Government & Community Relations

FEDERAL REPORT - October 2009

BUDGET AND APPROPRIATIONS
When FY10 began on Oct. 1, Congress had completed work on only the Legislative Branch bill, leaving 11 bills unfinished.  Consequently, most federal government operations are being funded at 2009 levels by a continuing resolution that expires at the end of October or as individual bills are passed.  As of Oct. 16, only the Agriculture bill had been cleared for the President's signature.  Conference reports have been completed on the Energy & Water and Homeland Security bills; three additional bills, including Defense, have cleared both the House and the Senate; and the Senate still must pass five bills including Commerce, Justice & Science, which includes the National Science Foundation (NSF) and NASA and Labor, HHS & Education, which includes student aid and the National Institutes of Health.

It's not certain yet whether all of the remaining bills will pass individually or if several will be rolled up into an omnibus.  It is possible that some of the remaining bills — including Labor, HHS & Education — will bypass the Senate floor and go directly to conference from Committee.  In any case, it is unlikely that all work will be complete before the end of the month; we expect that Congress will pass at least one more short-term continuing resolution to keep the process moving.

Highlights from individual bills are included below.  In all cases, where an increase or decrease is noted, it is from the FY09 appropriated amount.  Congress did not include Recovery Act funds in agency budget baselines, but treated the stimulus as a one-time emergency infusion of cash.  Cornell is working with the research community to minimize the effect of a budgetary "cliff" with ARRA-funded grants come up for renewal beginning in 2011.

Agriculture:  The formula funds program for research and extension at land grant universities received increases over 2009.  These include:

• Hatch Act (payments for research at agricultural experiment stations) - $215 million, approximately $6 million for Cornell

• Smith-Lever (payments for cooperative extension) - $297 million, approximately $9 million for Cornell

• Expanded Food & Nutrition Education Program (EFNEP, administered through cooperative extension) - $68.7 million, approximately $3.8 million for Cornell

Competitive research programs at USDA also fared well.  The Agriculture and Food Research Initiative (formerly the National Research Initiative) is funded at $262.482 million, a nearly 40 percent increase.  In addition, for the first time, the Sun Grant Program was funded as an authorized program at $2.25 million and not as an earmark.  Of this amount, $450,000 will go to the Northeast Sun Grant Center of Excellence at Cornell.

The USDA/ARS Center for Grape Genetics Research, to be built at the Agriculture and Food Technology Park at Geneva, received an additional $3,654,000 toward construction.  To date, $26,969,825, including $10 million from the New York State Department of Agriculture and Markets, has been appropriated toward this project.  According to USDA, the total needed to begin construction is $33 million.

Cornell received funding for 10 earmarked Special Research Grants:

• Apple Fire Blight (jointly with Michigan State) - $346,000

• Computational Agriculture - $131,000

• Environmental Research - $258,000

• Environmental Risk Factors (Breast Cancer) - $150,000
  

• Food Safety Research Consortium - $693,000
  

• Human Nutrition - $377,000

• Livestock & Dairy Policy (jointly with Texas A&M) - $693,000

• Minor Use Animal Drugs (jointly with UC Davis, Iowa State, Florida) - $429,000

• National Beef Cattle Evaluation Consortium (jointly with Colorado State, Georgia) - $655,000

• Viticulture Consortium (jointly with UC Davis) - $1,454,000

Commerce, Justice, Science:  Senate consideration of the Commerce, Justice, Science appropriations bill stalled on Oct. 13, when a cloture vote failed 56 - 38 (60 votes are necessary for passage, essentially to cut off debate and move the bill toward final passage).  At the time of the cloture vote, Sen. Tom Coburn (R-OK) had proposed an amendment to cut funding for the political science program at NSF.  The Senate did not vote on the Coburn amendment; it is not expected to pass when the bill comes back up for consideration.  Cornell has received assurances from Sen. Schumer and Sen. Gillibrand that neither would support this amendment. After the Senate completes work on CJS, differences will have to be conferenced with the House.   In all cases, Cornell is advocating for the higher level of funding.  Items of interest to Cornell include:

• NSF - $6.936 billion in the House vs. $6.916 billion in the Senate.

