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UM System prepares for consequences of potential federal cuts

Wednesday, December 5, 2012 | 6:00 a.m. CST; updated 6:46 a.m. CST, Thursday, December 6, 2012
In September, the White House Office of Management and Budget released an analysis that estimated sequestration reduction at 9.4 percent for defense discretionary spending and 8.2 percent for non-defense discretionary spending. Based on federal funding received in fiscal year 2011 (courtesy of the UM Office of Government Relations), this graphic shows what the UM System and MU stand to lose if sequestration occurs.

COLUMBIA — With little progress in "fiscal cliff" negotiations between the White House and Congress, the specter of sequestration — of deep cuts to federal spending including federally supported research and student-aid programs — looms less than a month away.

If they come, the cuts will reduce funding to vital segments of the University of Missouri System, including federally supported research and student-aid programs, by more than $23 million next year, according to a report released by the UM System Government Relations office in August.

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The higher education budget cuts are part of an automatic, across-the-board reduction to federal spending known as sequestration.

As a threat to produce a long-term budget agreement, Congress decided in 2011 to hold back — or sequester — $1.2 trillion in funds over the next decade, beginning Jan. 2, 2013.

In total, sequestration will cut more than $100 billion in military and domestic spending in 2013, according to an analysis on sequestration released by the White House in September.

The series of scheduled reductions in government spending combine with large tax hikes set to begin at the end of the year to form the "fiscal cliff" that policymakers and analysts warn could push the economy into a recession.

Federal funding shifts aren't out of the ordinary, said Rob Duncan, vice chancellor for research at MU. Federal funding for research and financial aid fluctuates with each year's budget.

Sequestration, however, "overrides any type of appeal," he said.

"I think all of us in research-officer positions are very concerned," Duncan said. "If you go and talk to your congressperson to try and salvage a particular program you’re working on, it doesn’t matter."

Based on the amount of federal funding the UM System received in fiscal year 2011, here’s how the automatic spending cuts will affect the system in 2013 if sequestration occurs.

Research and development

Federal investment in research and development falls under discretionary spending. The White House divides discretionary spending into two categories: defense and non-defense.

In its September analysis, the White House estimated that sequestration would result in a 9.4 percent reduction in defense discretionary spending and a 8.2 percent reduction in non-defense discretionary spending.

According to the UM System report, the system received $271.8 million in non-defense federal research funds in 2011 from agencies such as the National Institutes of Health, the National Science Foundation, the Department of Energy, the U.S. Department of Agriculture and NASA.

Duncan said it's unclear how each agency would impose the cuts.

Some agencies might cut their own internal programs to protect university funding, or they might protect their own internal commitments — such as NASA's Flight Centers and the Department of Defense's research facilities — at the expense of university funding, he said.

He mentioned a federal cut in a certain class of the National Institutes of Health's nanoscience funding as a hypothetical.

"Say the budget line is $250 million," he said. "That program may have 100 or 200 researchers funded throughout the U.S. As long as the aggregate reduction is 8.2 percent, it's pretty nondescript how the agency comes up with the money."

Cushioning the cuts

For researchers to avoid the cuts, Duncan said it's imperative to communicate with the agencies.

In November, he sent an email to MU faculty and researchers to prepare them for the possible cuts. In it, he instructed researchers to speak to the agencies and emphasize how much their particular projects fits with the agencies' missions.

"This is unusual," said Harry Tyrer, a professor in the electrical and computer engineering department at MU. "The closest we've come to something like this is when the Republicans played chicken with the Clinton administration and the government shut down for three or four days."

Tyrer, who has been involved in the federal research grant process for 30 years, said he expects researchers are contacting their federal agencies right now, or vice versa, to square away a solution.

According to the UM System report, in a House Budget Committee hearing on April 25, a representative from the White House Office of Management and Budget predicted that the National Science Foundation, which provides more than $32 million of research funding a year to the UM System, will fund 1,650 fewer basic research grants nationally under sequestration.

These grants would have supported roughly 20,000 researchers, teachers and students across the country, according to the report.

If federal agencies do discontinue programs, Duncan said, officials will have to meet on a case-by-case basis to decide how to shift internal investments.

"We won't have money in our reserve to continue every research program," Duncan said. "We have to weigh the really important programs with priority."

He cited MU's predominant position worldwide in technologies such as corn seed innovation and radioisotopes for medicine as programs "critical to society, that we can't let languish."

Student aid programs

Each year, universities in the UM System receive a pool of money for financial aid from the federal government, said Nick Prewett, MU director of student financial aid.

These "campus-based" funds are gleaned from the FAFSA results, which measure the student population's financial need, he said.

Sequestration will slash "campus-based" funds, including Work-Study and Federal Supplemental Educational Opportunity Grants, by 8.2 percent, according to the White House Office of Management and Budget.

Because aid is already awarded for the educational year 2012-2013, sequestration won't impact student-aid programs until the year 2013-2014, Mary Jo Banken, executive director of the MU News Bureau, said in an email.

If sequestration occurs, 51,577 fewer college students will receive federal Work Study funding across the country, according to a report by Sen. Tom Harkin, D-Iowa, chairman of the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies.

Nationwide, 110,543 fewer college students would receive SEOG funds, the report says.

For Missouri, that means 1,166 fewer students would receive federal work study and 1,997 fewer students would receive SEOG financial aid based on fiscal year 2012 levels, according to the subcommittee's report. 

MU already has more students eligible for financial aid awards than funding available for the awards, Prewett said.

"Funding allocation varies from year to year," he said. "This gives us upfront notice that we're receiving a cut next year."

Ann Korschgen, vice provost for enrollment management at MU, said she doesn't anticipate a drop in student enrollment due to sequestration and the accompanying cuts in financial aid.

Hoping for an agreement

Congress passed sequestration as a provision in the Budget Control Act of 2011. When Congress raised the federal debt ceiling in August 2011, a joint committee was formed to agree on a plan to reduce the deficit by at least $1.2 trillion between 2012 and 2021.

In its September report, the White House characterizes sequestration as "a blunt and indiscriminate instrument ... not the responsible way for our nation to achieve deficit reduction."

Earlier this year, the bipartisan joint committee missed its deadline for drafting a deficit-reduction package. Now, Congress and the White House have until the end of the year to reach an agreement and avoid the fiscal cliff.

Duncan said he's optimistic for an agreement. He's collaborated with fellow research officers to lobby for a budget resolution.

"We're doing everything we can as an industry," he said.  "If we circle the wagons and speak with a single voice, we have a lot greater impact. What impact that will have on our lawmakers and president — when it comes to making decisions — that’s what we will find out in the next month."

In July, UM System President Tim Wolfe and all four chancellors signed a letter, addressed to President Barack Obama and Congress, with nearly 150 other university presidents and chancellors. It encouraged bipartisan, comprehensive budget reform to avoid sequestration. 

At a conference in Orlando last week, Prewett said Department of Education representatives said they didn't expect sequestration to go through.

"They haven't prepared," Prewett said. "They haven't updated their software or dealt with the logistics, if that tells you anything."

Supervising editor is Elizabeth Brixey.


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