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The Return of the Sequester
Mandatory budget cuts are scheduled to take effect March 1. This time, colleges fear it might actually happen, but have little idea how the cuts would be applied.
For federally funded higher education programs, it’s been an uncertain couple of years. Colleges have navigated and lobbied their way through a near-government shutdown, the debt ceiling crisis of August 2011, the almost-doubling of the student loan interest rate and the year-end deal to avert tax hikes. For the past 14 months, there has been one reliable source of uncertainty: sequestration, the deep, mandatory spending cuts originally set to take effect Jan. 2.
The cuts didn’t take place a month ago. But they weren’t avoided entirely, merely delayed until March 1. With one month to go, the threat of sequestration -- the fiscal cliff that never seems to end -- is back. And even though the cuts haven’t happened, colleges are already feeling the effects of federal uncertainty, as research funds slow and student aid programs struggle to find savings.
The across-the-board cuts to domestic spending have threatened higher education for more than a year, ever since the Congressional committee tasked with solving the nation’s long-term deficit failed to reach consensus in November 2011. For most of last year, higher education advocates in Washington assumed that Congress would avoid sequestration in time. If the cuts took effect, many expected a quick and retroactive legislative fix, one that would avert major disruptions in the flow of federal dollars.
This time, though, many are less sanguine. Congressional Republicans -- with the year-end tax increases averted -- appear untroubled by the prospect of cuts to domestic spending. Representative Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee, said Sunday that he thinks the sequester will probably take effect.
The deal Congress reached at the end of the year slightly reduced the impact of the mandatory cuts. Discretionary programs, which include most federal spending important to higher education, were originally scheduled to be cut by 8.2 percent. The New Year’s Day deal raised revenue and changed the spending caps for the 2013 and 2014 fiscal years. Domestic discretionary programs now face a mandatory cut of 5.1 percent.
The Pell Grant is exempt from the cuts, at least in 2013, as are military and veterans’ tuition benefits. While the bedrock federal financial aid program won’t face direct cuts, tightening the rest of the domestic discretionary budget will worsen the pressure on the Pell Grant when it faces its own funding shortfall later this year, the American Council on Education said in a report Thursday on sequestration’s effects.
If Congress does nothing to avert sequestration, the National Institutes of Health will be cut by $1.5 billion and the National Science Foundation by $286 million, according to ACE’s report. Research and development expenditures for the Energy Department will drop by $562 million.
Despite the Pell Grant’s exemption, federal financial aid as a whole is not safe from the cuts. Campus-based programs, including the Supplemental Educational Opportunity Grant and federal work study programs, would be cut by $38 million and $50 million, respectively. TRIO and GEAR UP, two programs that help prepare low-income and minority students for college, will lose $58 million.
Federal agencies and departments have some leeway on how the cuts will be distributed, and the pain won’t necessarily be doled out equally to every federally funded program. Those offices are reportedly drawing up contingency plans for what will happen if sequestration goes into effect. But if the Education Department, the National Institutes of Health and the National Science Foundation, among other federal agencies, have detailed plans for a post-sequestration March 2, they have said little to their program directors and grant recipients on campuses nationwide.
The NSF and NIH referred questions about sequestration to the Office of Management and Budget, which has issued guidance on the cuts that does not go below the agency level. The National Endowment for the Humanities has not issued guidance on how budget cuts might be applied, and does not plan to do so, a spokeswoman wrote in an e-mail to Inside Higher Ed. The Education Department did not respond to a request for comment.
Wary of the cuts on the horizon, agencies appear to already be slowing funding. On campus, researchers are seeing a slowdown in federal grant-making and disbursement, said Tim Leshan, vice president for government relations at Northeastern University and president of the Science Coalition, an association of research universities advocating for federal scientific research. The Institute for Education Sciences, which oversees education research, has told applicants that, due to the budget uncertainty, it cannot make decisions on grant proposals submitted in June.
“We’re seeing the agencies not move their funding out as quickly as they would normally,” Leshan said. Some Northeastern researchers have been told that their grant will be funded -- just not yet. Others have received only part of the money they were awarded. The National Science Foundation appears to be holding back as much as 40 percent of its budget, Leshan said.
“That then breeds the concern of, ‘Well, if it’s taking awhile to get this grant, what about the next grant?’ ” Leshan said. Some researchers have held back on hiring assistants for their projects. Others have put off purchases of needed equipment while they wait on word from the funding agencies.
Leshan, who worked at the NIH before Northeastern, said he understood why agencies would want to hedge their bets and hold money back until the legislative picture is more clear. But it’s challenging for the researchers on campus.
Federal TRIO programs are feeling the same uncertainty and frustration. “It’s not a secret -- the department doesn’t know, I don’t think,” how it would distribute the cuts, said Alan Parks, director of college success programs at the University of Maine, which receives TRIO money to help disabled, first-generation and low-income students. “But if they do, they certainly aren’t saying.”
A 5.1 percent cut, if applied across the board, would cut about $39,000 from Parks’ budget this year, or enough to provide services to 44 students. He has warned staff that they may have a monthlong furlough in the coming year, and is already trimming his budget, hoping to save enough to partially offset the cuts.
“I’m doing my own sequestering of funds right now and spending as little as possible,” Parks said. The office has cut back on travel for conferences and meetings, using video chat instead. Officials there have stopped buying equipment, and Parks is urging his staff to make as few photocopies as possible. But some of his cuts have already hit student services -- the Maine center is seeing students less frequently, avoiding waiving fees that it might have otherwise covered, and is considering a cut in the $2,000 grants it can give to students.
Leshan, who assumed the presidency of the Science Coalition this month, said he’s a natural optimist who hopes the cuts still will be avoided. Meetings with representatives have evinced plenty of concern, he said. But, he said, he has yet to hear someone say that the budget cuts won’t happen.
“Many people are trying to push back against it,” he said. “I just haven’t heard anyone say, ‘You don’t have anything to worry about.’ ”
And even if the March 1 cuts are avoided, the next crisis is already on the horizon: The continuing resolution on the federal budget, which right now is keeping the government open, expires not even four weeks later, on March 27.
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