Fiscal cliff on the horizon

MIT prepares for federal research cuts

Unless Congress can come to a compromise regarding the fiscal cliff before the start of 2013, MIT could face up to a 10 percent cut in its federal research funding, affecting both students and faculty. The fiscal cliff refers to the mandate set by the Budget Control Act of 2011 that the Joint Select Committee on Deficit Reduction agree on a $1.2 trillion deficit reduction package by Nov. 23, 2011; otherwise, roughly $400 billion in immediate budget cuts, or sequestration, automatically become effective in 2013.

In an email to The Tech, Associate Provost Claude Canizares said, “It’s encouraging to see that the President and Congressional leadership want do something to avoid the ‘fiscal cliff,’ but we’ll just have to wait and see if they can succeed in finding a compromise. Until then, the uncertainty and risk remain.”

In fiscal year 2012, MIT’s total campus research expenditures totaled $681 million — not including Lincoln Lab’s $846 million. Federal funds accounted for $473 million of that amount, which includes extra funding from the American Reinvestment and Recovery Act, the $787 billion dollar stimulus package passed in 2009.

The Institute has faired rather well despite the research spending reductions in the federal budget in 2011 and 2012. According to slides from an October faculty meeting, MIT had a 8.7 percent jump in federal funding (without ARRA funding) in the last three years. With the sequestration, funding will be reduced to levels similar to those from two to three years ago, not including stimulus funds. MIT’s projected federal research budget after the sequestration is $428.8 million, down from $473 million. According to Canizares, the faculty expects current grants will be cut either 9.4 percent or 8.2 percent.

Canizares said that the Institute should be able to weather the changes, though individuals should remain cautious. “The sequestration is not a fatal catastrophe. We can survive and have healthy and vibrant research for graduate students, UROPs,” said Canizares. “It could be devastating for individual faculty who might lose their awards, but it will not be a catastrophe for the institute overall given the recent growth in research from all sources.”

According to MIT Facts, about 3,385 researchers work at the Institute during the academic year on projects funded by foundations, industry, and the government. Roughly 2,460 out of the possible 6,510 enrolled graduate students are appointed as research assistants.

“We know the government has pressure to come up with a compromise,” Canizares said. “There is bipartisan recognition that research is important in longer term.” He conceded, however that even a potential agreement would probably also reduce federal research funding. The best-case scenario would be research funding capped at current rates, adjusted for inflation.

Due to uncertainty around the sequestration, faculty members should be careful, said Canizares. “We’re being vigilant, not overextending. PIs who have federal funding should not make large commitments when the money might not be there.” This includes being more cautious about hiring, or simply monitoring spending more closely.

The amount of federal funding across MIT’s schools is uneven. Federal funds dominate 83 percent of the School of Science’s budget, whereas they are 21 percent of the Sloan School of Management’s. MIT currently receives its largest federal grants from the National Institutes for Health, the Department of Defense, and the Department of Energy: $133.7 million, $117.5 million, and $90.9 million in fiscal year 2012, respectively.

At the faculty meeting, Canizares outlined several scenarios the government could take. In the best case, the federal budget would be capped at current levels, adjusted only for inflation. In the worst case, the national defense budget would be kept constant, forcing the mandatory cuts to affect other agencies disproportionately. According to the Budget Control Act, there will be a sequester of $400 billion in 2013, potentially totaling $1.2 trillion by 2021 if no compromise is enacted. The sequestration is modeled after the Balanced Budget and Emergency Deficit Control Act of 1985, which mandated broad, sweeping cuts.

However, despite the threat of a reduction to MIT’s research funds, Canizares said that “nothing is really known” about the how the cuts would be applied. It is unclear which programs would specifically suffer. For example, the sequestration could affect anticipated grant awards. According to slides from the faculty meeting, deans should leave extra funding for hardship cases in case any grants or awards are not honored.

In addition, MIT is trying to diversify the sources of its research funding, namely, with funds from industry and individual donors — in 2011, $100.8 million came from industry collaboration, according to MIT facts.

However, increased industry funding is not a panacea. Canizares said, “Industry doesn’t tend to fund basic research,” referring to research that does not necessarily translate into short-term profits because it may involve more theoretical work. Overall, Canizares urges the Institute be “reasonably prudent” in moving forward in light of the potential fiscal cliff.