Government Relations

Government Relations Legislative Update

Government Relations Legislative Update

Updates on state and federal issues relating to the UW System.

Sunday, February 26, 2012

Federal Update for February 26, 2012

President Obama's Proposed Budget for 2013 Fiscal Year

General Overview

As expected, the Obama Administration used the figure that was negotiated for the Budget Control Act from last summer as its top-line for the FY2013 budget request. In its budget, the White House projects a $1.33 trillion deficit for FY2012, which is 8.5 percent of the Gross Domestic Product (GDP) and a FY2013 deficit of approximately $900 billion, or 5.5 percent of the GDP.

The budget assumes the extension of the payroll tax cut for the remainder of the calendar year. It calls for cuts of $278 billion in "non-health mandatory" programs over ten years, as well as $360 billion in reductions to health care programs, including Medicare and Medicaid, during the same period of time. In addition, not surprisingly, the Administration is seeking at least 30 percent in taxes from households earning over $1 million per year in its budget proposal. The budget also assumes the expiration of the Bush-era tax cuts for individuals with incomes over $250,000. Consistent with the prior agreements and negotiations, the overall defense budget would be reduced by $487 billion over the next ten years, including a one-percent cut below the FY2012 levels in FY2013.

House Budget Chairman Paul Ryan (R-WI) called the budget proposal "fiscally irresponsible," saying the President has failed to address the nation's economic and fiscal challenges.

Unless otherwise noted, the budget figures cited below come from the budget documents released by the Administration on February 13.


Department of Education (ED)

The budget request includes $69.8 billion for the Department of Education, an increase of 2.5 percent.

Even before the budget documents were released, the President spoke about many of the proposals with respect to higher education that his Administration is seeking to pursue in speeches and at activities earlier this year. Most of these ideas will require Congressional authorization.

The budget documents explain that, as part of its "First in the World" Initiative, which would be a $55-million competitive program to encourage greater efficiency and productivity in higher education, $20 million would be set aside for minority-serving institutions (MSI's). The new program would be administered through the Fund for the Improvement of Post-Secondary Education (FIPSE).

The budget does not provide full details of the Administration's proposal to dramatically alter the way in which "campus-based" student aid programs—Federal Work-study, Perkins Loans, and Supplemental Education Opportunity Grant (SEOG)—would be allocated among institutions.

This plan has been one of the most controversial pieces of the Administration's package on higher education within the larger higher education community, partly because of a lack of clear definitions of key terms. The ED budget request states that institutional allocations would depend partly on institutions' ability to keep "tuition increases low, enroll and graduate relatively high numbers of Pell-eligible students, offer work-study experiences relevant to students' studies, and provide good value." At this point, it does not appear that the budget documents provide any clearer definitions of key terms, such as "value."

In addition, as part of its plans to reshape the campus-based programs, the Administration will seek to expand the amount of funds available in the Perkins Loan Program from $1 billion to $8.5 billion and to expand the number of work-study jobs available. The Perkins program would be expanded by converting the current program into an unsubsidized loan program with an interest rate of 6.8 percent and ED servicing the loans. This is similar to the Administration's past proposal on Perkins. The budget request would increase funding for the work-study program to $1.13 billion from the current level of $977 million.

The Administration is also seeking to push through its "Race to the Top: College Affordability and Completion" concept, a $1-billion initiative that would send funds back to the states, which in turn would reward institutions "to boost quality and productivity and provide greater value to students through improved undergraduate experiences, new paths to credit attainment and degrees, and increased capacity, among other purposes."

Another component of the Administration package is its request to Congress that it maintain the current interest rate on subsidized student loans at 3.4 percent. The rate is currently scheduled to increase to 6.8 percent on July 1. ED is requesting that the current rate be maintained through June 30, 2013.

Not unexpectedly, the White House and ED are asking Congress to fund the Pell Grant program at sufficient levels to ensure that the maximum award increases to $5,635 as scheduled. The Administration is also asking Congress to extend and make permanent the American Opportunity Tax Credit (AOTC), which was originally created as part of the American Reinvestment and Recovery Act.

Efforts to alter teaching programs, including those aimed at the preparation of science, technology, engineering, and math (STEM) teachers, figure prominently in the budget proposal. ED's budget request includes $80 million for a STEM teaching program as part of its "Teacher Pathways" idea and would fund the Administration's goal of producing 100,000 more STEM teachers in ten years. The Administration is also seeking $30 million each for ED and the National Science Foundation (NSF) to develop, validate, and replicate evidence-based teaching programs. In addition, the budget calls for the "overhaul" of the current TEACH Grants program and seeks $190 million in mandatory funds to replace it with the Administration's Presidential Teaching Fellowship program. A new Hawkins Centers of Excellence program would direct $30 million to Historically Black Colleges and Universities (HBCU's) for teacher education programs.

