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Federal Relations Report

January 31, 2014

The Federal Budget: A Timeline

December 11, 2013: House and Senate budget committee chairs reached agreement on top line spending numbers for FY14 ($1.0122 trillion) and FY15 ($1.0136 trillion).

January 17, 2014: President Obama signed the FY14 budget/spending bill to fund the federal government through September 30, the balance of FY14.

Late February: Next deadline to raise the debt ceiling.

March 4: The President’s FY15 budget is released; the kick-off on the FY15 budget process.

FY14 Federal Funding

Numbers are based FY13 post-sequester budget levels. Key agency funding levels and policy language are as follows:

National Institutes of Health:

National Science Foundation (NSF):

Department of Energy (DOE):

Department of Agriculture (USDA):

Department of Defense (DOD):

Department of Education (DEd):

State of the Union

During President Obama’s annual State of the Union, he discussed four issues of particular interest to research universities. He urged Congress to restore funding for basic research because it drives innovation, called for patent litigation reform, encouraged Congress to approve comprehensive immigration reform, and cited ways in which the administration is promoting greater college opportunity, college-cost information, and relief for those with high student debt.

On research:

"We know that the nation that goes all-in on innovation today will own the global economy tomorrow. This is an edge America cannot surrender. Federally funded research helped lead to the ideas and inventions behind Google and smartphones. That’s why Congress should undo the damage done by last year’s cuts to basic research so we can unleash the next great American discovery – whether it’s vaccines that stay ahead of drug-resistant bacteria, or paper-thin material that’s stronger than steel."
He added that his administration would launch six new university-based, high-technology manufacturing hubs this year to join the two existing hubs in Raleigh, North Carolina, and Youngstown, Ohio, and he urged Congress to approve legislation to double the number of new hubs.

On patent litigation reform:

“…And let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation.”

On immigration reform:

"Finally, if we're serious about economic growth, it is time to heed the call of business leaders, labor leaders, faith leaders, law enforcement—and fix our broken immigration system. Republicans and Democrats in the Senate have acted, and I know that members of both parties in the House want to do the same. Independent economists say immigration reform will grow our economy and shrink our deficits by almost $1 trillion in the next two decades. And for good reason: When people come here to fulfill their dreams—to study, invent, contribute to our culture—they make our country a more attractive place for businesses to locate and create jobs for everybody. So let's get immigration reform done this year. Let's get it done. It's time."

On college opportunity and student debt:

"We’re shaking up our system of higher education to give parents more information, and colleges more incentives to offer better value, so that no middle-class kid is priced out of a college education. We’re offering millions the opportunity to cap their monthly student loan payments to ten percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt. And I’m reaching out to some of America’s leading foundations and corporations on a new initiative to help more young men of color facing tough odds stay on track and reach their full potential."

The president also mentioned the recent White House Opportunity Summit, in which more than 100 higher education, including President Kaler, and private sector leaders pledged to undertake new efforts to improve college access and completion for low-income students. And he referenced the administration’s efforts to expand income-based repayment for student loans.

 

December 12, 2013

In an important display of bipartisanship, the cochairs of the FY14 budget conference committee announced a deal on Wednesday night that will fund the federal government for both FY14 and FY15 and provide some relief from the sequester. While the package developed by Rep. Paul Ryan (R-WI) and Senator Patty Murray (D-WA) does not completely lift the sequester cuts, it represents a step in the right direction.

