Harvard Braces for Decline in Federal Funding

Failure to Avert 'Fiscal Cliff' Will Trigger Significant Cuts in Federal Sponsorship

As Washington lawmakers scramble to reach a last-minute budget deal before the end of the year, Harvard and other research universities are bracing for what would be the most dramatic cut in federal research funding in recent history.

Failure to come up with a compromise to avert the so-called fiscal cliff by midnight Monday will trigger an 8.2 percent across-the-board cut in non-defense discretionary spending. As a result, Harvard will lose out on millions of dollars in promised federal grant money for the 2013 fiscal year.

Because the cuts will be applied to the current fiscal year, which began July 1, the loss in sponsorship will be compounded onto the second half of the fiscal year, worsening the blow for the remainder of the 2013 fiscal calendar.

The University received roughly $656 million in federal sponsorship during the 2012 fiscal year. Though the University has yet to release information for the 2013 fiscal year, sponsorship figures were not expected to change drastically from current levels. Federal sponsorship comprised about 16 percent of the University’s overall operating budget for the fiscal year 2012, according to the Office for Sponsored Programs 2012 annual report.

The schools most at risk from federal cuts are Harvard Medical School and Harvard School of Public Health, both of which rely heavily on the National Institutes of Health and the National Science Foundation for funding. The Medical School alone took in over $250 million in federal funds during the 2012 fiscal year, a sum that accounted for 34 percent of its operating budget. Though the School of Public Health brought in a slightly smaller total of nearly $193 million, that amount was 55 percent of the school’s overall budget.

Of all University schools receiving significant federal support, The Faculty of Arts and Sciences is the most diversified, relying heavily on private sponsorship in addition to federal support. FAS received just over $135 million in federal monies for the fiscal year 2012—about 12 percent of its overall budget.

Roughly 75 percent of federal sponsorship to Harvard comes from the Department of Health and Human Services, which includes the NIH. But the University also receives funding from the National Aeronautics and Space Administration and the Department of Defense, which stands to experience cuts at the slightly higher rate of 9.4 percent.

Younger faculty who rely on upstart research money for their first projects are particularly vulnerable to federal funding cuts, but all University researchers receiving federal sponsorship will be forced to tighten their belts.

University President Drew G. Faust has already warned Congress twice about the dangers of cutting funds for research. This summer, she and more than 100 other university presidents wrote to Congress and the President, urging them to avoid the automatic cuts. “Sequestration is an undiscerning and blunt budget tool that would substantially harm our nation’s future by blindly slashing valuable investments in education and scientific research,” the letter read.

In November, Faust and 15 other leaders of Universities and other research institutions signed a letter sent to the entire Massachusetts congressional delegation, calling on the legislature to avoid cuts to funding that schools “depend on to deliver innovations essential to economic growth.”

Faust told The Crimson in early November that in the long term, the University could make up for federal funding shortfalls through new sources of revenue, including partnerships between researchers and industry or philanthropic support for research. The University already receives millions in private research funds, but those numbers will likely grow as long term cuts are made at the federal level.

According to University administrators, threats to federal funding are not a new concern. Robert D. Reischauer ’63, senior fellow of the Harvard Corporation—the University’s highest governing body—said that the Corporation’s budget meetings have discussed preparing for slower growth or reductions in research funding for some time.

“The flashing red lights have been flashing now for a few years,” he said in early December.

The recent set of fiscal cliff measures was written into the Budget Control Act of 2011 in order to force Congress to address mounting budget deficits before the end of the year. The law calls for the sequestration, or automatic trimming, of discretionary and non-discretionary federal spending to the tune of $100 billion. Cuts will take effect on Jan. 2 and increase progressively in coming years. Additionally, Bush-era tax cuts and other more recent breaks will immediately expire.

Any deal that is reached before the fiscal cliff deadline—now less than 48 hours away—is expected to address only taxes, not spending, though Congress has expressed optimism it will reach a broader compromise after the deadline passes.

—Hana N. Rouse contributed to the reporting of this article.

—Justin C. Worland contributed to the reporting of this article.

—Staff writer Nicholas P. Fandos can be reached at nicholasfandos@college.harvard.edu.

—Staff writer Samuel Y. Weinstock can be reached at sweinstock@college.harvard.edu.

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