollment of low-income students in the institution; 
‘‘(3) use a portion of such funds to support re-
tention and degree completion of low-income stu-
dents; and 
‘‘(4) create a publicly available report that doc-
uments the institution’s efforts to satisfy the re-
quirements described in paragraphs (1) through (3). 
‘‘(d) PROHIBITIONS.— 
‘‘(1) NO USE FOR ENDOWMENTS.—A public in-
stitution may not use funds received under this part 
to increase the endowment of the public institution. 
‘‘(2) NO USE FOR ATHLETIC OR COMMERCIAL 
VENUES.—No funds awarded under this part may be 
used for the modernization, renovation, or repair of 
stadiums or other facilities of a public institution 
primarily used for athletic contests or events for 
which admission is charged to the general public. 
‘‘(e) STATE LIMITATIONS ON INSTITUTIONS.—Noth-
ing in this section shall be construed to prohibit a State 
from establishing additional requirements for public insti-
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tutions in the State for the purpose of increasing the af-
fordability of higher education. 
‘‘SEC. 500. GRANT FORMULA. 
‘‘(a) GRANT FORMULA.—The Secretary shall award 
a block grant to an eligible State for a fiscal year in an 
amount equal to the product of— 
‘‘(1) the marginal Federal match amount for 
the fiscal year, as determined under subsection (b); 
multiplied by 
‘‘(2) the full-time equivalent student number for 
the previous fiscal year. 
‘‘(b) FEDERAL MATCH AMOUNT
FOR ELIGIBLE 
STATES.—The marginal Federal match amount shall be 
the following: 
‘‘(1) ELIGIBLE STATES WITH NET STATE OPER-
ATING
SUPPORT
PER
FTE
STUDENT
BETWEEN
PERCENT AND 130 PERCENT OF THE MAXIMUM FED-
ERAL PELL GRANT.—The marginal Federal match 
amount for an eligible State with a net State oper-
ating support per FTE student for the fiscal year 
that is equal to or more than 50 percent of the 
amount of the maximum Federal Pell Grant under 
section 401 for the most recent fiscal year but is less 
than 130 percent of such amount, shall be equal to 
the product of— 
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‘‘(A) the amount of the maximum Federal 
Pell Grant for the most recent fiscal year; mul-
tiplied by 
‘‘(B) the result of the mathematical ex-
pression 0.26x2 ¥ 0.14x + 0.005, where x rep-
resents the ratio obtained by dividing the eligi-
ble State’s net State operating support per 
FTE student by the amount of the maximum 
Federal Pell Grant for the most recent fiscal 
year. 
‘‘(2) ELIGIBLE STATES WITH NET STATE OPER-
ATING SUPPORT EQUAL TO OR GREATER THAN 130 
PERCENT
OF
THE
MAXIMUM
FEDERAL
PELL 
GRANT.—The marginal Federal match amount for 
an eligible State with a net State operating support 
per FTE student for the fiscal year equal to or 
greater than 130 percent of the amount of the max-
imum Federal Pell Grant for the most recent fiscal 
year, shall be equal to the sum of— 
‘‘(A) the amount calculated under para-
graph (1) for a State with a net State operating 
support per FTE student equal to 130 percent 
of the amount of the maximum Federal Pell 
Grant for the most recent fiscal year; and 
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‘‘(B) 10 percent of the amount by which 
the eligible State’s net State operating support 
per FTE student exceeds 130 percent of such 
maximum Federal Pell Grant, 
except that in no case shall the marginal Federal 
match under this paragraph exceed an amount equal 
to 30 percent of the amount of the maximum Fed-
eral Pell Grant for the most recent fiscal year. 
‘‘(c) RATABLE REDUCTION.—If the sums made avail-
able under this part for any fiscal year are insufficient 
to pay the full amounts that all States are eligible to re-
ceive in accordance with this section for such year, the 
Secretary shall establish procedures for ratably reducing 
each State’s award amount. 
‘‘SEC. 501. ACCOUNTABILITY AND ENFORCEMENT. 
‘‘(a) ANNUAL REPORT.— 
‘‘(1) IN GENERAL.—Beginning for the first fis-
cal year after a State receives a block grant under 
this part, the State shall prepare and submit an an-
nual report to the Secretary, which shall include de-
tailed information about the State’s use of the grant 
funds to increase the affordability of public higher 
education and increase the enrollment and comple-
tion rates of low-income students (as measured by 
eligibility for a Federal Pell Grant). 
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‘‘(2) CONTENTS.—A report described in para-
graph (1) shall— 
‘‘(A) describe the cause of any increases in 
public higher education costs and the sources of 
new funding to address such increases; 
‘‘(B) 
describe 
all 
actions 
taken 
to 
incentivize public institutions to reduce tuition 
costs, or mitigate the need to raise tuition and 
fees for in-State students; 
‘‘(C) explain the extent to which public in-
stitutions supported the enrollment of low-in-
come students who are eligible for Federal Pell 
Grants or other need-based financial assistance; 
‘‘(D) disclose how the State distributed the 
allotment provided under this part to all public 
institutions, and the rationale for such distribu-
tion; 
‘‘(E) include, as reported to the State by 
each public institution in the State, the aggre-
gate graduation rates at such institutions for 
low-income students (based on eligibility for 
Federal Pell Grants), part-time students, and 
transfer students, disaggregated by type of de-
gree or credential; 
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‘‘(F) detail State efforts to improve the re-
tention and graduation rates of low-income stu-
dents at both 2-year and 4-year institutions of 
higher education; and 
‘‘(G) be publicly available in a manner that 
is easily accessible to parents, students, and 
consumer advocates. 