• NASA - $18.686 billion in the Senate vs. $18.2 billion in the House.  Both bills, however, contain increases for programs in the Science Mission Directorate ($4.5 billion in the Senate vs. $4.49 billion in the House).

• Department of Commerce/NOAA/National Environmental Satellite Data & Information Service/Regional Climate Centers - $3.85 million in the House vs. $3.9 million in the Senate.  Cornell is home to the Northeast Regional Climate Center.

Defense:  The Senate passed the Defense Appropriations bill on Oct. 6.  Differences with the House bill, passed at the end of July, are currently being reconciled in a conference.  Policy issues are slowing down the conference, and it is likely that the Defense bill will be one of the last to be completed.  Of interest to Cornell:

• 6.1 Basic Research - $1.93 billion in the House vs. $1.785 billion in the Senate.  The Senate number is a 3.1 percent decrease over FY09 funding, while the House provides a 4.8 percent increase.  Most of Cornell's defense research is funded from 6.1 accounts.

• 6.2 Applied Research - $4.927 billion in the House vs. $4.605 million in the Senate.  Both are a decrease from FY09.

• Advanced Technology Development - $6.325 billion in the House vs. $5.929 billion in the Senate.  Both are a decrease from FY09.

Energy and Water:  The Energy and Water Appropriations conference report passed the Senate on Oct. 15, and will be sent to the White House shortly.  Of interest to Cornell:

• Office of Science - $4.9 billion, including $1.636 billion for basic energy sciences; $810.4 million for high-energy physics; $604.2 million for biological and environmental research; $535 million for nuclear physics; $426 million for fusion energy sciences; and $394 million for advanced scientific computing research,

• Energy Efficiency and Renewable Energy - $2.24 billion, including $311.4 million for advanced vehicle technology; $225 million for solar energy R&D; $220 million for biomass and biorefinery systems; $174 million for hydrogen R&D; $80 million for wind energy R&D; $50 million for the State Energy Program; and $44 million for geothermal R&D.

Congress authorized only three of eight proposed energy innovation hubs at $22 million per hub in the following areas:

• Fuels From Sunlight

• Energy Efficient Building Systems Design

• Nuclear Energy Modeling and Simulation

The conference report did not contain any funding for the new ARPA-E research program.

Interior and Environment:  The Interior conference is underway, and should be wrapped up before the end of the month.  Of interest to Cornell:

• Environmental Protection Agency Science & Technology - $849.6 million in the House vs. $842.8 million in the Senate.  Includes funds for extramural research on air quality, water quality, and climate change.

• National Endowment for the Humanities - $170 million in the House vs. $161.3 million in the Senate.

• National Endowment for the Arts - $170 million the House vs. $161.3 million in the Senate.

Labor, Health & Human Services, and Education:  The Senate has not passed the Labor, HHS & Education spending bill, though the Appropriations Committee approved it in July.  Because it is the largest bill, it is likely to be among the last to be completed.  Of interest to Cornell:

• National Institutes of Health - $30.966 billion in the House vs. $30.8 billion in the Senate.

• Department of Education Student Aid Program:

• Pell Grant (discretionary) - $17.783 billion in the House vs. $17.495 billion in the Senate.

• Supplemental Educational Opportunity Grant - $757 million in both the House and the Senate.

• Work Study - $980 million in both the House and Senate.

• Graduate Assistance in Areas of National Need (GAANN) - $31 million in both the House and Senate.

