‘Fiscal cliff’ could lower MIT funding

Expected 8–10 percent research funding cuts unless Congress revises

The potential “fiscal cliff” at the end of 2012 would slash the U.S. federal budget across the board, hitting the nearly $475 million MIT receives from the government each year for research. The Institute could see up to 10 percent cuts in its federal research funding, according to Vice President for Research and Associate Provost Claude R. Canizares.

Congress passed the Budget Control Act of 2011 as a result of highly contentious and partisan budget negotiations, intended to force legislators to pass a responsible budget. In previous years, Congress had approved raising the debt ceiling with less turmoil, but the Budget Control Act of 2011 came with new strings attached: if the Joint Select Committee on Deficit Reduction (“the supercommittee”) could not agree on a $1.2 trillion deficit reduction package by Nov. 23, 2011, or if its proposal was voted down by Congress, then automatic budget cuts known as “sequestration” would become effective. Sequestration involves funding cuts across the board, about half of which would hit defense, affecting research centers such as MIT’s Lincoln Laboratory.

The supercommittee failed to agree on a deficit reduction package by the deadline, so sequestration will go into effect at the beginning of 2013, unless Congress passes additional legislation. Recipients of government money, including MIT, face the potential budget cuts, which would negatively impact all of MIT’s federal research funding.

MIT’s research budget

MIT’s FY 2012 campus research expenditures totaled $681 million (not including Lincoln Laboratory), with $473 million (about 69 percent) sponsored by federal funding, according to Canizares at the Oct. 17 faculty meeting in a presentation titled “Planning for Possible Federal Budget Sequestration.” As for FY 2011, according to MIT Facts, of the total $660.8 million in MIT’s campus research expenditures, 23 percent was funded by the Department of Health and Human Services (which includes the National Institutes of Health), 16 percent by the Department of Defense, 14 percent by the Department of Energy, 11 percent by the National Science Foundation, 4 percent by NASA, and 3 percent by other miscellaneous federal funding. This sums to 71 percent of FY 2011’s research expenditures being sponsored by some sort of federal funding that could be cut due to sequestration (the other 29 percent comes from industry, local/state/foreign governments, non-profits, and internal MIT funding). These federal research expenditures “include all primary contracts and grants, including sub-awards from other organizations where the federal government is the original funding source,” according to the 2012 MIT Briefing Book.

Lincoln Laboratory expended $846 million on research in FY 2012 — more than the rest of MIT combined — and $806.1 million in FY 2011, according to MIT Facts and Canizares’ presentation. 88.57 percent of the 2011 amount came from the Department of Defense and 11.12 percent from other federal funding, with only a mere 0.31 percent coming from non-federal sources.

Effects of potential sequestration

Unless revised or rescinded by Congress, sequestration will take effect at the beginning of 2013, cutting discretionary budgets by about 8 to 10 percent for FY 2013 and beyond, noted Canizares in the Oct. 17 faculty meeting. As of now, Canizares said, MIT will assume all federal grants are vulnerable to 8 to 10 percent cuts, and Principal Investigators should adjust spending and especially new hiring with the assumption that full sequestration will be applied.

Look for more coverage of this issue in the next few weeks.