‘‘(b) WAIVER OF UNMET FINANCIAL NEED FOR CER-
TAIN STUDENTS.— 
‘‘(1) IN GENERAL.—Each State receiving an al-
lotment under this part for a fiscal year shall, as a 
condition of receiving the allotment, ensure that 
each public institution in the State waives, or pro-
vides assistance (such as work study assistance, 
State grants, or Federal grants) to assist in meet-
ing, any unmet financial need for a course of study 
(as calculated under paragraph (2)) for any student 
enrolled in such course of study— 
‘‘(A) who is a dependent student from a 
family with an income at or below 350 percent 
of the poverty line; or 
‘‘(B) who is an independent student with 
an income at or below 350 percent of the pov-
erty line. 
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‘‘(2) FORMULA.—For purposes of paragraph 
(1), a student’s unmet financial need for enrollment 
in a course study shall be equal to— 
‘‘(A) the cost of attendance for such course 
of study for such student, minus 
‘‘(B) the expected family contribution for 
such student, minus 
‘‘(C) estimated financial assistance not re-
ceived under this title (as defined in section 
480(j)), minus 
‘‘(D) the amount of the Federal Pell Grant 
awarded to such student for such course of 
study. 
‘‘(c) MAINTAINING NET STATE OPERATING SUPPORT 
PER FTE STUDENT.— 
‘‘(1) IN GENERAL.—Each State receiving an al-
lotment under this part for a fiscal year shall— 
‘‘(A) ensure that the amount expended by 
the State, from funds derived from non-Federal 
sources, for net State operating support per 
FTE student for the preceding fiscal year was 
not less than the amount expended by the State 
for net State operating support per FTE stu-
dent for the second preceding fiscal year; and 
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‘‘(B) demonstrate the State’s compliance 
with subparagraph (A) by providing the Sec-
retary with a written assurance and detailed 
documentation. 
‘‘(2) PENALTY.—If a State does not comply 
with paragraph (1), the State’s grant award under 
this part shall be reduced by an amount equal to the 
product of— 
‘‘(A) the difference between— 
‘‘(i) the net State operating support 
per FTE student for the second preceding 
fiscal year; minus 
‘‘(ii) the net State operating support 
per FTE student for the preceding fiscal 
year; multiplied by 
‘‘(B) the full-time equivalent student num-
ber for the previous fiscal year. 
‘‘(d) MAINTENANCE OF EFFORT FOR STATE-BASED 
FINANCIAL AID
AND AVOIDANCE
OF TUITION INFLA-
TION.—Each State receiving an allotment under this part 
for a fiscal year shall, as a condition of receiving the allot-
ment— 
‘‘(1) maintain the level of State student need- 
based financial aid support provided for costs associ-
ated with postsecondary education at not less than 
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the average annual level of such support provided 
for the 3 academic years immediately preceding the 
year for which the State is receiving the allotment; 
and 
‘‘(2) ensure that for the academic year imme-
diately following the academic year for which the 
State is receiving the allotment, all public institu-
tions of higher education in the State will not in-
crease tuition for in-State students by a percentage 
greater than the estimated percentage increase in 
the Consumer Price Index (as determined by the 
Secretary, using the definition in section 478(f)) for 
the calendar year for which the State is receiving the 
allotment. 
‘‘(e) 
AUTHORITY
TO
COMPROMISE.—Notwith-
standing subsections (c) and (d), the Secretary may waive 
any maintenance of support and effort requirement, or the 
avoidance of tuition requirement, described in such sub-
sections for a State if there is a clear case of a significant 
economic downturn in the State as evidenced by a reduc-
tion in State domestic product, real per capita income, and 
employment. Such determination shall only be made by 
the Secretary following a written appeal by the State that 
documents recent and significant decreases in economic 
activity in the State. 
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‘‘(f) REPORTING ON PERCENTAGE OF LOW-INCOME 
STUDENTS.—Each State that received an allotment under 
this part for a fiscal year and that desires to receive an-
other such allotment for the succeeding fiscal year shall, 
as a condition of receiving such other allotment, report 
to the Secretary— 
‘‘(1) on the percentage of enrollment of low-in-
come students at each public institution in the State 
(out of the total student enrollment in such institu-
tion) for the mostly recently completed academic 
year, as so reported by such institutions to the 
State; and 
‘‘(2) with respect to any recently completed aca-
demic year for which the percentage of enrollment of 
such students at a public institution in the State 
was below the percentage of enrollment of such stu-
dents in public institutions in the United States as 
a whole for such year (out of the total student en-
rollment in such public institutions for such year), 
an explanation from such institution in the State for 
the reason for such reduced enrollment for low-in-
come students at the institution for such year. 
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‘‘SEC. 502. AUTHORIZATION OF APPROPRIATIONS. 
‘‘There are authorized to be appropriated to carry out 
this part such sums as may be necessary for fiscal year 
2017 and each of the five succeeding fiscal years.’’. 
Æ 
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