On the Brink of A Federal Government Shutdown: Uncertainty Reigns
With the expiration of current funding at midnight, Friday, April 8, if unresolved, the budget impasse on FY11 funding will force closure of the federal government. Ongoing, high level negotiations continue but have thus far been unsuccessful in bridging the spending and policy divide between the parties.
Given that agencies are still struggling with their shutdown plans, it is difficult to predict the impact of a government closure on Harvard’s activities. While we understand some grant agencies may be shaving grant size because of anticipated eventual cuts in FY11 budgets, it appears that we are mostly insulated from any immediate cut-off of funds because much of our federal support is in the form of obligated grants. To the extent their plans are announced, federal agencies have indicated that all non-essential personnel will be barred from their duties and only critical functions related to safety, law enforcement, homeland security, defense, and public health will continue. It is anticipated that many automated systems, including scheduled electronic funds transfer (such as Social Security checks, tax refunds, and likely student loans) and government websites, will remain active. However, without staff, these systems will not necessarily be updated or maintained to any great extent for duration of the shutdown. We understand that Harvard’s Office of Sponsored Research has shared the limited guidance available with appropriate offices across the campus and we remain in close touch with them. While it is hard to assess, it seems likely that a short duration shutdown will be fairly easily weathered. However, a longer term event would grow increasingly difficult to manage.
Leaders in the Congress and the Administration continue to work to avert a shutdown but, at this point, progress seems to have stalled. The two sides appear close on funding levels, with both Republicans and Democrats seemingly in the neighborhood of an additional $20 - 29 billion in cuts (with $10 billion already being cut in previous short-term continuing resolutions). House Republicans continue to publicly insist on further cuts, toward the $61 billion of cuts made in HR 1, the full year CR that passed the House and failed in the Senate last month. However, the real obstacle to a final deal reportedly is the inclusion of some portion of the policy riders that were a part of HR 1. As you may recall, these banned funding for activities including Planned Parenthood, NPR, various environmental regulations, and implementation of health care and financial systems reform. Congressional Democrats and the President have strongly objected to the inclusion of these policy matters in an essential stop gap funding bill. With anxiety growing among federal workers, the media, DC- area and national park visitors, and the many other constituencies of the federal government, there remains a chance of a deal but time is extremely short given the many legislative hurdles that confront any bill.
In terms of the specific outlines of a deal, there is little concrete information. Reports suggest that the Pell Grant program will be cut through the elimination of grants for summer school. In addition, we worry that that there could be a general rollback to FY08 numbers in some of the key research accounts –but there has been no confirmation of that and “medical research” is commonly cited by Democrats as an example of what shouldn't be cut. Attached is a chart showing the current funding levels, as well as those going back to FY08,for key Harvard accounts.
These funding issues are a top priority for the University. Indeed, next week President Faust is scheduled to be in Washington to meet with leaders on the Hill and in the business community to encourage support for research and education. We will stay in touch and hope for some definitive news and an end to the FY11 saga soon. Please feel free to be in touch with Suzanne Day or Jon Groteboer in the Harvard DC office (202 863-1292) with any questions or concerns.
Given that agencies are still struggling with their shutdown plans, it is difficult to predict the impact of a government closure on Harvard’s activities. While we understand some grant agencies may be shaving grant size because of anticipated eventual cuts in FY11 budgets, it appears that we are mostly insulated from any immediate cut-off of funds because much of our federal support is in the form of obligated grants. To the extent their plans are announced, federal agencies have indicated that all non-essential personnel will be barred from their duties and only critical functions related to safety, law enforcement, homeland security, defense, and public health will continue. It is anticipated that many automated systems, including scheduled electronic funds transfer (such as Social Security checks, tax refunds, and likely student loans) and government websites, will remain active. However, without staff, these systems will not necessarily be updated or maintained to any great extent for duration of the shutdown. We understand that Harvard’s Office of Sponsored Research has shared the limited guidance available with appropriate offices across the campus and we remain in close touch with them. While it is hard to assess, it seems likely that a short duration shutdown will be fairly easily weathered. However, a longer term event would grow increasingly difficult to manage.
Leaders in the Congress and the Administration continue to work to avert a shutdown but, at this point, progress seems to have stalled. The two sides appear close on funding levels, with both Republicans and Democrats seemingly in the neighborhood of an additional $20 - 29 billion in cuts (with $10 billion already being cut in previous short-term continuing resolutions). House Republicans continue to publicly insist on further cuts, toward the $61 billion of cuts made in HR 1, the full year CR that passed the House and failed in the Senate last month. However, the real obstacle to a final deal reportedly is the inclusion of some portion of the policy riders that were a part of HR 1. As you may recall, these banned funding for activities including Planned Parenthood, NPR, various environmental regulations, and implementation of health care and financial systems reform. Congressional Democrats and the President have strongly objected to the inclusion of these policy matters in an essential stop gap funding bill. With anxiety growing among federal workers, the media, DC- area and national park visitors, and the many other constituencies of the federal government, there remains a chance of a deal but time is extremely short given the many legislative hurdles that confront any bill.
In terms of the specific outlines of a deal, there is little concrete information. Reports suggest that the Pell Grant program will be cut through the elimination of grants for summer school. In addition, we worry that that there could be a general rollback to FY08 numbers in some of the key research accounts –but there has been no confirmation of that and “medical research” is commonly cited by Democrats as an example of what shouldn't be cut. Attached is a chart showing the current funding levels, as well as those going back to FY08,for key Harvard accounts.
These funding issues are a top priority for the University. Indeed, next week President Faust is scheduled to be in Washington to meet with leaders on the Hill and in the business community to encourage support for research and education. We will stay in touch and hope for some definitive news and an end to the FY11 saga soon. Please feel free to be in touch with Suzanne Day or Jon Groteboer in the Harvard DC office (202 863-1292) with any questions or concerns.