Ten Things We Know about the Budget Deal

  1. Federal spending will increase $45 billion in FY14, more than without the deal.
  2. The automatic spending cuts planned for January 15 under year two of sequestration have been reduced by about 50%.
  3. The automatic spending cuts planned for January 1, 2015, under year three of sequestration have been reduced by about 25%.
  4. This sequestration relief is evenly divided between defense and non-defense discretionary spending.
  5. Sequestration’s 2% mandatory spending cut per year to Medicare providers remains in place.
  6. The deficit is reduced by increasing various government fees for mineral leasing, oil and gas royalties, airport security, etc.
  7. Both Republicans and Democrats are denied what they want most: Republicans don’t get any changes to Medicare and Social Security; Democrats don’t get any new taxes.
  8. The debt ceiling is not addressed.
  9. The deal, if passed, makes it more likely that an omnibus or two large appropriations bills (rather than a Continuing Resolution) could be considered and passed by Congress before the current Continuing Resolution expires on January 15. It is likely that House and Senate appropriators will work behind the scenes to move one omnibus or two large appropriations bills through both chambers rather than producing competing House and Senate versions.
  10. Ultimately, an omnibus bill or series of appropriations bills will determine final FY14 funding levels for programs. This agreement does not specify those levels.

November 2013

The Budget Battle: A Timeline

October 1–16, 2013 - Federal government shutdown

December 13, 2013 – Deadline for the joint House/Senate committee (Son of Super Committee) to make recommendations on the FY14 budget

January 15, 2014 – Congress’ Continuing Resolution for FY14, passed on October 16, expires and year two of sequestration —across-the-board cuts— goes into effect

February 17, 2014 - Next deadline for the debt ceiling

There is a broad, sweeping effort by the U and our allies in the education and research communities to urge Congress to reach a realistic, balanced budget agreement that will eliminate the automatic spending cuts mandated under sequestration.

Sequestration Impacts

In October, 74 universities completed a survey about the impacts of sequestration on their campuses. The most commonly cited impacts were a reduction in the number of new federal research grants (70% of responding universities) and delayed research projects (also 70%). While the loss or delay of critical research is serious in itself, it is the other impacts of these reductions and delays—the financial costs, the effects on jobs and careers, and the opportunity costs—that illuminate the real consequences of sequestration. View a summary of survey findings.

Immigration Reform

Comprehensive immigration reform passed the US Senate in June and is languishing in the House. President Kaler wrote to the Minnesota House delegation urging them to move forward on immigration.

Farm Bill

The reauthorization of the Farm Bill is caught up in a debate over the Supplemental Nutrition Assistance Program (SNAP, formerly know as food stamps).

Bev Durgan, dean of Extension, announced earlier this month that due to cuts in the SNAP education program earlier this year, and with no clear path forward for the Farm Bill, she will have to eliminate some nutrition education positions.

Support for the Humanities

Provost Karen Hanson spearheaded a Committee on Institutional Cooperation (CIC) provost letter urging House and Senate leadership to support funding for the humanities.

U librarian Wendy Pradt Lougee authored a letter to the Minnesota delegation on the importance of humanities funding for our library system.

Technology Commercialization

The U participated in a new report, “Sparking Economic Growth,” produced by the Science Coalition. “Sparking” is a collection of 100+ companies created from federally funded research. The report is being used on Capitol Hill to underscore the importance of federal research to innovation and economic development.

Jay Shrankler, Executive Director of the Office of Technology Commercialization, wrote to the Minnesota House delegation in support of the TRANSFER Act (“Technology and Research Accelerating National Security and Future Economic Resiliency”). The TRANSFER Act would enable more effective commercialization of new technologies. The bill brings attention to the market viability of early stage technologies and would provide support for universities to undertake proof-of-concept, scaling-up and modeling.

On Campus

The Center for Transportation Studies hosted a legislative staff day, which included an overview of transportation research and a tour of the Minnesota Traffic Observatory and the HumanFIRST driving simulation lab.

The State and Federal Government Relations team hosted legislative staff for a day-long tour of U facilities—from the new cancer-cardio building to the turf grass plots in St. Paul.

Julie Selander, director of One Stop Services and Veterans Services, participated in a roundtable hosted by Senator Amy Klobuchar and St. Mary’s University on veterans and higher education.

Senator Klobuchar visited the Wellstone Center for Muscular Dystrophy to learn more about the research and to raise awareness of the importance of NIH research.

Senator Klobuchar visited the Rochester campus for a press conference with Mayo researchers to underscore the critical role of NIH research in discovering treatments for Alzheimer’s disease.

Rep. Keith Ellison participated in a community discussion at the Humphrey School and a showing of the film, “Koran by Heart,” part of a federally funded grant entitled “Muslim Journeys.”

