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The Debt Deal and Research Funding

School of Medicine administrators contemplate the possibility of diminishing federal resources for biomedical research.

November 2011-- Every congressional budget season generates a certain degree of nervousness within the scientific institutions that rely on federal grants and contracts. But anxiety levels have spiked higher than usual this past summer and fall, as Congress wrestles with new strict spending limits mandated by the recent Budget Control Act.

The law for the next decade sets strict caps on discretionary spending (a category that includes funding for research agencies such as the National Institutes of Health). It also establishes a 12-member bipartisan “super committee” to seek an additional $1.2 trillion in savings over that period.

Johns Hopkins relies heavily on federal support for biomedical research. Last fiscal year, 72 percent of the School of Medicine’s research funding, or $492.5 million, came from federal grants and contracts, with more than 90 percent of that amount received from the NIH. So any budget cutting at the federal level would percolate down to affect Johns Hopkins science.

“It’s really a very challenging time, especially for institutions dependent on federal funding,” says Beth Felder, director of federal relations for the Johns Hopkins Office of Government and Community Affairs.

The final ramifications of the Budget Control Act are still uncertain. Congress is currently in the throes of debating the fiscal year ’12 budget, and the Super Committee is not scheduled to issue its report until November 23, with Congress voting on that plan in December. In the meantime, Johns Hopkins government and finance experts are focusing on two aspects of the budget issue:

-The first is appropriations. The spending caps mandated by the Budget Control Act in effect flatten discretionary spending for the next 10 years. For fiscal year 2012, that amount is capped at $1.043 trillion. So all of the agencies and departments that rely upon such funding—including the NIH, National Science Foundation, Centers for Disease Control—are likely to see flattened budgets, too.

“In my mind, FY ’12 is the high-water mark year,” says Felder. “The budget caps get tighter every year going forward.”

A recent memo from the Office of Management and Budget appears to affirm that view. The memo asks all heads of departments and agencies to prepare budget requests for FY ‘13 that are at least 5 percent below their FY ‘11 appropriation, and then to identify additional savings that would result in budgets at least 10 percent below the FY ‘11 level. 

-The second issue is how the super committee’s recommendation will affect research funding. The committee is focused on finding savings through cuts in mandatory spending—or entitlement—programs, such as Medicare and food stamps, or by increasing revenue, says Felder. However, members could also decide to reduce discretionary spending even further than the current caps allow. If that occurs, it might result in a decline in funding for biomedical research. On the other hand, if the super committee fails to reach an agreement or Congress rejects its proposal, then across-the-board spending cuts mandated by the Budget Control Act would go into effect starting in fiscal year 2013. According to the Congressional Budget Office, those cuts would slash discretionary spending for non-defense programs (which includes NIH funding) an estimated 7.8 percent.

In the face of such fiscal constraints, NIH administrators are considering how to respond to various funding scenarios. Options they’re considering include limiting the number of grants awarded to individual investigators, limiting the size of those awards, or limiting the fraction of a grant recipient’s salary paid by NIH. The NIH is inviting scientists to comment on the proposals (here).

Whatever the future brings, many scientists say they are already feeling the pinch of reduced funding. The percentage of NIH grant proposals awarded funding has dropped precipitously in the past decade, with only about one in 10 new proposals receiving funding. “When I started grad school, this number was closer to 20 to 25 percent,” says Jennifer Pluznick, an assistant professor of physiology. “With funding that is already extremely hard to get and very competitive, that would make it extremely difficult for some labs to survive. Even if you have a good and solid proposal to submit to the NIH, being in the top 6 to 7 percent of good and solid proposals is a pretty daunting task.”

Given the uncertain outcome of ongoing budget negotiations, no one knows how biomedical research will fare in the next few years, or which result looks most promising (or least vexing) for science. For example, if the super committee proposes cuts that lead to a reduction in NIH funding, would that scenario be better or worse for biomedical research than the across-the-board spending cuts that go into effect if the committee fails? 

For now, says Felder, her strategy is to advocate even more vehemently for strong support of research funding. While congress hammers out the FY ’12 budget, her group is focusing on the near term. “We’re talking to members of Congress and their staffs to encourage them to fund NIH as generously as they can.” She urges scientists to do the same.

“As biomedical scientists, we need to ratchet up the noise,” adds Gordon Tomaselli, a Johns Hopkins cardiologist who is also serving a term as president of the American Heart Association. “We need to remind those in Congress that every dollar invested in the NIH yields a two to three dollar return in goods and services. Research is a vital piece of the economy.”

At the same time, Hopkins senior managers are looking at ways to tighten spending and increase revenue if federal funding does shrink. “We have people working on three scenarios—most to least attractive,” and devising plans of response, says Rich Grossi, chief financial officer for Johns Hopkins Medicine.

Ultimately, those plans hinge on the outcome of federal budget talks—still an unknown. Many predict leaner years for research, but perhaps not as lean as they will be for some other government-reliant sectors. Biomedical research, says Tomaselli, has many fans. “One thing that gives some solace is that there is significant bipartisan support for NIH and biomedical research.”

--Melissa Hendricks

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