To:          Faculty and Staff

From:     P. Barry Butler, Executive Vice President and Provost
              Daniel Reed, Vice President for Research and Economic Development

Re:          Federal Budget

In the summer of 2011, the Congress passed and the President signed the Budget Control Act of 2011.  This legislation, among other things, created the Joint Select Committee on Deficit Reduction.  This Committee was charged with developing a plan for Congressional approval that would reduce overall Federal spending by $1.2 trillion over the next decade.  If no agreement could be reached, the legislation mandated a sequester, or across the board budget cut, that would take effect on January 2, 2013.  While Congressional action has delayed implementation of the sequester, absent additional action, the sequester is scheduled to take effect on March 1, 2013.

Under the original sequestration plan, the estimated across-the-board cuts in FY13 were 9.4 percent for defense discretionary spending and 8.2 percent for non-defense discretionary spending.  The fiscal cliff agreement signed on January 2nd, 2013 lowered those percentages to an estimated 7.3 and 5.1 percent, respectively.  Funding for basic research (NIH, NSF, DOE, NASA, etc.) is considered discretionary, and the relevant agencies have been asked by the Office of Management and Budget to prepare contingency plans.

It is still unclear what the potential impact will be on existing grants and contracts when final budget agreements are reached.  As we await guidance from federal agencies about their implementation plans in the event that sequestration occurs, we encourage you to prepare for the possibility that you will need to operate your research programs with reduced budgetary resources.

Our respective offices, along with the Vice President for Human Resources and Vice President for Medical Affairs, will work with your respective deans to provide pertinent information on current and pending grants.  Please keep your dean and research groups informed of specific information you may receive on your grant(s).  We will provide additional information when it is received.