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February 17, 2012 - The Obama Administration's budget proposal for fiscal year 2012 makes critical investments in basic research and innovation programs and protects the Pell Grant while attempting to control the growth of federal spending.
The budget proposal provides increases for the National Institutes of Health (2.4 percent programmatic), National Science Foundation (13 percent) and the Energy Department's Office of Science (9.1 percent) over FY2010 levels, but cuts funding for the National Endowments for the Arts and the Humanities by 12.7 percent each. The Pell Grant maximum award is kept at $5,550 by proposing to eliminate the year-round program, while most other higher education programs are level funding, including Aid to Historically Black Colleges and Aid to Hispanic-serving institutions.
"We appreciate the President's strong support of research and financial aid in the Administration's FY2012 budget proposals," A۰P۰L۰U President Peter McPherson said. "It is important for the country to reduce the size of the federal deficit, but also to make important investments on the future."
Following the introduction of the President's budget, Congress turned its attention to resolving FY2011 federal spending. The federal government has been operating on a series of continuing resolutions, which allow government agencies to continue to operate at prior year funding levels, since the start of the fiscal year on October 1, 2010. None of the 13 appropriations bills have been passed by Congress. Once the current year budget is resolved, Congress will take up the President's plan.
Below is an outline of some of the major components of the Obama Administration's FY2012 budget proposal by key departments and agencies.
Department of Agriculture (USDA)Under the USDA request, funding for the Agriculture and Food Research Initiative (AFRI) would increase, but funding for the National Institute of Food and Agriculture (NIFA) would decrease. NIFA is funded at $1.22 billion, a $138.4 million cut from FY2010, while AFRI is funded at $324.66 million, an increase of nearly 24 percent.
Two “capacity” research programs, Hatch and McIntire-Stennis, would see 5 percent cuts as would the Smith-Lever 3(b) and 3(c) “capacity” extension program.
Department of Education (ED)Education Secretary of Education Arne Duncan highlighted five educational priorities for the Administration during the department's budget briefing: early learning; education reform, improving the quality and numbers of teachers, college completion, and assisting at-risk students.
The funding request for the Pell Grant program is $41.2 billion, with $28.6 billion from discretionary funding and $12.6 billion from mandatory funding. The $41.2 billion is the department’s cost estimate to maintain the current maximum award level of $5,550. Without the extra $5.7 billion provided in the current continuing resolution (CR) to cover the shortfall in the program, the FY2010 discretionary funding for the program was $17.5 billion.
The Administration is proposing a number of ideas to create the budget room necessary to maintain the maximum award of $5,550. A number of these proposals are included in the proposed legislative package Pell Grant Protection Act. The extra discretionary funds needed to pay for the Pell Grant Program would be found by suspending the “year-round Pell” program in FY2012, which currently allows students to take out two full Pell Grants while studying year-round. The year-round program has greatly exceeded the initial Administration costs and the Department plans to further study the program. A second proposal to pay for the $5,550 maximum award is to eliminate the eligibility of graduate and professional students to participate in the subsidized student loan program. ED has asserted that in-school subsidies are not being well-targeted and that they have little bearing on a student’s decision to enroll in graduate or professional school. The Administration is also proposing a loan servicing simplification plan, which would also free up resources for the Pell program.
As part of its emphasis on college completion, the Obama Administration proposed two new programs to address the goal of leading the world again in college completion rates by 2020. The first proposal would establish the “First in the World” initiative, funded at $125 million, to serve as a “venture capital” program to encourage innovative approaches by institutions. The second would establish the College Completion Incentive Grants program to provide funds to 25 states in the first year to to provide incentives to institutions to boost college completion programs.
Among the other budget proposals:
Department of Energy (DOE)As with a number of agencies and programs, the Department of Energy as a whole and several programs and offices in particular would see increases under the Administration's FY2012 budget request. The Administration calls for $29.5 billion for the DOE, which represents an increase of $3.1 billion, or 11.9 percent, over the enacted FY2010 level. Within the DOE budget, the Administration’s request maintains the doubling path for the Office of Science with funding rising to $5.42 billion, an increase of $452 million or 9 percent over the FY2010 levels. Specific Office of Science programs seeing increases include:
At the same time, the Administration proposed cuts to a number of programs, including: Fusion Energy Sciences: $399 million, a four percent cut; Science Laboratories Infrastructure: $111 million, 12 percent cut; Fossil Energy, a 44.5 percent cut; and Nuclear Energy: a 0.6 percent decrease.
