Policy Update: February 15, 2011

Policy Update: February 15, 2011

Yesterday, President Obama released his FY 12 budget, and while his $3.73 trillion proposal would cut more than 200 programs throughout the government, it makes investment in university research and education. The budget provides $1.12 trillion in discretionary spending, or a 2.8 percent increase over $1.08 trillion enacted in 2010. Overall spending would drop by 2.7 percent from the $3.8 trillion budget Obama had proposed for the current fiscal year. This is just the first step in a very long process that will be drawn out over the year, and we are likely to see a much different outcome in the end for the FY 12 budget.

Research Funding:

Below is a chart outlining some of the funding proposals in the President's budget for the federal agencies Northeastern relies on for research funding. (Currently the government is funded at FY 10 levels)

NIH:

  • 2010 actual - $30,950.00
  • 2012 est. - $31,995.00

NEA:

  • 2010 actual - $168.00
  • 2012 est. - $146.00

NEH:

  • 2010 actual - $168.00
  • 2012 est. - $146.00

DOE (Office of Science):

  • 2010 actual - $4,964.00
  • 2012 est. - $5,416.00

NASA:

  • 2010 actual - $4,498.00
  • 2012 est. - $5,017.00

NSF:

  • 2010 actual - $5,564.00
  • 2012 est. - $6,404.00

The Administration’s budget reflects President Obama’s message in his recent State of the Union: “I’m convinced that if we out-build and out-innovate and out-educate, as well as out-hustle the rest of the world… our people will prosper and our country will succeed.” The president’s proposal places an emphasis on university research focused on areas that include renewable energy, wireless communications, and computer technology. However, there were some significant cuts, such as $78 billion over five years in the Pentagon’s spending. President Obama and Administration officials are stressing that rather than the budget representing cuts to programs and spending, it reflected “investments” in the necessary areas, innovation and education, to remain globally competitive.  


In addition to investing in university research, the President’s budget proposal contains a number of provisions of interest to the higher education community, including:

  • The proposal would exclude from gross income amounts forgiven at the end of the repayment period for Federal student loans using the income-contingent repayment option or the income-based repayment option.
  • As with the President’s previous budget, the FY 2012 proposal would limit the value of itemized deductions, including charitable contributions, to 28 percent for high-income taxpayers.

These proposals have been made before and have not made it through the final budget process, but we will work to oppose them.

Pell Grants:

Despite the work to preserve research from severe cuts, there were some programs that President Obama “[cares] deeply about” that could not be protected, including Pell Grants. After the release of the president’s budget, Department of Education Secretary Arne Duncan held a press event in hopes of explaining the necessary actions of President Obama. In order to keep the maximum Pell grant at its current level of $5,550 for 2012, the budget plan called for two concessions: 1) reversing the 2008 change that allowed students to receive multiple Pell Grants in a single year and 2) eliminating the benefit for graduate students and professional students where the government pays the interest on student loans while they are still in school. “We’re making some tough choices to protect the Pell Grant," said Justin Hamilton, press secretary for Education Secretary Arne Duncan. "Our proposal would guarantee the maximum award of $5,550 by making some strategic reductions in other areas. We’re cutting where we can so that we can invest where we must.” Without these amendments to the program, Pell Grants were in danger of dipping to a maximum reward of $2,500, an outcome the Department of Education called “financially unworkable and morally unacceptable.”


Republican Response


Republicans in Congress immediately criticized the President's budget for not including more severe cuts that are necessary to address the deficit and the large national debt adequately. According to the White House, the president’s budget would reduce the deficit by $1.1 trillion over ten years. However, this timeframe is not fast enough for the House Republicans, who will now draft their FY 12 budget. This budget, which they hope to release in the next few months, will clearly include more significant cuts than the President’s proposal.  


FY 11 Budget

Meanwhile, Congress has still not completed work on the FY 11 budget as the government currently runs on a Continuing Resolution at FY 10 levels. House Republicans are proposing to make significant cuts to this year’s budget, looking to trim $100 billion. According to a plan released by the House Appropriations Committee last week, 40 percent of the cuts would come from discretionary programs in areas of health, education and labor programs. These cuts would result in

  • cutting the maximum Pell Grant award from $5,550 to $4,705, a recommendation that would affect 8 million students and that is directly at odds with the president’s hopes for the 2012 budget
  • cutting from several science agencies FY10 level: $900 million from Department of Energy’s Office of Science; $350 million from the NSF; hundreds of millions of dollars from NIH
  • eliminating all Congressional earmarks for individual institutions, which in 2010 totaled almost $2 billion for colleges and universities
  • eliminating all operating funds from the AmeriCorps program


However, the Senate is not going to pass such budget guts, which will likely result in another Continuing Resolution (CR) to keep the government running until the two houses can resolve their difference. Unfortunately, a CR restricts federal agencies from funding new initiatives.  Currently, Congress is also confronted with the need to raise the debt ceiling by March 4th. This could be a moment where the President and Congress will be forced to negotiate an agreement on the budget.


In both the current and next year’s budget, programs that are priorities for Northeastern are likely to be cut. Government Relations, in collaboration with many of you, will continue to advocate on behalf of the university on topics such as financial aid, research funding and other related federal programs. We will work to try to minimize the damage from cuts and try to position the university to continue to compete for funding as strategically as possible.