Government Affairs Update
March 20, 2007, Volume 53, No. 26	Print Issue

Federal Budget

FY 2007

Congress recently passed, and the President signed on February 15, a continuing funding resolution for FY 2007. This legislation funds government programs and agencies for the remainder of FY 2007, which ends September 30, 2007. This legislation was necessary as Congress only approved two of the annual spending bills for FY 2007 (Department of Defense and the Department of Homeland Security) prior to adjourning the 109th Congress.

This legislation essentially holds funding for federal discretionary funding at FY 2006 levels, although there were some funding increases provided for medical and scientific research. For example, the National Institutes of Health will receive $28.9 billion, an increase of $ 619.5 million, or about 2.2 percent. The National Science Foundation’s research account will receive $4.7 billion, an increase of $335 million, or 7.7 percent, in order to fund innovation and competitiveness programs.  Total NSF funding would be $5.9 billion, an increase of 6 percent over FY 06.  In addition, the Department of Energy’s Office of Science, again a key scientific research agency, will receive $3.8 billion, an increase of $200 million, or 5.6 percent.  Further, this legislation also includes an increase of $260 for the maximum Pell Grant, bringing the maximum grant level to $4,310.

FY 2008 Budget

On February 5, the President presented the Administration’s budget request for FY 2008 to Congress. This spending blueprint requests $2.9 trillion for federal government programs and agencies for FY 2008. Below is a brief summary of some of the key agencies and initiatives outlined in the budget package:

NIH–the budget request for this agency is $28.62 billion for FY 08, which represents an increase of $232 million over what was estimated to be the final funding level for FY 07. However, the final funding level for FY 07 which was just approved would provide NIH with a funding level of $28.83 billion (net of transfers and programmatic adjustments).  As such, it is our understanding that when all factors are considered, FY 08 funding for the NIH would represent a reduction of approximately $500 million below the final FY 07 level.

NSF–the budget request for the National Science Foundation for FY 08 is $6.4 billion.  This represents an increase of $409 million, or 6.8 percent, above the FY 07 budget request.  Of this amount, $5.13 billion is requested for NSF’s Research and Related Activities account, which represents an increase of $366 million, or 7.7 percent, over the FY 07 budget request. When compared to the FY 07 funding resolution levels, overall NSF funding would see an increase of 8.7 percent, while the R&RA account would be increased by 10.0 percent.

DOE–the Department of Energy’s Office of Science would be funded at a level of $4.4 billion under the Administration’s proposal.  This represents an increase of $296 million, or 7.2 percent, above the FY 07 request.  In comparison to the final FY 07 CR funding level, this Office of Science would see an increase of approximately $600 million, or 15.8 percent.

Department of Education–the budget proposal would provide $90.4 billion for federal student financial aid, an increase of $7.3 billion, or 8.8 percent, over FY 07.  However, the budget also recommends the elimination of 44 programs, including the Perkins Loan program, Federal Supplemental Educational Opportunity Grants (SEOG), and the Leveraging Educational Assistance Partnerships (LEAP).  The budget proposal also calls for an increase in the maximum Pell Grant of $550, to a total of $4,600 in FY 08, and increases of $200 per year until it reaches $5,400 in 2012.  (The recently approved funding resolution increased the Pell Grant to $4,310 for FY 07.)  In addition, the budget proposal would level-fund the GAANN and Javits programs at $30.1 million and $9.8 million, respectively, and would provide $828 million for TRIO programs, the same as the FY 07 funding level. Further, the budget contains a number of proposals that would modify existing federal student loan policies, such as increasing the annual borrowing limits of third and fourth year students by $2,000 to a level of $7,500 and increasing aggregate loan limits for all students.

Department of Defense–the request would provide $1.43 billion for Defense Basic Research (6.1) programs. This represents a reduction of approximately $135 million, or 8.7 percent, from the Fy 07 funding level but is $6 million more than was requested in FY 07.  For Applied Research (6.2), the budget proposes a funding level of $4.36 billion, a reduction of $972 million, or 18.2 percent, from FY 07.  The Defense Advanced Research Projects Agency (DARPA) is proposed to receive $3.09 billion in FY 08, a decrease of approximately $49 million, or 1.6 percent, from FY 07 level.  Of this amount, approximately $153 million would be directed to basic research in the Defense Research sciences account, representing an increase of about $7.4 million, or 5.1 percent, over the previous year.

NASA–the overall funding request for this agency for FY 08 is $17.3 billion, which represents an increase of 3 percent, or approximately $517 million over the FY 07 request (and is a 6.5 percent increase over the FY 07 funding resolution total).  The requested level of funding for the Science, Aeronautics and Exploration (SAE) account is approximately $10.5 billion for FY 08, a decrease of $167 million, or about 1.6 percent, below the FY 07 request, (however, it also represents an increase of about 4.1 percent over the FY 07 funding resolution level).  Of this amount, the Science Mission directorate would be funded at a level of $5.5 billion, an increase of $49 million, or one percent, over the FY 07 requested level (but an increase of 5 percent over the final FY 07 level); the Aeronautics Research Mission directorate funding level would be $554 million, an increase of about $25 million, or 4.7 percent over the FY 07 request but a decrease of approximately 38 percent from the FY 07 funding resolution total; and, the Exploration Systems Mission directorate would be funded at a level of $3.9 billion, a decrease of $228 million, or 0.5 percent, below the FY 07 request (but about a 15.4 percent increase over the FY 07 funding resolution amount).

NEH–the proposed funding level for the National Endowment for the Humanities for FY 08 is $141 million, which represents an increase of approximately $400,000 over the FY 07 request.  Of this amount, the We the People program would receive $15.2 million, the same level of funding as the FY 07 request.

It should be noted that the Administration’s budget submission to Congress marks the beginning of the process whereby Congress will evaluate the President’s funding request and determine funding priorities for the coming fiscal year during the appropriations process.

City Budget

City of Philadelphia

Mayor John F. Street delivered his final budget address to City Council on February 22, 2007, outlining a $3.9 billion budget for fiscal year 2008 and a five-year spending plan that drastically reduces the surplus and fails to deliver any new tax cuts.

Public safety, crime prevention, neighborhood development, and children’s programs were all winners in the Mayor’s farewell budget, as he strives to strengthen his legacy. There’s $1 million for emergency management, and $2 million for demolitions as part of Street’s signature anti-blight program.

On the chopping block:  the budget proposes a reversal of the $1 million increase Mayor Street bestowed on the Community College of Philadelphia last year. Funding is also set to expire in FY 09 for a $5 million marketing campaign promoting Philadelphia to tourists, and a $2.5 million contribution to Innovation Philadelphia, a city job-development agency.

FY 08 Operating Budget hearings begin on March 20.

—Vanda McMurtry, Vice President for Government and Community Affairs