STUDENT FINANCIAL AID
On Sept. 17 the House of Representatives passed H.R. 3221, The Student Aid and Fiscal Responsibility Act of 2009.  The bill terminates the Federal Family Education Loan (FFEL) program, eliminates student loan subsidies for financial institutions, and converts all new federal student lending to the government's Direct Loan Program.  Direct Loans are low-interest student loans with the U.S. Department of Education as the lender, rather than a bank or other financial institution.  The switch to the Direct Loan Program will not affect Cornell directly, as we have been a Direct Loan school for many years, but the savings will benefit Cornell students.

The Congressional Budget Office has estimated the elimination of FFEL private lender subsidies will save $87 billion from FY2010.  It is with these savings that H.R. 3221 expands funding for several higher education programs, including $40 billion for the Pell Grant Program.  The maximum Pell Grant award would increase to $5,550 in FY10 and would grow annually by the increase in the Consumer Price Index plus 1 percent.  Almost 2,000 Cornell students with family incomes of less than $20,000 a year receive Pell Grants.

Cornell supports these changes, and a reduction in student loan interest rates included in the bill.  However, we are disappointed that the House bill allocates less than half of the 10-year $87 billion in savings to the Pell Program.

We also have serious concerns in the House bill regarding language that includes financial incentives for states to create comprehensive new student tracking systems and to impose new top-down controls on higher education.  We also are concerned that the revamped Perkins Loan Program would cut the federal in-school interest subsidy for students and impose fees on participating institutions.

We are working with our associations and our senators to address these issues as Senate legislation is introduced.  That legislation has been delayed due to uncertainties over health care reform.

STIMULUS FUNDS REPORTING
The $789 billion ARRA provided $17 billion from federal agencies for research, related infrastructure, and education.  To date, Cornell's Ithaca campus researchers have received 120 grants totaling $99 million, from the federal American Recovery and Reinvestment Act (ARRA) signed into law last winter.  Researchers at Weill Medical College have received 25 awards worth $9 million.  That funding has enabled the creation of 14 FTE jobs and the retention of 81.

As part of a higher education community effort to publicize the scientific and economic benefits the funds are creating both nationally and locally — including job retention and creation — Cornell has created an ARRA website that will link to and have a link from a national website still under construction.

Cornell's site, which is updated weekly and includes news stories as well as data, is located at http://www.cornell.edu/recoveryact/.

ARECIBO
Cornell's five year Cooperative Agreement with the National Science Foundation (NSF) for the management of NAIC/Arecibo Observatory ends on March 31, 2010.  The NSF intends to hold a competition for the next Cooperative Agreement and currently expects to issue a Request for Proposals (RFP) before the end of November.  The NSF has stated that proposars will have six months to respond but, given the delays thus far, this may be reduced.  The RFP has been within six weeks of being issued since last January so the actual release date is very uncertain.  It is likely to be issued before the end of 2009.

The NSF will extend the current Cooperative Agreement until September 30, 2010, and there have been preliminary discussions with Cornell on an extension.  Once the RFP is issued the competition schedule will be clearer, and the NSF plans to discuss a further extension at that time.

The budget from the NSF for NAIC for FY10 is expected to be $10.9 million, a reduction of $800,000 from FY09.  NAIC has adequate carry over funds in its operational accounts to cover any shortfall.  In addition, it has been awarded $3.1 million in ARRA (stimulus) funds and will receive $3 million from the Puerto Rican government for infrastructure improvements at the observatory.  Part of the ARRA funds will be used for new initiatives and major equipment purchases.  Part will also be used to upgrade air conditioning systems to reduce energy usage, for improved fire suppression systems, etc.  These projects were planned and the use of ARRA funds will relieve the operations budget.

ERL PROJECT
Cornell is competing for a $500 million National Science Foundation (NSF) project to develop a next generation light source.  Our Energy Recovery Linac (ERL) is a new x-ray source based on accelerator physics and superconducting microwave technology.  The x-ray beams produced by the new source will be about a thousand times better in brightness, coherence and pulse duration than currently possible.

