By Kathleen J. Sullivan
Stanford is keeping a close eye on the congressional battle over automatic spending cuts – known as sequestration – set to take effect March 1, and weighing the potential impact on federal research spending.
Peter Michelson, professor of physics and chair of the Academic Council's Committee on Research, set the stage for the discussion at Thursday's Faculty Senate meeting by noting that 80 percent of the research conducted at Stanford is funded by federal agencies.
He said federal research grants include funds for direct project support and for indirect costs, including general administrative expenses, building depreciation, some equipment depreciation, utilities, maintenance, non-capital improvements, interest expenses and libraries.
Michelson said the Committee on Research has held a series of meetings in recent years to discuss the potential impact of reduced federal research spending in a variety of areas, including graduate student and postdoctoral fellow support.
"Patti Gumport, vice provost for graduate education, gave a presentation, and Ann Arvin, vice provost and dean of research, participated in the meeting," he said. "I can say, personally, I came away rather assured this university is prepared to look after our postdocs and grad students."
The federal landscape
Ryan Adesnik, director of federal government relations at Stanford, said the nation experienced a sea change in how Congress and the White House looked at the ongoing federal budget debate in 2010 and after that year's elections.
"Today we have a $1 trillion federal budget deficit and a $16 trillion national debt," Adesnik said. "So what's changed is: every single piece of federal legislation that comes to the floor of Congress is viewed through the prism of cost and deficit reduction. There are no free rides anymore in the legislative process. And this gives you the extreme budget environment that we're dealing with today."
He gave the senate a quick overview of the federal budget landscape, beginning with the difference between mandatory and discretionary spending. He used a slide showing President Obama's proposal for a $3.8 trillion budget in fiscal year 2013.
Mandatory spending, which accounts for more than two thirds of the budget, is not subject to the yearly congressional budget process and is made up mostly of entitlement programs, including Medicaid, Social Security and Medicare.
Discretionary spending, which accounts for less than one third of the federal budget – about $1 trillion – has to be approved by Congress annually.
"This is where the research funding that's so important to us lives," Adesnik said. "The non-discretionary spending category is where the National Institutes of Health, the National Science Foundation and the Department of Energy's Office of Science live. This funding category supports the 80 percent of the university's sponsored research budget that Peter cited earlier."
Adesnik said Stanford received $85 million in 2012 from defense research funding, including from DARPA (the Defense Advanced Research Projects Agency).
The federal budget in context
Adesnik discussed the Budget Control Act of 2011. The law was designed to reduce discretionary spending – to achieve $1 trillion in savings over 10 years – through spending caps that would keep such spending mostly flat over the next decade. The law also included additional across-the-board spending reductions – the sequestration – that would reduce spending even further if Congress did not propose and pass a plan that would achieve an additional $1.2 trillion in spending cuts over that same 10-year period.
Finally, he discussed the American Taxpayer Relief Act of 2012, which delayed the automatic spending cuts until March 1 – next Thursday.
"Through some mathematics and budgeting, that postponement of sequestration not only moved sequestration back two months, but it also took some bite out of the effects," he said. "So now the effects under current estimates are about 5 percent across-the-board cut for non-defense discretionary spending and about a 7 percent reduction to defense discretionary spending."
Adesnik said the possibility remains that the government could postpone sequestration to March 27, when it is required to pass legislation to fund the government through the end of fiscal year 2013.
"I'm loathe to do prognostication, but I'll do a little of it to give you a sense of where we're going," he said. "I think it's unlikely in the next week that they're going to get a deal. There are currently negotiations going on, so it's not impossible."
Adesnik said it remains possible that Congress will give federal agencies, including science agencies, flexibility on how to digest the cuts they may experience.
"We're hearing from a number of science agencies that some of that discussion is going on right now," he said. "Given that science accounts stand in good favor, especially in this administration and in Congress, agency flexibility will be helpful for research universities."
Adesnik said deficit reduction is here to stay, at least for the next four to five years.
"But we're going to get continued strong support for scientific research," he said.
"Over a number of years, we've really won the argument that we're a priority. We'll see some decline in the general aggregate level, but we've seen in the past that we have amazing faculty who do such great work and fare so well in the peer review process. One thing we'll have to take a look at is: as agencies try to manage this very constrained budget environment, they're looking for ways to shift some costs, or make it more affordable for them to do the same amount of grants."
Adesnik concluded by reminding the senate members that nothing is forever.
"The idea that the federal government is going to stick to a 10-year budget plan, in my experience, has never happened," he said.
The potential impact of budget cuts at Stanford
Ann Arvin, vice provost and dean of research, presented a slide that showed the projected impact of an 8 percent reduction in federal research spending on Stanford in 2013. Under that scenario, federal revenue to Stanford would drop by $51 million, including a $17 million cut to non-medical research, a $20 million cut to medical research and a $14 million cut to indirect costs.
If an 8 percent cut were enacted, the cuts would reduce Stanford's federal research revenue to $634 million in 2013. Originally, Stanford expected to receive $685 million in federal research this year, she said.
"That's the big picture on the institutional impact," said Arvin, who also presented slides showing the potential effect of federal spending cuts on indirect costs.
Arvin said individual faculty members compete for federal research grants through national peer review of proposals – a very competitive and entrepreneurial process.
"The success of faculty, our competitiveness, depends on novel ideas, being able to generate preliminary data and go to the review panel with a solid proposal based on observations that they can then see will be extended if they support your proposal," she said. "The other point that's really important is that it takes several grants to support a productive team – a productive team meaning your graduate students, your postdocs and your research staff."
With increased competition for federal grants, researchers are spending more time writing proposals, which takes away from research and teaching, she said.
"If you're managing multiple awards, you have more management and compliance tasks," Arvin said. "And it's important to realize that if you have fewer research projects, you are not going to have the money to support the work that your students would like to do with you in their research training."
Arvin said Stanford is less dependent today on external grants for graduate student support. In 2011, such grants accounted for 28 percent of graduate student support, compared with 40 percent in 1998.
"The endowments that we have for graduate student fellowships are really giving us stability around support for graduate students and we do expect to maintain that support," she said.
Arvin said Stanford is studying short-term and long-term strategies for coping with reductions in federal research spending.
"Short term, I think we agree that there may be more need for bridge funding so that the faculty can have an opportunity to submit a revised proposal and keep the show on the road," she said. "The graduate students and post docs have to be able to finish their projects. We have very many highly skilled research staff that are essential partners in our research. Retaining those people would be a reason for bridge funding.
"Longer term, we know we already depend very heavily on good start-up packages for faculty," she said. "We leverage our faculty competitiveness by providing seed grants. This is a very effective tool for which we can show data."
Arvin said better sharing of state-of-the-art facilities may be another long-term strategy.
"Interdisciplinary research has generally been a way in which our faculty have been more competitive because there is some novelty and innovation from those kinds of projects," she said. "There is potential to increase our proposals to industry and foundations, but historically we've had about the same fraction of resources from those kinds of funders, and I do not think we can imagine any substitute for federal research funding."
Arvin ended her talk with what she called "the bottom line," illustrated by a cartoon of a caveman and a cavewoman sitting amidst blocks – a rectangle, a triangle, a square and a half-circle – with the caption: "I was close to a breakthrough when the grant money ran out."
The full minutes of the meeting, including the presentations and the 35-minute question-and-answer session that followed, will be available next week on the senate's website. The next Faculty Senate meeting will be held March 7.
--Stanford News Service
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