Trump FY18 Budget Provides Little Certainty

The Trump Administration dropped a bombshell on the outlook for US federal science and research funding when it released last week its first fiscal year budget proposal. Although previewed by the Administration’s “skinny budget” released in March, the extent of the cuts was only fully evident in the official FY18 budget release.

Among the proposed cuts: a 21% drop in the budget of the NIH, a 17% decrease for the DoE’s Office of Science and a cap on NIH grant indirect costs. The table below is based on the actual FY17 final budget (see IBO 5/15/17), not the continuing resolution figures used in the Administration’s FY18 budget request documents.


* Source: IBO 5/15/17
** Source: FY17 Congressional explanatory report

The news sent shockwaves throughout the US scientific community and prompted a strong response from scientific organizations. Joanne Carney, director of Government Relations for the American Association for the Advancement of Science (AAAS), told IBO, “Overall, federal R&D increased by 5% above FY 2016 levels. This serves as a reminder that federal R&D in large part enjoys bipartisan support in the current Congress, and that there is a willingness to maintain their own position and views on budget and policy matters that may not reflect the current administration.” But, as she stated, “For FY 2018, one cannot assume that we will see yet another 5% increase and while overall R&D may continue to grow, individual agencies and programs may receive decreases in their funding levels.”

Asked about science and research programs that are especially vulnerable to possible FY18 budget cuts, she commented,There are some areas of research that have been more vulnerable; for example, applied research programs. Some policymakers in Congress view applied research programs funded by agencies such as the DOE as an inappropriate role for government spending and believe that industry should fund this area of research.”

She highlighted biomedical research as one budget item widely supported by Congress. “Biomedical research funded by the NIH has been one of the few areas of research that has enjoyed strong bipartisan support over the years. Almost every Member of Congress and the public at large recognizes the value of investing in research to improve public health.”

The FY18 budget proposal must be approved by Congress, and members of Congress in both parties have indicated that the budget will not pass in its current form. On May 22, USA Today quoted Democratic Representative John Yarmuth of Kentucky as saying,  “I don’t think there’s much chance of this budget going anywhere based on how Republicans talked about the skinny budget.” Republican Senator Mitch McConnell observed, “We’ll be taking into account what the president recommended. They will not be determinative,” as reported by the Wall Street Journal on May 23.

Specifically, the proposed cuts to biomedical research have drawn criticism from both Republican and Democratic members of Congress. “First of all, a disease like cancer and Alzheimer’s don’t [sic] make any distinctions on the basis of party or philosophy,” said Republican Representative Tom Cole of Oklahoma in The Hill on May 23. “And second, I think most people—when they really look at the issue and our subcommittee has spent a lot of time—understand that this is actually a way to save a lot of money longer term. It’s the right thing to do, obviously.”

A May 24 MedCityNews article quoted Republican Senator Roy Blunt of Missouri as saying “That proposal will not be well received in the Congress. I just don’t think you want to argue that we’re doing X—almost no matter what X is—as opposed to cancer research or Alzheimer’s research.”

However, some cuts contained in the FY18 budget proposal are expected to make it into the final budget, according to observers, as Republicans control both houses of Congress. But months of negotiations lay ahead, making it difficult to speculate on the budgets for federal agencies and their programs, let alone science and research funding programs. Congress will introduce its budget proposals in June.

Regarding the prospects for cuts to science and research funding in the final FY18 budget, Howard Garrison, PhD, director of the Office for Public Affairs at the Federation of American Societies for Experimental Biology, told IBO, “I am not great at projections, but I believe that we can prevent the NIH cuts. I hope that we can do the same for the NSF and USDA.”

He specified some programs that are popular in Congress, “Certainly, NIH programs dealing with the diseases of aging (like Alzheimer’s) have had strong support. The programs identified in 21st Century Cures are also authorized for increases. These remain possibilities.” Under Trump’s budget proposal, the 21st Century Cures Act would receive its full allocated amount for FY18 of $496 million, consisting of $300 million for the Cancer Moonshot (see IBO 12/31/17), $100 million for the All of Us Research Program (previously the Precision Medicines Initiative), $86 million for the BRAIN Initiative and $10 million for Regenerative Medicine.

Although FY18 begins on October 1, it is doubtful that Congress will finalize the budget before then. “It has been almost 20 years since the U.S. Congress passed separate appropriations bills under what is termed ‘regular order,’” Ms. Carney told IBO. “For decades, the US has operated under a series of continuing resolutions and omnibus bills to fund the federal government. A truncated schedule will inhibit the ability of Congress to get its work done in a timely manner, so one can expect a continuing resolution to fund the government at FY 2017 levels in our near future.” Dr. Garrison agreed, saying, “Congress is unlikely to compete its work by September 30 and the most likely outcome is a continuing resolution.”

Among the most controversial proposals affecting research funding contained within the budget is a cap of 10% on indirect costs in each NIH grants. As defined by a 2016 report by the Government Accountability Office (GAO), “Indirect costs represent an organization’s general support expenses that cannot be specifically attributed to a specific research project or function.” Currently, the percentage is set based on negotiated agreements between each institution and the NIH.

“This proposal guts NIH support for these research costs. If enacted, the proposal will literally turn out the lights in labs where universities have no other funding to pay for these essential research infrastructure and operating expenses.”

As Mary Sue Coleman, president of the Association of American Universities, said in a statement to IBO, “You can’t conduct cutting edge medical research without high-tech facilities, utilities, hazardous waste disposal, and specialized maintenance and regulatory compliance personnel. This proposal guts NIH support for these research costs. If enacted, the proposal will literally turn out the lights in labs where universities have no other funding to pay for these essential research infrastructure and operating expenses.”

According to the GAO report, in FY15, indirect cost reimbursements for the 10,170 NIH-funded grants and cooperative agreements totaled $6.3 million, or 28% of all costs versus 72% for direct costs. For universities, which represented 80% of all such grants, indirect costs accounted for 21% of grant costs. For the DHHS, NIH and Department of Defense, the review “determined that while the three cognizant agencies had designed some controls for setting indirect cost rates, deficiencies in the design of these controls could result in the waste of federal resources.”

Testifying before the House Committee on Science, Space and Technology in May, James D. Luther, associate vice president of Finance for Duke University, stated in written testimony, “The federal government contributes over 50% of funding for academic research. These funds include the ‘direct costs’ of personnel, supplies and equipment, as well as the Facilities and Administrative (F&A) costs that represent critical research infrastructure.” Making the case for the interdependence of the categories of funding, he explained, “F&A costs cannot be viewed separately from direct costs; together, they represent the total cost of performing research. If direct costs are thought of as ‘gas’ for the research engine, F&A reimbursements represent ‘oil’—the research engine requires both.”

Although NIH enjoys Congressional support, evidenced by the 6.2% increase to its FY17 budget (see IBO 5/15/17), attention to indirect costs has increased. In a May 17 hearing by the US House Committee on Appropriations on advances in biomedical research, the issue was a focus of discussion with committee members, noting that private foundations’ grants allocate a lower percentage for indirect costs compared to the NIH (ScienceInsider). NIH Director Francis Collins defended the NIH higher limit noting that it allows universities to accept grants, such as those from private foundations, by covering more indirect costs, and rarely covers all of the indirect costs of doing research. The NSF’s indirect costs are now facing similar scrutiny (see Industry Watch).

As Congress begins work on the budget, uncertainty remains regarding US scientific and research funding next fiscal year despite the budget proposal’s release. Such uncertainty spans nearly all scientific agencies and programs, especially as no final funding annoucement is expected by the beginning of the fiscal year in October.



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