The outlook for the ERL is positive and development continues.  The NSF has recently taken several significant actions.  First, NSF has funded continued development for a total of $26.3 million through March 31, 2010.  An NSF proposal to continue research and development through March 31, 2014 will be recommended for approval to the National Science Board (NSB), probably in December.  It would be extremely unusual for the NSB to decide counter to the staff recommendation.  Thus, we are reasonably confident that we can expect an additional $33.1 million of prototype support through then.

The project is being developed with prototype funding from both NSF and New York State and has major economic development implications for the State.  It is worth $1 billion over the first 10 years of construction and operation — all of which will be financed by the federal government.

In March 2006 the State awarded ERL a $12 million grant that ends in FY10.  This money was essential for Cornell to get to this point, but more State funding is needed to win the project.  We continue to look for opportunities for State funding.  A full-scale facility, based on the prototype fundings, is in the concept design stage now and will be submitted to the NSF in 2010.  The goal is to begin construction within the next five years.

HEALTH CARE REFORM
Health care reform has crowded out almost everything else on Capitol Hill as Senators and Representatives work to reconcile competing proposals against a backdrop of vested interests, non-stop politics, and a ticking clock.  President Obama has made it clear that he wants to sign a bill by year's end.

On Oct. 13, the Senate Finance Committee was the final committee to approve a health care reform proposal.  The Committee's 14-9 vote is notable in that Sen. Olympia Snow (R-ME) became the first Republican to support any of the proposals this year.  Senate leaders are working to combine the Finance Committee's bill with one that was passed in July by the Senate Health, Education, Labor & Pensions (HELP) Committee.  This process could take a couple weeks, as negotiators — Majority Leader Harry Reid (D-NV), Finance Committee Chairman Max Baucus (D-MT), and HELP Committee member Chris Dodd (D-CT) — try to strike the right balance with Democrats while perhaps gaining a few more Republican votes.

While only 50 votes are necessary to pass a bill, Senate rules require 60 votes to cut off a filibuster and limit debate on a measure.  After Senate Minority Leader Mitch McConnell (R-KY) told the press that he wants at least two month to debate the health care bill, it became clear that all 60 members of the Democratic caucus will have to vote to invoke cloture for the bill to proceed.  A "yes" vote on cloture, however, does not guarantee that any individual Democratic senator will vote for the underlying bill.

On the House side, three committees — Ways and Means, Energy & Commerce, and Education & Labor — finished work on a "tri-committee" bill in July.  The House, however, will not vote on health care until members get a clearer picture of what the Senate is going to do.  Because of deep divisions in the Democratic caucus — the Progressive Caucus is insisting on a public plan while "Blue Dogs" want to hold costs down — and a total lack of support from Republicans, House leaders will not force their members to take a potentially unpopular vote without some assurance that the Senate will follow through.  Like her Senate counterpart, Speaker Nancy Pelosi (D-CA) is working to round up votes for a bill.  Unlike Senator Reid, however, she is not constrained by rules that require a super-majority — which is why she told reporters that the House bill will contain some form of public option.

President Obama has stayed largely on the sidelines of the Congressional debate.  He has used the White House as a bully pulpit to stage events — like a prime time address to Congress, a series of town hall meetings, events in the Rose Garden — to keep momentum from flagging.  Other than reiterating his basic principles, however, he has not weighed in on the substance of any of the bills.  When the House and Senate pass their bills, the President and his staff will most likely have a very heavy hand in the conference and will broker the compromises that make up the final bill.  With so many moving pieces still in play, however, it's not certain whether everything will be wrapped up by the end of the year.

