Campus & community, Campus news

How will federal sequestration impact the campus?

By Public Affairs

With sequestration and automatic federal funding cuts due to begin today (Friday, March 1), UC Berkeley is among the thousands of affected entities across the country.

The campus’s Office of Governmental and Community Relations provides answers to questions about the potential impacts of sequestration on financial aid for students, as well as research. As additional information from federal and other sources becomes available, this Q&A may be updated, with dates of any changes noted.

1.  How will UC Berkeley cuts impact the Bay Area economy?

As one of the San Francisco Bay Area’s top employers, UC Berkeley is a critical piece of the region’s fragile economic ecosystem.  We help educate the workforce, advance scientific breakthroughs through research, and contribute to economic growth through new jobs, start-up companies and spinoff industries.

Federal contracts and grants account for about 18 percent of our campus revenue, so sequestration could damage our ability to carry out these critical missions and harm the economic recovery at the local, state and national levels.

2.  How will sequestration impact student financial aid?

Because federal student aid is “forward funded,” current students have already received their allotments, which were untouched this year. Additionally, under current sequestration proposals, the Pell Grant program is not subject to cuts in fiscal year 2013, so there will be no cuts in the 2013-2014 academic year. However, the program could face deep cuts in fiscal years 2014-2021 due to the lower annual funding caps, and a significant funding shortfall in fiscal year 2014, both of which could have devastating effects on student financial aid.

An uncertain fiscal future for federal financial aid programs is a significant concern for many students and parents who want to know that there is strong and sustained financial aid ahead for higher education.

3.  How will other federal financial aid (non Pell Grant) programs be impacted?

Cuts to other important education programs – such as Supplemental Education Opportunity Grants (SEOG), Federal Work-Study, TRIO (federal outreach and student services programs designed to identify and provide services for individuals from disadvantaged backgrounds), the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) program for low-income students, graduate and international education, and teacher preparation – also will occur under sequestration. In addition, interest rates and origination fees charged for new federal student loans taken after July 1 will rise. This will increase the cost of education for UC students and limit the availability of other educational opportunities. Also, loan processing delays could make it harder for students to register for classes.

4.  Will these cuts affect state or institutional aid for students too?

All aid dollars at UC Berkeley are put into a pot and distributed based on student need. With fewer dollars available to share, there will be less opportunity to help all of our students. So it is possible that all students receiving financial aid could be impacted, not just those on the lower end of the economic spectrum.

5.  How else might students feel the impact of sequestration?

Foreign students or students wishing to travel or study abroad are advised to plan for delays in visa and passport processing.

6.   How much federal funding does UC Berkeley get for research?

It varies year to year.  Last year, the campus was awarded approximately $400 million in federal funds.

7.   Is research feeling any impact yet?

Unfortunately, yes. Federal agencies began holding back monetary awards at the start of this fiscal year because of federal budget uncertainties. UC Berkeley’s research funding already is down about $50 million, to $200.7 million for fiscal year 2012-2013’s first two quarters, as compared to the same period in the last fiscal year.  Some but not all of this may be due to normal funding fluctuations. Overall, the ten-campus UC system is seeing a 22 percent decline in federal research dollars compared to the same period (July through September) of the previous year.

8.   Who are UC Berkeley’s key federal funders? Which ones are most likely to pass along the deepest funding cuts?

Close to two-thirds of the $400 million in federal research funding that UC Berkeley received last year came from the National Institutes of Health and the National Science Foundation.

Most of that funding is spent directly on researchers’ salaries, so any loss in federal research dollars will mean lost jobs. As sequestration translates into fewer federal grants, the campus will be forced to hire fewer researchers.

9.   As the threat of sequestration advanced, what actions did the campus take?

UC Berkeley’s government relations team, its chancellor and other top campus administrators met for months with elected officials in Washington, D.C., and at the White House, and conferred with federal-agency staff, urging them to prevent these across-the-board cuts.

Related information: UC President’s letter to California congressional delegation, on impending spending cuts