‘Budget consistent with earlier blueprints’

By Laurie Fenlason
Office of Federal Relations

While he’s unwilling to declare any book weighing five pounds and containing 1,400+ pages “free of surprises,” Tom Butts describes President Bill Clinton’s proposed 1994 budget as “consistent with earlier administration blueprints.” (And that’s the good news.)

“Trying to effect deficit reduction, while changing spending priorities to focus on domestic research and development and human resources, is bound to leave everyone unhappy to some degree,” commented Butts, associate vice president for government relations and director of the Washington office. “It’s not going to be an easy year.”

Several U-M units that clearly would be adversely affected include the libraries, the Department of Nuclear Engineering and the School of Business Administration’s Great Lakes Trade Adjustment Assistance Center (GLTAAC).

GLTAAC, with a staff of 10 professionals and six students, is one of 12 centers across the country that help small and medium sized manufacturing firms regain market share lost to foreign competition. The 50 firms currently working with GLTAAC in Michigan, Indiana and Ohio employ more than 10,000 people. Federal funds, which Clinton would eliminate, account for some 80 percent of GLTAAC’s $1 million annual budget.

Under the Clinton proposal, U-M libraries would lose approximately $400,000 in funding for distribution of journal articles throughout the state, enhancing special collections, cataloging and preserving rare materials and creating electronic records of serial holdings. University Library Dean Donald E. Riggs notes that the budget cuts could be felt not only on campus but across the state, since libraries throughout Michigan depend on the U-M’s information resources.

Clinton’s Department of Energy budget eliminates funding for university nuclear reactor research and development, a move that Department of Nuclear Engineering Chair William R. Martin expects will impede research into alternative fuels, medical isotopes and disposal of hazardous waste, and, by extension, discourage graduate students from entering nuclear engineering programs.

Funding for student aid in Clinton’s proposal is widely described as a mixed bag. Campus-based aid programs, for example, which include Work-Study, Supplemental Educational Opportunity Grants and Perkins Loans, would be cut by $200 million; in exchange, however, the three programs would be consolidated, ostensibly giving institutions flexibility in distributing their funds to eligible students.

Pell grants, the foundation for all other federal aid, would be funded at a rate 3.4 percent higher than the current budget, allowing the maximum grant level to remain at $2,300 and enabling 4.7 million students to receive grants. However, the recent Senate defeat of the president’s economic stimulus package leaves the program with a $2 billion shortfall in current funds, which could adversely affect grant awards.

The president’s budget calls for reforms to the current guaranteed student loan system that include the phasing in of a direct loan program.

Under this program, which the U-M supports, students will receive federal loan funds directly from the government via their institutions, rather than through private banks. Direct lending would be fully operational by 1997 and would save $4.2 billion over five years.

Community service, an often-stated priority for Clinton, is presented in the budget proposal as an optional way to repay college loan debt. In addition, the budget would require that 10 percent of campus Work-Study funds support students working in community service jobs, a target that Office of Financial Aid Director Harvey P. Grotrian says the U-M already meets. Currently, students earn Work-Study funds through positions at the Shelter Association of Ann Arbor, the Domestic Violence Center, Recycle Ann Arbor, Project Serve, the Peace Corps, and other organizations.

In keeping with the president’s commitment to stimulate the economy and address social needs, the majority of research areas targeted for expanded funding are those expected to produce applicable, pragmatic, commercially-relevant results: advanced manufacturing technology, alternative fuels, environmental cleanup and information technology, to name a few.

Failure of the president’s economic stimulus package has also jeopardized a significant portion of expected National Science Foundation (NSF) research monies. As originally proposed by Clinton, the stimulus package would have increased NSF’s current budget by $207 million, greatly enlarging the base on which the administration’s 8 percent increase for 1994 would have been based. Without the $207 million in supplemental funding, the president’s $3.18 billion target budget for NSF could only be reached through a 16 percent increase in the foundation’s current budget.

The budget also includes targeted funding increases for research on breast cancer, AIDS, tuberculosis, health issues affecting women and minorities, and the human genome project. However, overall funding for the National Institutes of Health would rise only 3.2 percent over current levels, a rate that fails to keep pace with inflation in the biomedical field and that would result in nine NIH institutes suffering funding losses from current levels.

The proposed budget does not include any cuts in indirect cost recovery rates.

Clinton’s failed stimulus package was also the vehicle for funding the Summer of Service proposal, through which as many as 1,800 college students could participate in community service and leadership activities in exchange for a tuition stipend. The U-M has submitted a proposal to the Office of National Service to host one of 10 Summer of Service programs nationwide.

Although it is not clear whether the administration will attempt to find other ways to fund these programs, the White House has indicated that a supplemental appropriations bill could be brought up in the House of Representatives as early as this week.

The final outcome on the budget is not expected until late August or early fall.


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