The budget seeks to fund international education programs at $75.7 million next year, which represents a modest increase of $1.7 million from this year's level, and the Graduate Assistance in the Areas of National Need (GAANN) program at $30.9 million (level funding), which would also allow for "non-competing continuation awards for Javits recipients."

With respect to possible offsets to fund some of its ideas, the Administration is seeking to limit the interest loan subsidies to 150 percent of a student's program length. After the 150-percent mark, interest would begin to accrue on subsidized student loans. The move is expected to yield a savings of $1.8 billion over ten years.

The budget also seeks two technical changes to guaranty agencies' compensation for rehabilitating defaulted loans that may yield $3.4 billion in savings over ten years.

ED's detailed budget request is available on its website here:

National Endowment for the Humanities (NEH)

The budget request for the NEH is $154.36 million, a modest increase of $8.24 million over the current year funding level.

The increase would be used for a new $5-million Bridging Cultures initiative and to relocate the agency headquarters.

Details about the NEH budget are available here:


The Administration's request of nearly $141 billion for research and development (increase of 5.5 percent above final FY2012 levels) includes a total of $13.1 billion for the combined budget of the NSF, the Department of Energy (DOE) Office of Science, and the National Institute of Standards and Technology (NIST). It also includes a request for $6.7 billion for cross agency initiatives in clean energy technology, as well as $2.2 billion for programs that would promote advanced manufacturing technologies.


With its FY2013 budget proposal, the Obama Administration is seeking a total of $7.37 billion for NSF, an increase of $340 million, or 4.8 percent, above the FY2012 level.

If adopted, the budget would generally divide up the $7.37 billion in the following manner:

• Research and Related Activities (R&RA): $5.98 billion, an increase of $294 million, or 5.2 percent.
• Education and Human Resources (EHR): $875.6 million, an increase of $46.6 million, or 5.6 percent.
• Major Research Equipment and Facilities Construction (MREFC): $197.1 million, a decrease of $0.9 million, virtually level-funded.

The agency's budget request includes $459 million for its Graduate Research Fellowship and Early Career Development programs.

As part of its broader initiative to promote advanced manufacturing, the Administration is proposing $149 million to support new manufacturing technology programs at NSF. This would be in the context of a larger $257 million initiative at NSF to transform static systems.

The Administration's FY2013 request for NSF is available here:


Overall, the Department of Energy (DOE) would be provided $27.2 billion in discretionary funds, a 3.2-percent increase above the FY2012 enacted level. Within DOE, the Office of Science (Science) would see an increase of $118 million, or 2.4 percent, to a total of $4.99 billion in FY2013. Broken down further, the budget calls for the funds to be allocated in the following manner within Science:

• Basic energy sciences: $1.799 billion, up 6.6 percent from $1.688 billion in FY2012.
• Biological and Environmental Research: $625 million, up 2.6 percent from $609 million in FY2012.
• Advanced Scientific Computing Research: $455 million, up 3.3 percent from $440 million in FY2012.
• High-energy Physics: $776 million, down 1.8 percent from $790.8 million in FY2012.
• Fusion: $398 million, down 0.7 percent from $400.9 million in FY2012.
• Nuclear physics: $526 million, down 3.7 percent from $547 million in FY2012.

In addition, the Administration is calling on Congress to fund ARPA-E at $350 million next year, up from $275 million this year. The budget request is also seeking $120 million for the Energy Frontier Centers, which would represent an increase of $20 million, or 20 percent, from current levels.

Finally, the budget includes a request of $140 million for the Energy Innovation Hubs program that would fund the current 5 hubs and would support a new hub on Electricity Systems, funded within the Office of Electricity Delivery and Energy Reliability, addressing the challenges of modernizing the grid.

As noted above, advanced manufacturing is a cross-cutting theme in the Administration's budget this year. As such, DOE's budget request includes $290 million for the Advanced Manufacturing Office at Energy Efficiency and Renewable Energy (EERE).

The detailed budget request for DOE is available here:

Department of Defense (DOD)

The budget request for DOD research programs ("R-1") is available here: The figures used for DOD research programs come from the DOD's "R-1" document.

Overall, the budget request includes approximately $525.4 billion in discretionary funding for the DOD, a cut of approximately $5.1 billion, or one percent, below the FY2012 enacted level. This is the first defense budget since the passage of the Budget Control Act (BCA) last summer, which included an agreement to cut defense spending by nearly $490 billion over the next ten years.