Representative Erik Paulsen visited the Medical Device Center and met with Dr. John Andrews, associate dean for graduate medical education, to discuss the importance of GME funding.

On The Hill

President Kaler met with Chairman John Kline and Rep. Betty McCollum in October in Washington. They discussed issues, from the reauthorization of the higher education act to the impact of sequestration on our institution.

On November 19, a bipartisan group of 33 Senators, including Senators Klobuchar and Franken, wrote to leadership encouraging strong funding of NIH in the FY14 budget negotiations.

On November 20, Senator Klobuchar and Senator Susan Collins (R-ME) introduced a resolution urging the doubling of funding for Alzheimer’s research by 2015.

August 2013

Student Loan Interest Rate

Before adjourning for August recess, Congress passed the Smarter Solutions for Students Act (aka Bipartisan Student Loan Certainty Act). The final bill is similar to the market-based plan offered by the administration and Chairman John Kline’s (R-MN) House Education and Workforce Committee.

The measure pegs the interest rate for federally subsidized and unsubsidized loans for undergraduates at the 10-year Treasury bond rate plus 2.05%, with rates for unsubsidized loans for graduate students at plus 3.6%, and for parents at plus 4.6%. The rates would be capped at 8.25% for undergraduates, at 9.5% for graduate students, and at 10.5% for parents. For undergraduates this fall, the loan rate will be 3.86%.

The Fiscal Situation

With federal FY14 set to begin on October 1, you can count on a Continuing Resolution (CR). However, there is no agreement on how long a CR would last or at what funding level. Further complicating the situation is the expectation that negotiations over FY14 spending and the future of sequestration will run right up to a fall deadline for raising the debt ceiling.

The House and Senate have been working from different blueprints for FY14 appropriations—amounting to a $91 billion difference in their budgets for discretionary spending—so it was no surprise when the process ground to a halt in both chambers in late July.

Immigration Reform

In late June, the Senate passed a comprehensive immigration reform bill: Border Security, Economic Opportunity and Immigration Modernization Act. Our advocacy efforts focused on three major areas of concern to the U: 1) modernization of the green card process for advanced degree graduates; 2) modernization of non-immigrant visas; 3) the DREAM Act, which would provide a path to citizenship for children brought to the United States illegally at an early age and who attend college or serve in the military.

In a letter of thanks to Senator Klobuchar, President Kaler stated, “The Senate has taken the first step forward in fixing a broken immigration system that has failed many who wish to study at US higher education institutions and those that wish to work and/or become Permanent Residents in the US after they graduate. Senate passage of immigration reform represents an important step forward for universities, which stand to benefit from provisions that will allow a new generation of immigrants as well as international students and scholars to fill classrooms and research laboratories.”

Innovation Deficit

The presidents of 165 universities, including Eric Kaler, signed an open letter to President Obama and members of Congress on the federal “innovation deficit.” The letter ran in late July as a two-page advertisement in the Washington newspaper Politico.

The letter argues that the declining federal investment in research, plus the automatic budget cuts via sequestration, are undermining our nation’s ability to discover, innovate, and grow our economy.

The U’s News Service worked diligently to build on this national effort here in the Twin Cities and was successful:
A Star Tribune column by Lee Shafer focused on the importance of funding University research, and how University-IP drives innovation, creates jobs, and advances Minnesota's economy. Mr. Shafer used the U’s Center for Genome Engineering as an example.
Brian Herman penned a commentary for MinnPost on Minnesota’s innovation deficit.
• Minnesota Public Radio's Washington correspondent, Brett Neely, spoke to Dr. Herman on the impact of sequestration on Minnesota.

Coming Soon: Reauthorization of the Higher Education Act

Chairman John Kline (R-MN) and Ranking Member George Miller (D-CA) of the House Education and Workforce Committee requested comments and suggestions for the upcoming reauthorization of the Higher Education Act. This act governs higher education—student loans, work-study, accreditation, campus safety, international education, and much more.

