A new federal spending bill has major implications for Pell Grant recipients.

Congress has passed a $1 trillion omnibus spending measure that continues funding for the Obama administration’s signature “Race to the Top” competition and includes a very modest increase in Title I funding for disadvantaged students. But an Obama proposal to create a new federal agency for ed-tech research and development received no funding in the bill.

The measure, which averted a possible government shutdown, funds 10 Cabinet agencies for fiscal year 2012. It awarded a slight increase to the Pentagon and veterans’ programs while trimming the budgets of most other domestic agencies. Democrats agreed to the cuts in exchange for dropping many policy provisions sought by GOP conservatives, such as attempts to block new rules aimed at preserving net neutrality and limiting greenhouse gases.

President Obama’s cherished “Race to the Top” initiative, which encourages state and local education reforms, will absorb more than a 20-percent cut, though Republicans wanted to kill the program’s funding altogether. Title I grants will be funded at $14.5 billion, and special education funding will receive $11.6 billion—virtually the same as last year.

Missing from the legislation was funding to create a new federal agency designed to pursue breakthroughs in educational technology. Obama requested $90 million for the agency’s first year in the budget plan he sent to Congress earlier this year.

Obama’s proposal would have created an Advanced Research Projects Agency – Education (ARPA-ED), with the goal of transforming educational technology just as the Defense Advanced Research Projects Agency (DARPA) has transformed military technology. But the project wasn’t funded in the budget bill passed by Congress.

With the Enhancing Education Through Technology program having been eliminated last year, “that amounts to zero dollars of federal investments in ed tech” through the U.S. Department of Education, an educational technology advocate on Capitol Hill noted. “How is this preparing schools for online assessments in 2014?”

The maximum Pell Grant awards for low-income college students will remain at $5,550 for students beginning college in fall 2012, but Congress has tightened its requirements for the program under the new bill.