The 46 Energy Frontier Research Centers, started in 2009, would be funded at $100 million, while the Administration is also proposing $146 million to support the three existing Energy Innovation Hubs and to create three new ones. The new hubs would address needs in batteries and energy storage, smart grid technologies and systems, and critical materials.
Programs supported through the Energy Efficiency and Renewable Energy (EERE) account would be funded at a total of $3.2 billion, a 44.1-percent increase. In addition, since more than 13 percent of the FY2010 EERE budget had been allocated for earmarks, the Administration’s proposal would use those funds to triple industrial technologies, double building and geothermal technologies, and increase many other programs. The exceptions were Federal Energy Management Program, which would be cut by three percent and Hydrogen and Fuel Cell Technologies and Water Power, both of which would see significant cuts.
The budget also calls for a new Better Buildings Initiative at $100 million in loan guarantees. The program is geared toward hospitals and universities and would allow the funds to be used to make infrastructure improvements.
National Science Foundation (NSF)The Administration proposed boosting NSF funding by 13 percent above the FY2010 levels, for a total of $7.77 billion. As expected, most of the increase would come from the Research and Related Activities (R&RA) account, with R&RA accounting for $689.6 million (12.4 percent) of the $894.5-million increase. R&RA would be funded at $6.25 billion, while Education and Human Resources (EHR) would increase $38.44 million (4.4 percent) to $911.2 million and the Major Research Equipment and Facilities Construction (MREFC) account would be funded at $224.9 million, an increase of $107.4 million, or 91.6 percent.
NSF is proposing a number of interdisciplinary activities within the agency, including:
The budget also highlights NSF’s proposal to promote competitive markets and encourage entrepreneurship. Some $1 billion has been proposed for the NSF component of the Wireless Innovation (WIN) fund to significantly expand the nation’s wireless broadband capacities, part of the Administration’s new Wireless Innovation and Infrastructure Initiative (WI3). Another $146.9 million would support Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.
NSF’s role in key national priority areas in FY2012 include, but are not limited to, proposals to fund the Cyberinfrastructure Framework for 21st Century Science and Engineering (CIF21) at $117.0 million; Science, Engineering, and Education for Sustainability (SEES) portfolio at $998.2 million; and Clean energy investments at $576 million.
National Institutes of Health (NIH)The Administration’s FY 2012 request for the National Institutes of Health (NIH) proposes boosting spending by on health research by $745 million to $31.829 billion, a 2.4-percent increase above the FY2010 enacted level of $31.084 billion. The budget request highlights three areas of exceptional opportunity “…instrumental in paving the way for more rapid scientific advances across all areas of human health and disease, including global application;” technologies to accelerate discovery – including DNA sequencing, nanotechnology, computational biology and microarray technology; enhancing the evidence base for health care decisions – including comparative effectiveness research and personalized medicine research; and new investigators, new ideas – including two programs, the NIH Director’s New Innovator Award and the Early Independence Award.
Also highlighted in the NIH request is the addition of a new National Center for Advancing Translational Sciences (NCATS) to "catalyze innovation at key junctures in the process, ‘de-risk’ projects to the point where they become economically attractive for commercial investment, spur new public-private partnerships, and facilitate the regulatory review process. NCATS will align and bring together in one organization a number of trans-NIH programs that are inherently cross-cutting and are ideally suited for incorporation into the new Center.” NCATS is expected to include the Clinical and Translational Science Awards (CTSAs) , the Cures Acceleration Network (CAN), the Molecular Libraries Program (MLP), the Therapeutics for Rare and Neglected Diseases (TRND) program, the Rapid Access to Interventional Development (RAID) program and the NIH-FDA Partnership formed in 2010 to foster regulatory science.
The NIH proposal does not include NCATS funding, but does include the National Center for Research Resources (NCRR), a center that is slated to be shut in the coming months. As NIH decisions are made over the next few months about this reorganization, including both the establishment of NCATS and where the NCRR-housed programs will be moved, NIH will submit to Congress an amended budget request. NIH Director Francis Collins said that NIH had heard many concerns about the reorganization and made the case that NIH has no intention of eliminating any NCRR programs during the reorganization, but rather place them in a more suitable home within the NIH.
