Policy Update: April 16, 2013
Last Wednesday, President Obama unveiled his proposed Fiscal Year 2014 budget. Overall, in light of the challenging fiscal climate, including the looming threat of additional sequestration budget reductions, the President's proposal is positive for Northeastern and the higher education sector generally, although it is very unlikely to be enacted into law as proposed. The budget has also won some praise for proposing a balance of revenue increases and entitlement cuts that would facilitate deficit reduction and ending sequestration. Below is a summary of the highlights.
The budget largely preserves key investments in scientific research and development. Below is information about funding for federal research agencies on which Northeastern relies:
National Institutes of Health (NIH)
The Budget provides $31.3 billion for the NIH, a 1 percent increase over FY13, not including across-the-board sequestration cuts. While the proposal would cut NIH center grants across the institutes by 3.6 percent, the budget includes increases for the BRAIN Initiative, Alzheimer's, Big Data and the Cures Acceleration Network. In fact, the budget would provide $639 million for the National Center for Advancing Translational Sciences (NCATS), designed to accelerate research on the discovery and development of new therapeutic interventions.
National Science Foundation (NSF)
The Budget provides $7.625 billion for the NSF, a proposed increase of $232.7 million, or 3.2 percent, above the 2013 enacted level. Of this, $6.62 billion is designated for research and related activities, and the Budget focuses on cross-cutting research priorities in advanced manufacturing, clean energy, Research at the Interface of Biological, Mathematical and Physical Science and Engineering (BioMaPS), cognitive science and Neuroscience, cybersecurity, and STEM education. Of note, NSF plans to support around 500 new CAREER awards across the NSF research portfolio. Funding for Hazard and Water Sustainability and Climate Science, Engineering, and Education for Sustainability (SEES) programs for 2014 is also included.
Department of Homeland Security (DHS)
The Budget provides $39 billion, a decrease of 5.6 percent, or $2.3 billion, below the final FY13 level. Despite the overall cut, the Budget provides $1.5 billion for the Science and Technology Directorate (S&T), an increase of over $691 million. Funding for research within S&T would increase by 3.7 percent for priorities such as disaster resilience and cybersecurity. The University Programs Account, which funds the ALERT Center, would see a $9 million cut to $31 million. DHS states that the cut is aimed at speeding up successful transition of tools and technologies developed by COEs' research into the field. Some COEs have more mixed track records of serving DHS component needs than ALERT, which may be targeted here. We will, of course, be fighting to preserve the ALERT Center.
Department of Defense (DOD)
The budget proposes increasing the core Pentagon Budget by $16.47 billion to $526.6 billion. Within this total, DOD requests $67.5 billion for Research, Development, Test, and Evaluation (RDT&E) accounts, a decrease of $2.4 billion, or 3.5 percent from the FY13 enacted level. Army, Air Force, and Defense-wide basic research would all see increases. The President's budget assumes that sequestration will be reversed; if not, DOD would have to absorb tens of billions in additional cuts.
Department of Energy (DOE)
The Budget provides the DOE $28.4 billion in discretionary funds, a 5.2 percent increase above the 2013 enacted level. The Office of Science would be funded at $5.15 billion, a $249 million increase. The budget maintains and expands funding for the Advanced Research Projects Agency-Energy (ARPA-E).
Department of Education (ED)
The Budget provides $71.2 billion in discretionary spending, which is 2 percent above the 2013 enacted level. The request includes several of the college affordability items President Obama laid out in his State of the Union Address. Several of these items, particularly increased funding for student financial aid programs, would benefit Northeastern students and their families. The Budget would consolidate federal STEM programs, with ED, NSF, and the Smithsonian overseeing new interagency STEM efforts. In the areas of student aid, the President would increase the maximum Pell award to $5,785 for the 2014-2015 year and again included his proposal to modernize and expand the Perkins Loan program. He also seeks to address the looming Stafford Subsidized loan interest rate hike by proposing a new market-based variable rate for all federal student loans going forward.
Both Houses of Congress have each already passed their own budgets, although given their deep differences, reconciling the two is unlikely. Under the Budget Control Act enacted in 2011, beginning October 1st, sequestration requires an additional $109 billion cut shared equally from security accounts (DOD, DHS, STATE) and non-security discretionary spending (NIH, Commerce, Education, Energy, etc), unless Congress acts to undo the mechanism. This week, in a departure from the House's posture, Sen. Barbara Mikulski, Chair of the Senate Appropriations Committee, announced plans to prepare appropriations bills at a higher spending level that assumes the sequester will not take place. Whether a long-term budget and deficit reduction deal can be reached, likely in the context of Congress raising the debt limit this summer, remains to be seen.
Finally, also on Wednesday, the state House of Representatives released its proposed FY14 budget. The $33.8 billion proposal calls for a 3.9 percent increase in state spending, $1 billion below the Governor's proposed budget. The House budget would dedicate $39 million in new revenue for UMass to avoid tuition and fee hikes for two years. However, the budget does not provide new funds for the MassGrant scholarship program, level funding the need-based financial aid program that helps Massachusetts students attend public and private colleges in the state. We are currently building support for an amendment to increase the MassGrant program by $9 million to help offset reductions in the average scholarship award over the last several years. The House budget counts on $500 million in new revenue from higher taxes on cigarettes, gas and businesses, and would direct $265 million of the new revenue to transportation, and use the balance to invest in local aid, Chapter 70 education aid and higher education. Ultimately, such investments will depend on the size of the new revenue package currently under consideration in the Senate. The House will debate the budget the week of April 22nd.