March 2013

On March 1, congressional inaction to reduce the federal deficit triggered sequestration, which refers to mandated across-the-board cuts to most federal spending. While further details on the exact impact of the cuts are forthcoming from individual agencies, a report from the Office of Management and Budget (OMB) issued to Congress on March 1 details how sequestration will impact federal science agencies at the budget account level. As required by the Budget Control Act, funding reductions will be made equally at the program, project, and activity (PPA) level within each budget account, but the Act does not require that spending cuts be made unilaterally to budget resources within the PPA level.

Overall, nondefense discretionary spending for the 2013 fiscal year will be reduced by 5% and defense discretionary spending by 7.9%.  These percentages account for the requirement that half of the $85 billion of cuts be from defense and the other half from nondefense spending. In its report, OMB calculated that spending within agencies that fund education research will see appropriations for FY 2013 reduced by the following amounts based on current funding levels:

• Institute of Education Sciences (IES): $30 million
• National Science Foundation (NSF) – Education and Human Resources Directorate: $47 million
• NSF – Research and Related Activities: $290 million
• National Institutes of Health (NIH): $1.56 billion

The cuts will have an impact on the disbursement of research grants at each of these agencies. NSF released a memo on February 27 stating that it expects to fund 1,000 fewer new grants in FY 2013 while continuing to fund existing grants and contracts. Department of Education officials also have noted that IES will seek to ensure funding for existing grants and contracts, though at the expense of funding for new grants. According to a memo issued to grantees on March 4, NIH anticipates that impacts on awards could range from delaying or canceling new awards to not issuing continuation awards.

It is expected that the sequester will be applied to congressional legislation to extend the FY 2013 continuing resolution (CR), which expires March 27. On March 6, the House passed a bill for the CR that would apply the sequester after a 0.098% cut to FY 2012 spending levels for all agencies except the Department of Defense and the Veterans Administration, which would be funded at the FY 2013 level.

Although the Senate is expected to take up the House bill during this Highlights publication week, Sen. Barbara Mikulski (D-MD) introduced a bill for the CR on March 11 that would apply the FY 2012 appropriation through the remainder of the FY 2013 fiscal year, minus the cut from the sequester, for many agencies. One exception is NSF, which would receive an overall increase in funds under this legislation. Specifically, the Education and Human Resources Directorate would receive $895.6 million, an increase of $66.6 million, or 8%, while the general fund for research and related activities would receive $5.98 billion, an increase of $263 million, or 4.6%, over FY 2012 appropriations. Sequestration will then be applied to these levels.