In that context, the budget request states the following with respect the DOD-funded research and development:

The Administration will continue its strong commitment to funding the Nation's long-term scientific and technical needs, including those for national security. Accordingly, the Budget proposes $69.4 billion for research, development, test, and evaluation, including $11.9 billion for early-stage science and technology programs, focusing our efforts on those projects most likely to enhance our capability to respond to new threats. The Budget invests in the Defense Advanced Research Projects Agency and department-wide basic research slightly above the 2012 enacted levels. Such investments will allow the Nation to explore diverse scientific principles and technological applications, including bio-defense, cybersecurity, information access, and cleaner and more efficient energy use, robotics, and advanced computing.
Funding in this area will also capitalize on the role that DOD plays in advanced manufacturing by establishing a number of public-private partnerships in targeted technologies to expedite their development and production. DOD-funded research provides future options for new defense systems, helps the Nation avoid a technological surprise by potential adversaries, results in cost savings by solving technical problems early in the life cycle of acquisition programs, and takes advantage of emerging technical opportunities. The funding proposed in the Budget will be awarded through competitive processes, with experts guiding the choices of research topics to be undertaken, and reviewing and selecting projects for funding based on proposals submitted by universities, non-profit organizations, for-profit companies, and Government laboratories.

More specifically, the Administration proposes to fund basic research programs ("6.1" programs) at $2.12 billion (an increase of $2 million) and applied research program ("6.2" programs) at $4.48 billion (a decrease of $262 million).

Basic research programs supported by the Army would be funded at $444.1 million next year, a decrease of $121 million. Army applied research programs would be funded at $874.7 million, a decrease of $72.1 million.

The Navy proposes to fund its basic research programs at $605.0 million and its applied research programs at $790.3 million, which would mean virtually level funding basic research and decreasing applied research by $32.7 million.

The Air Force is requesting $516.0 million for its basic research programs and $1.11 billion for it applied programs. This would mean a cut of $14.9 million to the 6.1 programs and a $110-million decrease for the 6.2 programs.

Finally, the budget proposes to fund "defense-wide" 6.1 programs at $551.8 million, an increase of $31.7 million, and "defense-wide" 6.2 programs at $1.70 billion, a decrease of $47 million.

National Institutes of Health (NIH)

The Administration proposes to level fund NIH at $30.7 billion in FY2013. Operationally, this would mean flat funding or cuts/increases of less than 0.5 percent for most Institutes and Centers (ICs), while the National Institute of General Medical Sciences and the Office of the Director would both be cut by two percent, the National Eye Institute cut by 1.3 percent, and the Fogarty International Center increased by two percent. The most dramatic proposed IC funding level change would be an increase of $62.6 million, or 11 percent, for the National Center for Advancing Translational Services (NCATS).

The Health and Human Services budget link is available at and the NIH section runs from page 34-39 of the report.

Some additional highlights from the NIH budget request include:

• Broad research priorities include investing in basic research, accelerating discovery through technology, advancing translational sciences, encouraging new investigators and new ideas

• NIH estimates it would fund 9,415 new and competing research project grant (RPGs) in FY2013, an increase of 672 (two percent) above current year levels, for a total of 35,888 RPGs in FY2013. Earlier budget documents indicated that NIH would implement "new grants management policies to increase the number of new research grants." The HHS document provides further illumination: To achieve this increase in a flat-budget environment, NIH plans to discontinue out year inflationary allowances for competing and continuation grants (this has been the ultimate practice for NIH over the past few years although the agency's budget requests had previously allowed for inflationary increases); reduce non-competing continuation grants by one percent below the FY2012 level and negotiate the budgets of competing grants to avoid growth in the average award size (estimated to be approximately $431,000).

• Within NCATS, the Cures Acceleration Network (CAN) would receive $50 million, a 400% increase over FY2012 funding of $10 million. The relatively new CAN program would work to reduce barriers between research discovery and clinical trials, thereby accelerating the development of "high need cures."

The detailed budget justification for NIH is available here:

Department of Agriculture (USDA)

The USDA National Institute of Food and Agriculture (NIFA) budget request for FY2013 includes $732.7 million for research and education activities, an increase of $27.1 million, or 3.8 percent, over current year's funding level.

While many programs of interest to our institutions are level funded in the budget, Agriculture and Food Research Initiative (AFRI) would see an increase of $60.5 million, or 22.9 percent, for a total of $325.0 million. The Hatch Act would see a cut of $1.5 million, while the McIntire-Stennis and Evans-Allen programs would be level funded at $32.9 million and $50.9 million, respectively. The new capacity-building program for non-land grant College of Agriculture and Natural Resources was zeroed out.

Under this budget proposal, extension programs at USDA would be funded at $462.5 million, which represents a decrease of $12.8 million, or 2.7 percent.

The Administration's request for "Integrated Activities" includes the creation of new programs, including a Crop Protection program as well as a Sustainable Agriculture Federal-State Matching Grant program. The Administration is seeking $29.1 million for the crop protection program and $3.5 million for the matching grant proposal. Altogether, the Administration is seeking $43.54 million for Integrated Activities, an increase of $22.1 million, an amount that more than the entire account this year.

