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How Sequester Cuts Will Impact Research

Northwestern officials work to avert a crisis, provide basic information

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February 25, 2013 | by Storer H. Rowley

EVANSTON, Ill. --- Northwestern University President Morton Schapiro and education leaders across America have appealed to Congress to repeal across-the-board budget cuts to take effect March 1 in domestic spending, military outlays and vital services.

Known in budget terms as the “sequester,” these cuts will fall particularly hard on the education sector and federal research grants to universities such as Northwestern, which is bracing for the impact if President Barack Obama and Congress fail to reach a compromise.

“The sequester will damage Illinois' knowledge-based economy, which depends on a steady stream of basic research funding from federal agencies, like the National Institutes of Health (NIH) and the National Science Foundation (NSF),” Schapiro wrote in a Feb. 18 letter to members of the Illinois Congressional delegation. “Last year, Illinois research universities received more than $1 billion in funding from the NIH and NSF.”

Jay Walsh, vice president for research at Northwestern, urged research faculty and staff who rely on federal grants to take careful note of the potentially damaging cuts that may occur for research funding and to plan accordingly -- as best they can, given the uncertainty of the situation.

“Everything we’re hearing and reading indicates that a sequester will go into effect on March 1st,” Walsh observed. “We want to provide some basic information that will help our researchers and administrators think about how to handle their grants, labs and graduate students if this happens.

“NIH says everyone is going to be affected,” Walsh added. “That means there may be many fewer grants and budget cuts to continuing grants, but the specific numbers are not yet known.” Department of Health and Human Services officials have said the National Institutes of Health, for instance, would need to cut its annual budget by 5 percent in about seven months.

Following is a Q-and-A with background on what is known so far about how the University’s research may be at risk, how Northwestern could be affected and what the University has done to try to stop the budget cuts and influence the debate. In addition, accompanying this story are several links to sites with reliable information about the sequester.   

Can you give an example of the kinds of cuts Illinois and Northwestern are facing?

President Schapiro’s letter to the Illinois delegation described a recent analysis conducted by United for Medical Research (UMR) that illustrates the impact of a 5.1 percent sequester (reduction) on NIH biomedical research spending. According to UMR, this NIH-funded research supports 14,000 jobs in Illinois, of which 727 could be lost if the sequester hits. Northwestern University stands to lose about $14 million in NIH research funding should sequestration occur, he wrote.

Is there a way to stop the sequester from happening?

Without a compromise agreement by Congress and the White House, the “sequestration” cuts in defense and non-defense discretionary spending automatically will go into effect starting March 1. A compromise appears unlikely. This sequester is a self-imposed effort to force all sides to control spending and help bring down the federal deficit. If implemented, the $1.2 trillion sequester cuts would take place over 10 years, with the first $85 billion kicking in this year.

How is Northwestern impacted by federal grant income?

Since 2001, NIH funding to Northwestern has increased by about 85 percent, and NSF funding has increased by 80.6 percent. As President Schapiro noted in his letter to Illinois members of Congress, “These cuts could not come at a more inopportune time. Northwestern is currently ranked Number 1 nationally in the amount of licensing income generated, and University faculty have created more than 50 start-up companies during that same time. Along with our affiliated hospitals and physicians, we recently made a commitment to invest $1 billion in private funds to build a state-of-the-art biomedical research facility on our Chicago campus. The new facility will create 2,500 construction jobs, 2,000 full-time positions, and have an estimated annual economic impact of nearly $400 million. This research center will enable our scientists, physician-scientists, and support staff to accelerate breakthroughs in many research areas, including neuroscience, heart disease, diabetes, and cancer in children and adults.” 

How will the sequester affect Northwestern?

The sequester would cut most of Northwestern’s federal funding by 5.1 percent in Fiscal Year 2013, with the cuts falling between March 1 and September 30, 2013.  Some federal programs, like Pell Grants, are exempt from the sequester, but Northwestern’s federal research grants could be reduced by as much as $20 million, including up to $14 million in cuts from the National Institutes of Health (NIH). 

How will the sequester affect individual grants at Northwestern?

Although the law specifies that cuts be applied across the board, it is expected that federal agencies will exercise some discretion in applying the cuts, for example, by stopping awards of new research grants in order to protect ongoing multi-year projects or protecting intramural projects at the expense of extramural research. At NIH, the largest source of federal funding for Northwestern, each of the 27 institute directors could decide how to apportion the reduction within his or her institute.

What are federal agencies saying about the potential cuts?

Federal agencies are beginning to send out memos and notifications to their grant holders in which they specify the kinds of cuts expected at individual agencies. A notice of an “NIH Operation Plan in the Event of a Sequestration,” released Feb. 21, states the following: “Final levels of FY 2013 funding may be reduced by a sequestration. Despite the potential for reduced funding, the NIH remains committed to our mission to seek fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to enhance health, lengthen life, and reduce the burdens of illness and disability.

“Should a sequestration occur,” the notice continued, “NIH likely will reduce the final FY 2013 funding levels of non-competing continuation grants and expects to make fewer competing awards to allow the agency to meet the available budget allocation. Although each NIH Institute and Center (IC) will assess allocations within their portfolio to maximize the scientific impact, non-competing continuation awards that have already been made may be restored above the current level as described in NOT-OD-13-002 but likely will not reach the full FY 2013 commitment level described in the Notice of Award. Finally, in the event of a sequestration, NIH ICs will announce their respective approaches to meeting the new budget level.”

Where can one go with questions about individual grants?

The NIH notice suggested the following for inquiries: “Questions regarding adjustments applied to individual grant awards may be directed to the Grants Management Specialist identified on the Notice of Award.”

What is Northwestern doing about the sequester?

For more than a year, Northwestern has been lobbying Congress to stop sequestration, through personal visits to Washington by President Schapiro, letters to Congress, commentary pieces and coalition activities with organizations such as the Association of American Universities, The Science Coalition and United for Medical Research.