Many national associations responded, as well as a number of universities, including the University of Minnesota. Vice Provost and Dean of Undergraduate Education Robert McMaster responded to the committee and focused on several key aspects of undergraduate education.

In DC

President Kaler participated in a meeting of the Department of Homeland Security’s Academic Advisory Council in July and stopped by the White House to greet U CLA student Dan Lightfoot (summer intern) and U alum Andrea Mokros (CLA 1999, director of strategic planning). Kaler also met with reporters from Inside Higher Education and the Chronicle of Higher Education.

In June, Department of Pediatrics faculty member Rebecca Shlafer participated in a White House event announcing an initiative spearheaded by Sesame Street, “Little Children, Big Challenges: Incarceration,” to address the needs of children with an incarcerated parent.

The leadership of the National Center for Interprofessional Practice and Education (Barbara Brandt, Frank Cerra, Jeny Kurtz) visited with Minnesota delegation health staffers to discuss the work of the center.

On Campus

The U’s Humphrey School hosted a Department of Education public forum in May. Participants came from throughout the Midwest and commented on a myriad of higher education issues such as student finance, gainful employment regulations, and tax issues.

Rep. Erik Paulsen (R-MN) visited Amplatz Children’s Hospital in early July.

Rep. Rick Nolan (D-MN) toured the Soudan Underground Laboratory over the July 4 break.

Law School professor Fred Morrison met with staffers for Senator Franken to discuss the University’s approach to implementing the Affordable Care Act.

Chief Information Officer Scott Studham spoke with Senator Klobchar’s staff on the U’s concern around cybersecurity.

Paul Savereid of the Office of the General Council spoke with Senator Franken’s Judiciary Committee staff about intellectual property and patent issues.

May 2013

Immigration

On May 21, the U.S. Senate Judiciary Committee passed a comprehensive immigration bill. Both Minnesota Sens. Amy Klobuchar (D-MN) and Al Franken (D-MN) are members of the Judiciary Committee.

Over the past two weeks, the committee considered hundreds of amendments to the bipartisan Gang of Eight bill. Some amendments the higher education community and the U supported:

Student Loan Interest Rate

Chairman John Kline's (R-MN) Smarter Solutions for Students Act passed the House Education and Workforce Committee last week. The bill addresses the July 1 doubling of the student loan interest rate with a long-term solution that pegs the interest rate to the 10-year Treasury bond and caps the rate at 8.5% percent.

The House is expected to consider the bill this week.

The Senate will consider a bill that would freeze the existing rate of 3.4% for two years.

Farm Bill

Both the House and Senate Agriculture committees passed their versions of farm bills last week. The full Senate will take up the bill this week, and the House Committee leadership hopes to bring its bill to the floor in June. Both bills reduce spending by billions of dollars over five years.

Sen. Klobuchar, an Ag Committee member, was successful in offering an amendment that would increase the authorizing levels from $100 million to $200 million for the newly created Foundation for Food and Agriculture Research.

More information on Title VII (Research and Extension funding) in the current versions of the bill.

High Quality Research Act

The higher ed community continues to engage with key members of the House Science, Space, and Technology Committee about a draft legislative proposal that would impose new requirements in the awarding of grants by the National Science Foundation (NSF). What is driving such proposals is concern about "questionable grants" awarded by NSF, primarily in the social and behavioral sciences. The chairman of the committee, Rep. Lamar Smith (R-TX), has expressed 1) concerns about the NSF merit review process, and 2) his interest in priority-setting in federal research funding.

On The Hill

Office of Technology Commercialization leaders Jay Shrankler and Eric Hockert met with Minnesota congressional staff to update them on OTC's efforts to create companies out of U discoveries.

Extension's Public Issues Leadership Workshop (PILD) team met with agriculture staffers in the Minnesota delegation to talk about their work throughout Minnesota.

Eric Kaler attended a Science Coalition reception honoring U.S. Rep. Ron Kind (D-WI), a U law school alum, as a "Champion of Science." Kaler also met with Rep. Rick Nolan (D-MN), the new representative for Minnesota's 8th District and a U alum.