A few items of interest to Cornell:

• The House bill repeals the "Sustainable Growth Rate" (SRG) formula for payment to physicians under Medicare and replaces it with an annual update with payment incentives for certain outcomes, and pays for it by reducing payments to Medicare Advantage Plans.  The Senate bill, however, only fixes the SGR for a single year, replacing the scheduled cut with a 0.5 percent increase.   The Finance Committee defeated an amendment to extend the increase for an additional two years, through 2012.  Chairman Baucus voted against the two-year extension, but then told reporters he was working to find a way to fix it permanently, as the bill moves forward.  CBO cost estimates for repealing SGR range from $184 billion to $253 billion over 10 years.

• Keeping Baucus's promise, the Senate will vote on S. 1776, a bill to repeal the SGR and reset the baseline for physician payments, during the week of Oct. 19.  This will allow Congress to make comprehensive payment reform in the context of the health care bill without incurring the cost of repealing the SGR.  President Obama assumed that the SGR would be repealed and accounted for these costs in his budget; Congress, however, did not make the same assumptions, meaning that the Senate will need 60 votes to waive the budget rules to pass S. 1776.

• Both the House and Senate bills contain provisions to reduce Disproportionate Share payments to safety net hospitals (many of which are teaching hospitals, including the hospitals affiliated with Weill Cornell Medical College) as certain insurance enrollment targets — and a corresponding drop in uncompensated care — are met.  The phase-in period is longer in the House bill and the mechanism by which DSH payment are calculated are different in each bill.

• Neither the House nor the Senate significantly addresses workforce issues by raising the cap on residency slots for which Graduate Medical Education and Indirect Medical Education payments are made.  The Senate bills, however, would allow 80 percent of unused slots to be redistributed for primary care and general surgery residencies.

• Despite pressure to reconcile geographic disparities in Medicare payments, neither bill attacks that issue head on.  Rather, the House bill directs the Institute of Medicine to study the issue and report to Congress — including recommendations for addressing payment disparities — within three years.

• The House bill and the Senate bill raise revenue to pay for the bill in different ways.  The House bill imposes a "millionaire's surtax," while the Senate bill taxes "Cadillac health plans."  Under the Senate bill, beginning in 2013, employer-sponsored health plans with premiums greater than $8,000 per individual or $21,000 per family would be taxed.  The insurance company would pay the tax, and (presumably) pass the costs on to customers.  According to the Joint Committee on Taxation, 14 percent of family plans and 19 percent of individual plans would pay this tax in 2013.  Those numbers rise to 37 and 41 percent, respectively, by 2019.  According to Chairman Baucus, the "Cadillac" tax is designed to control costs as employers shop around for more affordable coverage and insurers put pressure on providers to keep costs down.  More than two-thirds of House Democrats — including Speaker Pelosi and Ways & Means Committee Chairman Charlie Rangel (D-NY) — have come out against the "Cadillac" tax.  The House bill raises revenue by imposing a 5.4 percent surtax on individual income over $500,000 or $1 million for couples.  There is also a growing faction of House Democrats, led by freshman Rep. Jared Polis (D-CO), who do not want to pay for health care by imposing taxes on the affluent.

• The Senate Finance Committee's bill calls into question whether insurance companies would still be allowed to offer college health insurance plans like the Student Health Insurance Plan (SHIP) offered to Cornell students.  The language creating "Young Invincible" plans — essentially catastrophic coverage for people under 30 — is ambiguous as to whether limited duration plans would qualify in this category.  Because Cornell requires all students to have health insurance, SHIP was created to provide primary or supplemental coverage to uninsured and underinsured students while they are enrolled.  SHIP is much more comprehensive than the "Young Invincible" plan, covering services that are in high demand by college students, such as mental health and prescription drugs.  Cornell has been working with the American College Health Association and other higher education associations to clarify the language before the bill hits the Senate floor.

For more information contact:
Jacquie Powers, Director of Federal Relations
Government Relations, (Ithaca, NY)
607.255.5678; jkp3@cornell.edu

Dianne Miller, Director of Federal Relations
Government Relations, (Washington, DC)
202.434.8035; dlm72@cornell.edu