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Dire Warnings as Cuts Approach

March 1, 2013

WASHINGTON -- Sequestration is almost here.

After months of failed deals, delays and countless dire warnings about mandatory, across-the-board budget cuts, the cuts go into effect at midnight tonight. A last-minute deal could, in theory, delay the cuts again, if not avert them entirely -- but few here expect that to happen.

On campuses, uncertainty reigns. Higher education associations have issued dark predictions for months about what a 5 percent cut to the budgets of many domestic programs will mean for colleges and universities. Some of the effects have been felt for months, as agencies withhold funds in anticipation and federally funded programs scrimp to try to offset projected budget losses. But federal agencies have given scant guidance on how the cuts will be applied, meaning few details are available on what will happen to specific programs.

A few things are clear: In general, universities that conduct a lot of federally funded research will feel the budget crunch earlier than others. While the Pell Grant is exempt this year, cuts to other federal financial aid programs could lead to confusion as colleges prepare award letters for recently admitted students. And, as always in Washington these days, the next crisis is just around the corner, when the law funding the federal government expires March 27.

“The largest problem is the degree of uncertainty that’s out there,” said Tobin Smith, vice president for policy at the Association of American Universities.

Sequestration was first proposed in August 2011, when the debt ceiling was increased -- the threat of deep, across-the-board cuts that would go into effect at the beginning of 2013 if Congress couldn’t reach a long-term deal on deficit reduction. The cuts were meant to be so unthinkable that they would force legislators to act. Instead, Congress struck a New Year’s Day deal to avert a tax increase, but settled for merely pushing the spending cuts back 2 months, so they would take effect March 1. (The absolute deadline for a deal is 11:59 p.m. tonight.)

In the intervening months, higher education associations and college presidents, particularly those representing research universities, have urged and then pleaded with Congress to strike a deal to avert the cuts. On Thursday, the Science Coalition, the Association of American Universities and the Association of Public and Land-grant Universities, released a round of videos of college administrators touting the economic benefits of federal research and warning of the effects of sequestration.

“The solution to America’s financial challenge should be balanced, and should recognize that the discoveries universities make today will be the foundation of our economy tomorrow,” said Bernadette Gray-Little, chancellor of the University of Kansas, in one of those videos.

House Republicans, who are hoping to make the sequester cuts permanent for the rest of the 2013 fiscal year, have pushed back against some of these arguments, in some cases responding directly to the Science Coalition’s effort. “The reduction would take federal funding of grants back only to the level [the university] received just one year earlier,” wrote Mike Pompeo, a Kansas Republican, calling the sequester a “home run for America” in an open letter responding to Gray-Little’s video and similar efforts.

A recent survey of life science researchers by BioInformatics, a market research company, found that the majority of those researchers expect a hiring freeze or layoffs as a result of the budget cuts. Many colleges have also reported that they received less money from federal grants in the first quarter of 2013 than last year, Smith said, although because grants vary from year to year, that could be due to factors other than the budget cuts.

Oregon Health & Science University said Thursday that it would largely freeze hiring in response to the cuts, which will hurt both research funding and hospital revenue. The National Science Foundation anticipates that it will award 1,000 fewer research grants this year than it otherwise would have, according to a sequestration memo, but the money for already-awarded grants will continue to be released on schedule. Other agencies, including the National Institutes of Health, have already slowed disbursement of grant funds, Smith said. In some cases, campus researchers working on federally funded projects have put off hiring lab staff or purchasing equipment until the budgetary picture is more clear.

For other areas of higher education that receive federal funding, the effects are less clear, in part because another budget deal is necessary to avert a government shutdown at the end of March. If the sequestration cuts are kept in place as part of that deal, the next program to feel the effects might be Upward Bound, for which grant notifications go out in April and May, said Heather Valentine, vice president of public policy at the Council for Opportunity in Education.

While the Pell Grant is exempt from the cuts this year, campus-based aid programs, including federal work study and the Supplemental Educational Opportunity Grant, are not. The National Association of Student Financial Aid Administrators recently released campus-level estimates of how much colleges could lose as a result of sequestration. Arizona State University would stand to lose more than $200,000, the association found.

Because of how student aid is funded, many effects might not be felt until the fall, said Becky Timmons, assistant vice president for government relations at the American Council on Education. “It’s still going to be a devastating blow, particularly for work study and people who depend on” the supplemental grants, Timmons said.

But the bigger threat, Timmons said, is the acceptance of the cuts as the “new normal” -- particularly with many other budgetary issues for 2013 still unresolved. “It makes it a little easier for these cuts to become the norm once you slide past the doomsday date,” she said. “With the stakes raised as high as they have been raised, if the public doesn’t see an effect, it becomes easier for this to be the new baseline.”

 

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