Among the other proposals included in the Administration’s budget request for NIH are:
Department of Commerce The Commerce Department budget proposes to provide the U.S. Patent and Trademark Office (USPTO) full access to its fee collections and strengthens USPTO’s efforts to improve the speed and quality of patent examinations through a temporary fee surcharge that will better align application fees with processing costs.
The Administration is seeking to provide $5 billion to help expand the next generation of wireless broadband networks in rural America. This investment will complement the efforts of the Federal Communications Commission to reorient its Universal Service Fund towards broadband support. The budget allocates $3 billion of spectrum receipts to the WIN Fund to help develop and promote cutting-edge wireless technologies to advance public safety, Smart Grid, telemedicine, distance learning, and other broadband capabilities and to facilitate spectrum relocation. This funding will support efforts in a variety of agencies, including the Departments of Defense and Commerce and, as noted above, the NSF.
The President’s Budget Request provides $284 million, a 7.5-percent increase, for the Department of Commerce Economic Development Assistance (EDA) programs. A portion of these funds, $40 million, will aid businesses and regions through the Regional Innovation Program authorized in the America COMPETES Reauthorization Act and provide financing for science and research parks. The EDA will also support the Administration’s proposal to make competitive awards for Growth Zones, to bring market-based growth strategies and tax benefits to 20 new areas facing economic distress in urban and rural regions that have both strong potential for growth and significant need.
The Administration’s budget request seeks to save $15.8 million by eliminating the Trade Adjustment Assistance for Firms program.
National Institute of Standards and Technology (NIST)The Administration's budget for NIST in FY2012 is nearly $1 billion, a 16.9-percent increase over the FY2010 level. The agency’s budget includes $764 million for its laboratories and the increase would be used for cyber security, interoperability standards, measurement services for industry, advanced materials, advances in manufacturing related measurements including biomanufacturing, nanotechnology measurements, energy efficiency and environmental measurements, resilience standards, and a post-doctoral research associateship program.In addition, the Hollings Manufacturing Extension Partnership, which helps firms identify growth strategies and adopt more efficient manufacturing processes, would see an increase of $17.9 million over FY2010 appropriations to $142.6 million. The Technology Innovation Partnership would increase $5.1 million to $75 million, which would permit a new solicitation. A new Advanced Manufacturing Technology Consortia (AMTech) Program to promote industry consortia to tackle common technological barriers to the innovation and manufacturing of new products would be funded at $12.3 million.
Housing and Urban Development (HUD)The Adminstration's budget request provides flat funding of $150 million for the Sustainable Communities program for communities to develop comprehensive sustainable development plans while the Community Block Grant program is cut by $300 million to $3.8 billion.
The Promise Neighborhoods Program, essentially a demonstration project in FY2010, is funded at $250 million for 2012. The program focuses on transformative investment in high poverty neighborhoods focused on preservation, rehabilitation and transformation of HUD assisted public and privately owned multifamily housing and to improve surrounding communities.
The University Development Fund, which supports partnership efforts for minority-serving universities to engage in neighborhood development, is apparently slated for elimination. It was funded at $25 million in FY2010.
Arts and HumanitiesFunding for the National Endowment for the Humanities and the National Endowment of the Arts would each decline by 12.7 percent under the Administration's funding proposal.
Tax ProposalsSeveral parts of the Administration’s tax package for FY2012 would have an impact on higher education. The Administration would make the American Opportunity Tax Credit (AOTC) permanent and extend the deduction of qualified tuition and related expenses through next year. The Administration believes that students and families will claim $7.1 billion in AOTC and another $5.5 billion in the Lifetime Learning Credit. In addition, the budget would exclude from taxation the balance of loans for students taking advantage of either the income-contingent and income-based repayment (ICR and IBR) program. This provision would become effective January 1, 2012. The Individual Retirement Account (IRA) “rollover” provision also would be extended through 2012.
The Administration once again proposed to limit itemized deductions, including charitable contributions, to 28 percent for high-income taxpayers.
On the research side, the Administration’s FY2012 budget proposes an expanded, simplified and permanent Research & Experimentation (R&E) Tax Credit, to further incentivize companies to increase their research activities.
Additional details about the Administration’s tax proposals for FY2012 are available here.
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