A local look at the federal sequester

Upwards of $260 million in federal funding – in the form of research grants, student financial aid and operating funds – was destined for Iowa State this year. That funding suffered a blow officially on March 1, a missed deadline for Congress to agree to a plan for reeling in the national debt. That failure triggered across-the-board cuts in the federal government set in motion by legislation passed in August 2011. In the current fiscal year alone, about 85 billion federal dollars will be cut. The long-term effects are less clear.

"We continue to communicate to our representatives in Washington how important these programs are to Iowa State University," said chief of staff Miles Lackey. "We hope they will get these funding issues resolved before the continuing resolution expires on March 27."

While nearly all the affected units at Iowa State await firm announcements from their federal funders – there's still uncertainty at the federal level about how the cuts will be determined -- campus leaders are contemplating their options with the best information available to them. Here's a quick look at how their plans are evolving.

Federally funded research projects

The slowdown in federal research funding already has begun. Through February, contract and grant dollars coming to Iowa State from federal agencies were down about 16 percent from last year. If that trend holds, the university would receive about $175 million in federal research funds this fiscal year – roughly $34 million less than in FY12.

Interim vice president for research and economic development David Oliver confirmed that federal agencies haven't shared firm funding plans yet, pending appropriations decisions for the rest of this fiscal year. Congress has a March 27 deadline to get that done. Oliver said federal agencies are hoping to be allowed to reshape or focus the cuts.

"The most information we're getting is from NSF (National Science Foundation), suggesting that continuing projects will keep their funding commitments and new grants will take the bulk of the cuts," he said. "Estimates tossed around are a 20 to 30 percent reduction in new grants funded."

Other federal agencies are "playing it close to their vests," said Rochelle Athey, director of Iowa State's Office of Sponsored Programs Administration. She said she too believes new funds are more at risk, but didn't count out the possibility that already awarded grants could be reduced if an agency's cuts are severe enough and research projects had not yet incurred some costs.

"What we're telling people is to keep spending their money and keep submitting proposals, with an eye on diversifying their submissions and considering non-federal funding sources," Athey said.

Oliver noted that while the research funding cuts are made award by award, the impact on the university will be a collective one. Two groups he expressed concern for are Ph.D. students and tenure-track assistant professors. New Ph.D. students are guaranteed five years of funding, three of which typically are in hand. In an environment of declining new grants, a significant number of graduate students will need to be funded from other sources, he said. Fewer grants also make new faculty members more vulnerable professionally, he said, once their startup funds are used and they need to transition to competitively awarded funds.

Oliver also offered this advice to researchers:

• Don't try to save money to carry into the future; these funds might be recaptured by the granting agency.
• Keep up to date on your grant proposals. When you receive a tentative acceptance, get all the paperwork done promptly to decrease the chance of the offer being lost.
• Stay in touch with your program manager and your budget.

U.S. Department of Energy's Ames Laboratory

Ames Laboratory receives about $39 million in operating funds from the U.S. Department of Energy. Following a national process of prioritizing science programs, Ames Lab leaders learned last week that none of its research programs are scheduled for cuts.

"This is a great testament to the quality, visibility and productivity of our research programs," said Ames Lab director Alex King in a message to his staff, "and it's the payoff for constant attention to those issues."

King said the Lab will sustain a 5 percent reduction to its safeguards and security budget, amounting to about $50,000, and a 50 percent reduction to its general plant projects budget (a reduction of about $300,000). These cuts amount to less than 1 percent of the Ames Lab annual operating budget.

He expressed confidence that the cuts can be absorbed without Lab-wide employee furloughs or layoffs, but said it will take some juggling. He said it's likely that some maintenance projects will be delayed.

Student financial aid

Iowa State will receive about $28.5 million this year in federal grant aid and work-study funds, about 80 percent of which is in the PELL grant program. All federal awards made to students for this academic year are secure, said director of student financial aid Roberta Johnson. And because it's a forward-funded program, PELL grant aid is safe for the 2013-14 year as well, she said.

Johnson said the National Association of Student Financial Aid Administrators (NASFAA) estimated about a $37,000 reduction to Iowa State for 2013-14 in both federal work-study funds and Federal Supplemental Education Opportunity Grant funding, a grant for students with exceptional financial need. This amounts to roughly 4 percent and 6 percent reductions, respectively, to these two funding sources.

Johnson said she hasn't received specific information yet about some smaller federal grant programs.

"I'm working off the assumption that I'll have these two cuts next year," she said. "We're using the revised numbers for planning purposes."

Johnson said institutional support for financial aid has increased over the last few years in response to higher enrollments and increased financial need. That trend has helped offset eroding federal support.

"But it is unsustainable to assume that institutions can continue to absorb federal cuts while keeping their costs reasonable," Johnson said. "We are doing our best to minimize the impact on students."

Johnson's staff is preparing to send out financial aid award letters to incoming freshmen around March 28, and she said she doesn't anticipate having to mail out revised award letters. Final funding information from the U.S. Department of Education typically arrives before March 31.

Iowa Agriculture and Home Economics Experiment Station

The College of Agriculture and Life Sciences was to receive about $8.1 million in federal funds this year -- sometimes referred to as "formula" funds -- that are distributed annually to the nation's land-grant schools for research that is relevant to their states. At Iowa State, this is carried out under the umbrella of the experiment station.

"These funds are one of the things that link us to other land-grant universities and make the system work with greater efficiency," said dean Wendy Wintersteen. "They provide a great return on the investment, in part because they assure collaboration among the states."

Wintersteen said she hasn't received the official word yet from the U.S. Department of Agriculture (USDA), but Iowa's Congressional members advised her last week to plan for approximately a 5 percent reduction in funding for the current year, or about $414,000.

"We don't have the flexibility in our budget to absorb that, so we will be making cuts," Wintersteen said.

The college cabinet began discussion last week about potential areas for reductions, which for the time being will be considered one-time only. She said ideas included holding faculty lines open, reducing funding for centers, reducing facility budgets and other differential reductions.

ISU Extension and Outreach

The USDA sends other "formula" funds each year to the nation's land-grant universities to support their outreach programs. That amount was going to be about $9.3 million this year at Iowa State. A key use of those funds in this state is support for ISU faculty with extension responsibilities.

Vice president for extension and outreach Cathann Kress said the USDA advised her earlier this week to plan for a 5 percent reduction in the current fiscal year – or somewhere between $450,000 and $485,000, depending on which funding lines are subject to the cut. In the last two quarters of the fiscal year, 40 percent of the normal funds will be sent to Iowa State, she said.

Planning began months ago to address the anticipated cuts, Kress said.

"We've worked hard this past year to identify priorities and gear our resources toward those things most important," she said. "We've also tried to be prudent and achieve savings where we could.

"Since we build the capacity of the university to do outreach work, this is going to have an impact in the colleges," Kress said. "Once we get clarification on what the cut will be, we'll go from there."

TRiO programs

Iowa State is receiving about $920,000 this year from the U.S. Department of Education for three programs intended to help low-income students prepare for and succeed in college: Educational Talent Search and Upward Bound for precollegiate students, and Student Support Services for enrolled Iowa State students. Jane Agyeman, who directs the precollegiate programs, said she learned in a conference call last week that this year's funding is secure; next year's budgets will face a 5 percent cut.

"I will talk with my staff about program cuts we can make that won't hurt the quality of the service we provide our students," she said. "Five percent of any number will have an effect, obviously."