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Washington, D.C. —  U.S. Senators Marco Rubio (R-FL) and Ben Cardin (D-MD) and U.S. Representatives Nydia Velazquez (D-NY) and Steve Chabot (R-OH), Chairmen and Ranking Members of the Committees on Small Business, urged the U.S. Small Business Administration (SBA) Acting Administrator Chris Pilkerton to evaluate the Office of Entrepreneurial Development’s recent practice of requiring Small Business Development Center (SBDC) grantees to submit budget proposals based on the president’s requested budget.
 
Historically, SBDC’s have submitted their requests based on the current budget authorized by Congress. This new budget process could come at the cost of services, as SBDC’s are forced to redirect their time and resources away from their day to day operations to fulfill this SBA imposed requirement.  
 
The full text of the letter is below. 
 
Dear Acting Administrator Pilkerton:
 
We write to express concern regarding the Small Business Administration’s (SBA) practice of requiring its Small Business Development Center (SBDC) program grantees submit budget proposals based on the amount of funding proposed in the President’s annual budget request to Congress, rather than the previous fiscal year’s enacted level.  Given that the funding levels for this program are statutorily approved by Congress, we are concerned this practice unnecessarily burdens SBDC grant recipients, hinders their ability to fulfill their programmatic responsibilities, and potentially creates financial confusion for the SBDC grant recipient’s private sector partners. 
 
It is our understanding that this requirement is a change from the practices of the prior two administrations where the funding level for the proposed budget for SBDCs would be based on the current year’s appropriations level.  For example, in FY2014, SBDCs were funded at $114 million, and for FY2015, they were required to submit their proposals at that level ($114 million). When funding was increased through the Congressional appropriations process, budgets were revised, with approval from the administration, to reflect the increased allocations. 
 
For FY2019, the enacted level of funding for SBDCs is $131 million, and the President’s request for FY2020 is $101 million.  The SBA is requiring that SBDCs submit budget proposals for FY2020 at the $101 million level, a reduction of more than 20 percent in funding.  It is important to note, there have been no calls to reduce the funding (other than the President’s request), and the FY2020 House Financial Services and General Government Appropriations bill provides $150 million for the SBDC program. 
 
We are concerned that this budgeting process is potentially detrimental to the operation of the SBDC program and the counseling services it provides, which assists in the creation of roughly 14,000 small businesses annually.  The exercise of drafting a budget at an artificially reduced level unnecessarily directs time and resources away from program operations.
 
We ask that you further evaluate this practice and provide the Senate Committee on Small Business and Entrepreneurship and the House Committee on Small Business with the following:
 
1.      the basis and justification for this practice;
2.      any relevant appropriations law or OMB circular that supports this practice;
3.      the SBA’s plan to amend or alter the SBDC budget proposal practice moving forward to address these concerns; and
4.      the SBA’s process for ensuring that this or any other practice does not unnecessarily burden SBDC grant recipients.
 
We ask you to provide the Committees with this information no later than September 30, 2019. Thank you for your attention to this important matter.
 
Sincerely,