by R. Larry Dooley, Vice President for Research
More than $1.83 billion in economic output, nearly 25,000 jobs and a net return to state taxpayers of $77.4 million annually. That’s the sum of Clemson University’s economic impact on the state of South Carolina.
While significant, these numbers only scratch the surface of Clemson’s value to the state of South Carolina and the Upstate region. As a research university, our primary contributions are well-educated graduates, direct impact on key industry sectors such as agribusiness, automotive and manufacturing, and the innovations and new knowledge created through research.
Following Congress’ failure to reach a larger budget deal to replace the Budget and Control Act of 2011, beginning March 1 the federal government started putting plans in place to enact $85 billion in automatic spending reductions. These spending cuts are expected to continue over the next 10 years, totaling approximately $1.2 trillion in cuts in federal expenditures.
These spending cuts will have a dramatic impact on Clemson University and the economic development of South Carolina, which is the eleventh most economically impacted state.
For FY 13, we have already submitted 280 research proposals for approximately $146 million. Without the sequestration, we would have expected about 84 of these proposals to already be funded with $44 million in awards. We anticipate losing $32 million worth of funding in FY 13 and, over an 18 month period, we could lose as much as $52 million and a nine percent reduction for non-defense discretionary accounts. The domestic discretionary budget is at an historic low in terms of the percentage of US GDP, which we have not seen since the Eisenhower administration.
Clemson still has approximately 167 proposals out for review from FY 12 with a total of $81 million in play. In a normal budget year, we would have expected about 50 of those proposals to be funded by now and we would have realized approximately $25 million in awards. However, funding agencies are hesitating on such commitments and we anticipate that only eight of the pending proposals to be funded with $4 million in awards. This equals an estimated $20 million loss in funding for the past proposal cycle due to federal budget uncertainty.
There is also the potential for unanticipated consequences such as the reduction of staff, graduate tuition revenue and research equipment expenditures. Our interaction with federal program managers has been negatively impacted due to the their recent travel restrictions and uncertainty in planning research programs. Such restrictions puts a strain on our travel budget and discretionary accounts, which makes it difficult for faculty and students to plan the future of their research and graduate needs. We expect to see a decrease in demand for graduate research assistants with the loss of funding and a decrease in graduate assistantship money from external funding.
In addition to the sequester’s heavy impact on research, it also affects financial aid. Nationally, the sequester provides a $49 million cut to the Federal Work-Study Program, a $37 million cut to SEOG grants and higher loan origination fees.
Clemson will lose nearly $100,000 with such cuts while parents and students will have to pay an extra $77,000 in additional loan origination fees. And, as a result, 50 fewer students will receive Federal Supplemental Educational Opportunity Grants, more than 20 students will be denied Federal Work-Study jobs and 50% of our students will pay more for their federal loans. We also have over 3000 Pell Grant recipients on campus worth $12 million and would not be able to makeup for any of these award decreases.
Since 2008, state funding for higher education has plummeted. While state funding and tuition will continue to be primary sources of funding for ongoing operations, new initiatives and continual enhancements in quality require a new funding strategy.
Clemson’s new planning model requires divestments to fund investments; it recognizes that the University’s largest resource is existing funding, which can be reallocated to higher priorities. And it leverages the Clemson brand to generate new revenue through public-private partnerships, summer programs, online and distance education, and increased private and research support. This new model is about self-reliance — about using current funds, existing debt capacity and the strong market for a Clemson experience to pay for new initiatives.
The Budget Control Act will continue to impose budget caps until 2021. I recognize the importance of shared sacrifice but the discretionary domestic budget has felt the brunt of these cuts and it’s time for a comprehensive approach. Understanding that future cuts are coming and that Clemson needs to continue to find funding in a severely constrained budget, I urge our Congressional leaders to pursue a larger budget deal to replace these cuts and ensure long term solutions to our nation’s federal deficit concerns, including tax and entitlement reform.
