Impact of Sequestration on NSF

Posted on February 27, 2013

The National Science Foundation has issued an Important Notice concerning the impact of sequestration on the NSF programs. In that notice, NSF indicates that they intend to make the necessary FY 2013 reductions with “as little disruption as possible to established commitments” and will use the following set of core principles to guide sequestration planning activities:

Protect commitments to NSF’s core mission and maintain existing awards;
Protect the NSF workforce; and
Protect STEM human capital development programs.

The notice goes on to detail what they foresee as the major impact of sequestration, which will be noticed through reductions to the number of new research grants and cooperative agreements awarded in FY 2013. They anticipate that the total number of new research grants will be reduced by approximately 1,000 for the remainder of this fiscal year.

But the good news for existing grants is that all continuing grant increments in FY 2013 will be awarded, as scheduled, and there will be no impact on existing NSF standard grants. The same intent applies to annual increments for cooperative agreements, though overall funding constraints may require reductions to certain major investments. These will be handled on a case-by-case basis.

Sequestration Likely

Posted on February 24, 2013

Congress returns to work Monday after a week-long recess period. Foremost on their agenda this week will be the sequester, which is set to take effect on Friday unless Congress takes legislative action before then. Barring an extremely unlikely last-minute deal, about $85 billion is set to be cut from military, domestic, and some health-care programs beginning March 1^st. Even if Congress decides to replace or delay some cuts during the late March debate on funding government for the remaining seven months of FY 2013, some cuts will certainly go into effect before then.

Sequestration involves trimming $85 billion from a $3.6 trillion annual federal budget, or about 2.4 percent. But the cuts will not affect Social Security or Medicaid, and the Medicare cuts total only about $11 billion in FY 2013. Thus, entitlement spending, which poses the biggest long-term challenge to the federal budget, accounts for only a sliver of the cuts. That leaves more than $70 billion in cuts to be applied over the next seven months to the roughly two-fifths of the budget that is devoted to discretionary spending, including research, education, the military, and dozens of other categories.

NIH Prepares for Sequestration Implementation

Posted on February 22, 2013

As mentioned in our blog post yesterday, NIH Director Francis Collins announced that NIH IC directors will develop their own plans for how to apply sequestration cuts to their institutes and centers. This was followed by NIH’s official notice posted yesterday that due to sequestration, NIH likely will reduce funding levels of non-competing continuation grants, make fewer competing awards, and for continuation awards that have already been made, may not be able to reach the full FY 2013 commitment level described in Notice of Award. Confirming Collins’ announcement, it also states that if sequestration occurs, NIH ICs will announce their individual plans to meet new budget levels. Read the full NIH notice here.

The anticipated cuts are already being seen: PIs are receiving awards sharply reduced from committed levels, forcing universities to make up the difference or find cuts, including letting go lab staff. The sequester is scheduled to take effect just a week from today.

Sequestration: The Bottom Line

Posted on February 12, 2013

While it may seem that the White House has been more focused gun control and immigration over the past several weeks, President Obama is expected to make the economy his central theme and renew his call to avoid sequestration when he delivers his State of the Union tonight. There are just 17 days until the sequester is schedule to take effect and the President is certain to call for new tax revenue to avoid the $85 billion in spending reductions due March 1^st even as Republicans reiterate their strong opposition to any new revenues.

Meanwhile, Senate Democrats will soon release a proposal to replace the across-the-board cuts with new revenue and other spending reductions. This is most likely a short-term fix through the end of the calendar year, possibly setting up Congress for another New Year’s battle on spending cuts. But it appears that the Senate proposal is unlikely to get any support from Republicans, which is why so many believe that sequestration will happen on March 1^st.

The bottom line: If Republicans cannot get a new deal involving entitlement cuts but without new tax revenue, they prefer accepting sequestration cuts to defense programs as the price of getting some cuts to domestic programs. If Democrats cannot get a deal involving more tax revenue but without entitlement cuts, they prefer accepting sequestration cuts to domestic programs as the price of getting some defense cuts. The cuts will reduce domestic programs by 5.1 percent and defense by 8 percent, but since they come in the middle of the fiscal year, the impact is closer to 9 percent for nondefense and 13 percent for defense programs. Many federal agencies will likely see 14-day furloughs for employees and layoffs for new hires.

Another Short Term Sequestration Fix?

Posted on February 11, 2013

Senate Democrats plan to announce a short-term sequester replacement bill this week aimed at combining alternative spending cuts and new tax revenue to avert $85 billion in automatic spending reductions scheduled to begin taking effect March 1^st. Republicans, who adamantly oppose any use of tax revenue to replace the sequester, are not part of the broader discussions with democratic senators. It is possible that the Senate will consider the yet-to-be-released measure the week of February 25^th, after next week’s Presidents Day recess.