Sens. Klobuchar and Franken introduced a resolution in the Senate honoring the University's women's hockey team NCAA championship. In addition, a letter signed by the entire Minnesota delegation was sent to President Obama, urging him to honor the team at the White House.

Kris Wright, director of student finance, met with House Education and Workforce Committee staff as part of the Direct Loan Coalition.

The U's Student Legislative Coalition participated in a Big Ten student visit to DC that included meetings with the Administration and on Capitol Hill. Rep. Tim Walz (D-MN) arranged for the Minnesota team to attend the annual Hotdish Cook-off, which included all members of the Minnesota delegation.

A group of 4th-year pharmacy students and faculty visited with policy-makers in the health care field, as well as with staff for Sens. Klobuchar and Franken.

On Campus

Kamil Urgbil (CMMR) and Sen. Klobuchar held a roundtable at CMMR to discuss President Obama's BRAIN Initiative. Roundtable participants included advocates for research in epilepsy, autism, Alzheimer's and Parkinson's diseases. Sen. Klobuchar toured the lab and answered questions as part of the session. There was great coverage in the Star Tribune.

Congressman Keith Ellison (D-MN) visited the Community-University Health Clinic (CUHHC). He met with CUHHC leadership and toured the clinic.

Rep. Ellison led a discussion on student debt in a Science Teaching and Student Services classroom. Panel participants included U student leadership, MPIRG and Minnesota's Office of Higher Education.

Sen. Franken held a higher education roundtable at the University of Minnesota-Rochester campus to discuss career preparation and engaging with industry.

Tom Giaimo—a junior computer science major, wrestler and Air Force ROTC cadet—served as a judge for Sen. Franken's second annual poetry contest, "My Experience as a Military Child."

Sen. Franken spoke at the First Robotics conference and visited with participants afterward at Mariucci and Williams arenas.

University of Minnesota students participated in a roundtable at St. Paul College. Sen. Franken organized the event, and Gov. Dayton and Director Pogemiller participated. U students who spoke about their challenges were Taylor Williams (MSA President), Elizabeth Nelson (CEHD) and Zahra Forouzan Karimian (Pharmacy).

Many thanks to our Minnesota delegation members who were graduation speakers this spring: Sen. Franken at the Morris campus and Rep. Betty McCollum (D-MN) at the College of Food, Agricultural and Natural Resource Sciences.

April 2013

FY 2013—Finally

Two weeks ago, the US Senate and House successfully negotiated and passed a FY13 Continuing Resolution to fund the federal government through September—the balance of the federal fiscal year.

While nothing is simple in the world of federal budgeting, we can summarize that FY13 funding levels will be at the FY12 level minus the 5% sequestration cut.

A few examples of research agency funding that defy easy explanation:

During the Senate debate two amendments passed of importance to the University:

The House of Representative passed the FY14 budget resolution offered by Budget Committee chair Paul Ryan (R-WI) in mid March. The House budget resolution aims to bring the federal books into balance in 10 years by repealing President Obama's health care law, overhauling Medicare, and paring back government spending.

The Senate passed a budget resolution before adjourning for the Passover/Easter break. The resolution calls for $975 billion in increased tax revenues and for replacing the sequester with a mix of tax revenues, and cuts to defense and non-defense spending at about half the amount that will happen under the sequester. The higher education associations sent a letter in support of the Senate budget while raising concerns about reducing the charitable deduction in the tax code, which the Senate is considering.

We are still waiting on the final piece of the budget puzzle—President Obama's proposed FY14 budget. While traditionally released in early February, the president's budget proposal was delayed while Congress resolved the FY13 budget and sequestration. We anticipate the president's budget next week.

Sequestration

The budget sequestration went into effect on March 1—5%-7% cuts to most federal programs for a total of $85 billion dollars, which need to come out of the budget between March 1 and September 30.

Pamela Webb of the U's Sponsored Projects Administration has set-up a website to gather information from federal agencies on their plans to implement sequestration cuts across research accounts. Please check the site for updates and to share information.