The full USDA budget is available at:


The NASA budget request is $17.71 billion overall, a 0.3-percent decrease from the FY2012 level of $17.77 billion. NASA Science, Aeronautics, and Education programs are cut significantly in the budget request, while the Space Technology program would get a sizable increase.

The Science Mission Directorate would receive $4.91 billion under the budget proposal, a 3.2-percent decrease and $162 million less than the FY2012 estimated level.
Earth Science: The FY 2013 request is $1.78 billion. This represents a $24.3 million increase from the FY 2012 estimate ($1.76 billion). Specifically of concern to several institutions, the Earth Science Research and Analysis (R&A) would be funded at $324.3 million in FY2013, down from the FY12 estimated level of $332 million.

Planterary Science: The FY 2013 request is $1.19 billion. This represents a $309.1 million decrease from the FY 2012 estimate ($1,501.4 million).

Astrophysics: The FY 2013 request is $659.4 million. This represents a $13.3 million decrease from the FY 2012 estimate ($672.7 million).

James Webb Space Telescope: The FY 2013 request is $627.6 million. This represents a $109.0 million increase from the FY 2012 estimate ($518.6 million).

Heliophysics: The FY 2013 request is $647.0. This represents a $26.5 million increase from the FY 2012 estimate ($620.5 million).

Aeronautics Research would receive $551.5 million, a 3.1-percent or nearly $18-million decrease from the FY2012 level of $569.4 million

The Administration is requesting $699 million for Space Technology, which represents an increase of 21.8 percent, or $125 million, over FY2012 levels. The Space Technology account would to fund the development of pioneering technologies that would increase the nation's capability to operate in space and enable deep space exploration.

Education programs would be funded at $100 million, a decrease of $36 million, or 26.5 percent, from the FY2012 level of $136 million under the Administration's budget. This includes $24.0 million for the National Space Grant College and Fellowship Program (Space Grant).

At a macro level, the NASA budget seems to reflect a combination of the fact that this year's top line number is significantly smaller than last year's projections and the costs of the Webb telescope continuing to climb.

The detailed budget for NASA is available here:

National Oceanic and Atmospheric Administration (NOAA)

The Administration proposes to fund NOAA at $5.06 billion, an increase of $150 million over FY2012 levels.

Within NOAA, the agency is seeking to allocate a total of $413.8 million for Oceanic and Atmospheric Research (OAR). This amount includes $212.7 million for climate research, $69.5 million for weather and air chemistry research, and $108.8 million for ocean, coastal, and Great Lakes research.

The NOAA budget request includes $874.75-million request for Integrated Ocean Observing Systems (IOOS).

Department of Commerce

Overall, the proposed budget calls for $8.0 billion in discretionary funding, a five-percent increase from this year's enacted level. The budget also includes $2.3 billion in mandatory funding for new programs.

The budget provides $182 million for Commerce's Economic Development Administration (EDA) Economic Development Assistance Programs, including $25 million in the Regional Innovation Strategies Program and $60 million in Economic Adjustment Assistance to stimulate entrepreneurship and high-growth business formation.

The budget also requests $47 million for National Telecommunications and Information Administration (NTIA) initiatives, including the Broadband Technology Opportunities Program (BTOP).

The Commerce budget eliminates 16 programs for a $50-million savings, and also finds $176 million in administrative savings.

The Commerce Department's budget request is available here:


Within Commerce, the budget proposes $857 million for the National Institute of Standards and Technology (NIST), an increase of $106.2 million over FY2012.

More than half of the proposed increased funding would be focused on advanced manufacturing research both at NIST laboratories and through a new industry-led consortia program. The request includes $128 million for the Hollings Manufacturing Extension Partnership program. Additionally, the Administration will propose legislation that will make $1 billion available through NIST for a competitive grant program to establish a number of regional institutes for manufacturing innovation that will accelerate technological advancements in the manufacturing environment.

Additional information about the NIST budget is available here:

US Geological Survey (USGS)

The Administration is requesting $1.10 billion overall for USGS, an increase of approximately $34 million over the final FY2012 level.

Within USGS, the Administration budget would zero out the Water Resources Research Institutes program. At the same time, it is seeking $28.0 million for the National Cooperative Geologic Mapping account, $95.4 million for the Geologic Hazards Assessments account, and $18.9 million for the Cooperative Fish and Wildlife research units.

Environmental Protection Agency (EPA)

The Administration is seeking to fund its Science and Technology programs at $807.3 million in FY2013.

Tax Issues

The budget request calls for the extension of the Build America Bonds at an adjusted rate.

(APLU and the UW System Office of Federal Relations contributed to this report.)