Sequestration begins, brings uncertainties

Lori Clark
Lori Clark

SEQUESTRATION UPDATE

Although there were several last-minute attempts by the Obama administration and various members of Congress to avoid the onset of sequestration, no agreements were reached so the federal sequestration process begins today.

What Can We Expect?

At this point, there are more uncertainties than answers as to how sequestration will be implemented by federal agencies.

Many people believe that there will be a series of very intense budget negotiations as Congress and the Obama administration try to figure out a better way to achieve the $85 billion in budget reductions that are required to be instituted in federal Fiscal Year 2013 (Oct. 1, 2012 to Sept. 30, 2013) before the Continuing Resolution that has kept government running expires Wednesday, March 27.

As it now stands, sequestration requires across-the-board cuts, totaling $85 billion, split between defense and non-defense discretionary programs.

Initial estimates indicate that the budget reductions to federal agency appropriations are likely to be between five and 10 percent. Several programs have been exempted from sequestration this year, including Social Security, Medicaid, uniformed military veterans benefits and other programs that benefit low-income individuals and families. Pell grants also are exempt for the 2012-2013 academic year, and they look fairly secure for the 2013-2014 academic year.

Unfortunately, other student financial aid programs will feel the impact of sequestration, including the Supplemental Educational Opportunity Grants and the Federal Work-Study program. However, our students will not feel the impact of these reductions until July 1, when the financial aid program year begins.

U.S. CapitolThe U.S. Department of Education will notify us of the new allocations for these programs. The TRIO and Gear-Up programs that help to prepare low-income and minority students for college will be reduced as well

We are apt to see a more immediate impact from sequestration on our federally-funded research grants and applications.

There will be differences in how each of the federal research-funding agencies manage sequestration. Most federal agencies have yet to issue an official pronouncement on how they will implement the required reductions.

However, based on intelligence gathered to date, we believe that research universities will see several impacts:

  • There will be fewer, smaller new awards.
  • No-cost extensions that require agency approval will be very difficult to obtain.
  • Significant unexpended balances on active projects could prompt agency inquiries and require justification; agencies may off-set future funding increments to adjust for continuing unobligated balances.

The entire NIU team is working to monitor this situation. We will post additional details as they become available.

The Voices section of NIU Today features opinions and perspectives from across campus. Lori Clark is director of State and Federal Relations for NIU.
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