In the news we continue to hear about the cancellation of White House tours and military fly-overs, and about the closure of entrances to Capitol Hills offices and national parks. A Washington Post chart tracks what the federal agencies are proposing.

On Campus

In February, Chairman John Kline (R-MN) visited the Twin Cities campus. He met with University leaders to discuss higher education policy, financial aid, and costs that drive higher education. He also visited one of the U's Department of Defense-funded labs—the Academic Health Center's SimPORTAL.

On the Hill

Larry Zanko of the Natural Resources Research Institute attended the Transportation Research Board and met with Rep. Nolan, the new representative from the 8th District.

Duluth's dean of engineering, James Riehl, participated in a national conference of engineering deans and visited members of the Minnesota delegation.

The annual CARET meeting was held in late February, and leadership from the College of Food Agricultural and Natural Resource Sciences and from Extension met with the entire Minnesota Congressional delegation.

Dean Trevor Ames met with Members of the Minnesota delegation as a follow-up to the American VetMed Association annual conference.

March 2013

Going, going…over the fiscal cliff
It looks like we are headed over the federal fiscal cliff—across-the-board cuts set in motion in August 2011 by the Budget Control Act.

Simply put, the budget cuts that go into effect at midnight tonight (March 1) are to all non-defense discretionary accounts, Medicare (cut falls on providers) and the Department of Defense. Medicaid, Social Security and veterans' benefits are exempt, as are Pell Grants. Cuts from sequestration will continue over a ten-year period.

Federal agencies have been slow to reveal their plans for the cuts. The U's Sponsored Projects Administration (SPA) is posting information from research agencies as it becomes available. Be sure to check SPA's site and contact them if you receive any clear directions regarding a grant or contract.

Brian Herman, the University of Minnesota's vice president for research, sent a note to faculty last week with recommendations for preparing for the cuts.

Several organizations have posted state-by-state impacts to research (Science Works for Us) and school-by-school impacts on student aid (National Association of Student Financial Aid Administrator).

On Thursday, February 28, Science Works for Us issued its last press release before the March 1 deadline: "Sequester will have a devastating impact on American's research enterprise."

We continue to work closely with our national associations and the Minnesota Congressional delegation to communicate the effects of these cuts to the University of Minnesota.

Important federal dates

March 1 Sequestration deadline
Mid-March Obama administration releases proposed FY14 budget
March 27 FY13 Continuing Resolution expires
May 19 Federal debt reaches limit, again

Articles of Interest

The coming R&D Crash
The Washington Post, 2/26/13

Bad medicine: cutting American health research will harm the world
The Economist, 3/2/13

January 2013

Ringing in the New Year—Congressional style
On the first day of 2013, Congress met to pass the American Taxpayer Relief Act of 2012, averting the impending ‘fiscal cliff’. However, in spite of the passage of the legislation, additional items will need to be addressed in the coming months.

Included in the legislation

What the legislation did not address
Numerous items were not included in the legislation, and will require attention by the 113th Congress.

Automatic spending cuts (8 percent for most federal spending, 2 percent for Medicare and Medicaid) that would have become effective January 3, 2013 have been postponed until March 27, 2013. Further, changes have been made to the sequestration fiscal target.  The total cuts needed have been reduced by $24 billion (from $1.2 trillion to $1.176 trillion) because of new revenues (from Roth IRA rollovers) and cuts to budget caps set by the Budget Control Act in August 2011.

Congress will still need to act to raise (or not raise) the federal debt ceiling in the first quarter of 2013

How the votes were tallied
Of the 535 voting members of Congress, those voting in favor of passing the act included Minnesota Senators Klobuchar and Franken; as well as their colleagues in the House of Representatives, Representatives Ellison, Kline, McCollum, and Walz.

Representatives Bachmann, Cravaack, Paulsen, and Peterson voted against the legislation.

View a detailed summary of the act. For more information, visit the Washington Post ‘s Wonkbook article Everything you need to know the fiscal cliff deal and for an interesting look at the deal, the 10 weirdest parts of the ‘fiscal cliff’ bill.