Sequester may decrease U. budget

The sequestration measure was put in place as part of a legislative deal struck between Democrats and Republicans in 2011 to decrease the federal deficit and to avoid letting the United States slip into sovereign default as a result of surpassing the national debt ceiling. A White House Office of Management and Budget memo released Wednesday anticipates cuts of 9 percent for nondefense programs and 13 percent for defense programs across the board as a result of sequestration.

Sequestration is intended to reign in the federal budget by automatically cutting spending by $1.2 trillion over 10 years. Over the rest of the fiscal year, an additional $85 billion will be cut from federal spending if the full sequestration package goes into effect.

The sequestration could impact University operations that receive federal funding, including federally-funded research, undergraduate financial aid and the Princeton Plasma Physics Laboratory.

According to Congressman Rush Holt NJ-12, whose constituency includes the University, sequestration could diminish the U.S. budget by $15 to 20 billion and could have “spotty, but very noticeable” consequences across various University operations because the University’s various departments and programs receive different amounts of federal funding and use it differently.

Dean of Research A.J. Stewart Smith said that the University could lose $10 to 15 million in federal research grants of the roughly $200 million in federal funding it receives annually.

“We have since received an email from the National Science Foundation estimating roughly a five percent cut,” Smith said.

National Science Foundation Director Subra Suresh released a statement Wednesday notifying university presidents and grant recipients that, in an addition to a five percent reduction in NSF appropriations, the agency expected to award approximately 1,000 fewer grants in fiscal year 2013.

Smith said that the University has not yet heard how other government agencies will be curtailing their budgets. The bulk of federal funding that the University receives typically comes from the National Institutes of Health, the National Science Foundation, the Department of Defense, the Department of Energy and the Department of Commerce.

“The bottom line is we don’t really have any firm picture of what’s going to occur,” Smith said.

In a Feb. 20 letter sent to faculty grant recipients, Smith explained that grant money may be more difficult to come by for the next several years.

“I urge you to spend cautiously, keeping in mind that uncertainty and tight budgets may be with us for quite a while,” he wrote. “We also need to keep in mind that there are plausible scenarios under which funds that have already been granted could be scaled (“clawed”) back.”

Smith said he is most concerned for the future of the PPPL, which could lose 10 percent of its $90 million budget as a result of sequestration. Because the PPPL receives 100 percent of its funding from the DOE, a 10 percent cut in funding could be “disastrous.”

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According to the Student Aid Alliance, a coalition of higher education organizations, students nationwide who receive federal financial aid could lose up to $856 million in assistance per year. The White House estimated that at least 650 work-study jobs could be eliminated in New Jersey alone. But University Provost Christopher Eisgruber said that the University would continue to provide adequate financial aid to undergraduate students.

“We will preserve the integrity of all our financial aid programs,” Eisgruber said. “We can confidently say that we can meet the full financial need of every student at the University,” he added, citing the University’s endowment and generous alumni donors.

Eisgruber also said that Princeton’s endowment could suffer as a result of adverse conditions in the national economy that could be worsened as a result of sequestration. He said a recession would be the most severe impact sequestration could have on the University, since it would affect multiple revenue streams.

He added that the University has the right combination of reserves to be able to accommodate short-term financial shocks.

At the administrative level, the University has engaged in lobbying efforts to oppose sequestration in concert with other research universities and through its Office of Government Affairs.

“Princeton has been participating in efforts with other research universities to argue strongly against the cuts to research and education that would occur under a sequester,” University spokesperson Martin Mbugua said, referring to the University’s involvement in the Association of American Universities, a coalition of 62 public and private research universities formed in 1900.

AAU president Hunter Rawlings testified before the Senate Committee of the Budget on Tuesday, arguing that both university research and financial aid could “suffer significantly under sequestration with consequences not only for scientists, engineers and students, but also for our nation’s innovation enterprise and economy.”

In a Feb. 11 letter provided by Mbugua on behalf of OGA director Joyce Rechtschaffen, University President Shirley Tilghman and Rutgers president Robert Barchi expressed concern to Holt over cuts to research and development.

“The indiscriminate, across-the-board cuts scheduled to go into effect on March 1 not only fail to address the primary source of the nation’s deficit, but undercut the very investments — education and scientific research — that spur strong economic growth,” Tilghman and Barchi wrote.

The University’s Office of Government Affairs, located in Washington D.C., has actively worked to oppose the cuts in recent months. Rechtschaffen did not respond to request for comment.

In December, Rechtscaffen confirmed to The Daily Princetonian that the OGA has conveyed concerns about sequestration in conversations with members of Congress and the White House.

Mbugua said that the University has also advised researchers that grants could be scaled back and that “uncertainty and tight budgets may be the reality for the foreseeable future.”

He added that even as the sequester goes into effect, uncertainty remains because it is unclear how long the sequester will last.

Holt gave a gloomy prediction of the sequester’s economic impact.

“Overall I think it’s going to have serious effects on the economy,” Holt said. “Even if the pain is felt quickly and Congress is forced to do what it should have done before, some irreversible damage will be done, even if it’s turned around in a matter of days.”

President Obama has called a meeting at the White House today to craft a bargain with Republicans in efforts to avert the sequester.

“We never should have gotten to this point,” Holt said. “The negative effects had been postponed, but now they are coming due. We’ll see if there is any bipartisanship in getting out of this predicament.”

Senior Writer Monica Chon contributed reporting for this article.