TXEXplainer: How Will the Sequester Affect UT?

At the end of the week, massive federal spending cuts could shake up America’s universities (and just about everything else). We look into how buzzwords like supercommittee, fiscal cliff, and debt ceiling may cause real trouble for the Forty Acres.

Updated February 27

What is the sequester?

Set to kick in on March 1—that’s Friday—the sequester is a set of across-the-board federal spending cuts that kick in automatically, and total nearly $1 trillion. Just about every federally-funding entity will see cuts, from defense intelligence spending to the National Zoo, which may have to put off its planned acquisition of new cheetahs. You can read a list of project fallout from the cuts here.

Why would so many programs be cut arbitrarily?

The sequester is designed to be unpalatable. Everything from national parks to unemployment benefits will be cut, including the departments of state, defense, transportation, and others. The money cut won’t be re-allocated, either—it will simply disappear from the budget. The idea was hatched in 2011, when Congress and the President were debating whether to raise the debt ceiling, a legislative limit on the amount of debt the U.S. Treasury can issue. Congress ultimately raised the debt ceiling. In doing so, the so-called fiscal cliff was generated, a projected economic crisis as a result of spending cuts and tax increases in the act that also raised the debt ceiling.

To avoid weakening the economy, Congress created the Supercommittee, a group of members of Congress tasked with thoughtfully cutting more than $1 trillion in federal spending over 10 years. They also created the sequester—an equal cut in spending, but with far less focus than what the Supercommittee would agree to cut. It was assumed that the fear of sequestration would force members to work together. They didn’t, and the Supercommittee failed to come up with a plan to avoid the sequester.

How will the cuts affect UT?

Science Works for U.S., a campaign of three major higher education advocacy groups, reports that Texas universities stand to lose more than $85 million as a result of the sequester. The State of Texas is expected to take the brunt of the federal cuts, and education funds seem particularly vulnerable to sequestration.

Research funding and financial aid programs are the most obvious areas that might feel the impact of sequestration. The National Science Foundation awarded more than $91 million to UT-Austin in 2012 alone, including funding for labs in the proposed Engineering Education and Research Center. The National Institutes of Health, which awarded nearly $57 million to the University in 2012, told reporters it’s expecting a $1.6 billion cut. The Daily Texan reports that concerns about drastic cuts are widespread, and that less research funding could affect UT’s competitiveness.

Cuts to financial aid programs could cause massive headaches for students, according to testimony [PDF] from education secretary Arne Duncan:

…many students would not receive financial aid determinations and awards in time to make enrollment decisions. Just to be clear about the magnitude of the risks here, during the 2011-2012 award year the Department delivered or supported the delivery of approximately $172 billion in grant, work-study, and loan assistance to almost 15 million postsecondary students attending more than 6,000 postsecondary institutions. In addition, since the Department would likely need to furlough many of its own employees as well, sequestration would significantly harm the Department’s ability to prevent fraud, waste, and abuse in these very large, complex student financial assistance programs.

“It’s important to remeber that the sequester is a 10-year process,” says Megan McClean, policy director at the National Association of Student Financial Aid Administrators. McClean points out that Pell Grants are exempt from cuts in the first year of sequestration, but that in later years, the program is “very likely” to experience reductions.

Inside Higher Ed has reported that funding for many federal assistance programs will be cut by 7.6 percent, a rate that’s reflected in research cuts, as well. The U.S. Office of Federal Student Aid is expected to lose $140 million. Even more daunting for those with federal aid: fees on federal loans will increase, too.

Photo courtesy Navin75 via Flickr Creative Commons.


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