All Vice President for Research Tim Mulcahy can do is watch, wait and hope for good news.

With time running out for Congress and President Barack Obama to reach a compromise before looming automatic tax increases and spending cuts send the federal budget over a fiscal cliff, Mulcahy says the University of Minnesota’s research budget is in jeopardy.

More than half of the University’s $1 billion in research funding comes from federal sources. If the government doesn’t amend the 2011 Budget Control Act, it will reduce federal spending by $1.2 trillion Jan. 1.

In a September presentation to the Board of Regents, chief financial officer Richard Pfutzenreuter said the University would receive $50.8 million less in federal funding. But Mulcahy said the worst effect can’t be measured in dollars.

“This big of a cut extended over a long period of time, I think, is going to have a very chilling effect on the next generation of young scientists,” he said.

The American Association for the Advancement of Science predicts that in the worst case scenario, $57.5 billion will be cut from federal research and development agencies within the next five years. This would only occur if the government doesn’t act on the fiscal cliff at all.

University officials argue that the fiscal cliff would make federal funding even more competitive than it already is. The possibility is coming at a time of low state funding support and historically high research costs.

These factors combined, Mulcahy said, could result in a “lost
generation” of scientists.

Pharmacy associate professor Jayanth Panyam said the effects of the fiscal cliff will reverberate for years.

“That, in the long run,” he said, “is going to affect our stature as a premier research institution and as a premier research country.”

What could happen

Federal funding agencies have been “eerily quiet” about how they will react to the fiscal cliff, Mulcahy said.

Some possible scenarios include offering fewer grants, cutting funding from existing grants or — most likely — a combination of the two.

The National Institutes of Health funds more University research than any other federal agency.

Last year, the success rate of receiving a grant from the NIH was 20 percent. If federal agencies have to give out fewer grants, Mulcahy said the success rate could drop to historic lows of 10 or 12 percent.

Grants often span multiple years. But many researchers spend the bulk of the grant during the first year to pay for up-front costs like new equipment or materials.

If federal agencies have to cut funding from multi-year grants they have already given out, Mulcahy said they could withhold the amount that has yet to be dispersed. This could result in the agency only funding 90 percent of what it originally promised.

But many grants pay the salaries of researchers, including students. Panyam said the cuts would mean the University couldn’t employ as many student researchers.

“You are not only impacting current research,” he said, “but the availability to produce the leaders of tomorrow.”

What’s already happening

Physics professor Roger Rusack leads the University group that played a part this summer in the groundbreaking discovery of the Higgs boson, which could unlock the origin of every particle’s mass.

But the U.S. Department of Energy notified him that the group will receive a 2 percent reduction in funding next year.

This reduction isn’t part of the fiscal cliff. It’s part of a larger trend where the demand for research funding is increasing and the funding itself is decreasing.

To combat this, Mulcahy said the University is trying to get more funding from companies through direct investments and invention licensing.

Nearly 5 percent of the University’s research funding comes from business and industry. While it can help, business and industry funding could never replace what the federal government funds, Mulcahy said.

Since researchers are now having to write grants more often for the same level of support. Mulcahy said his office is trying to make the grant-writing process easier so it’s “as painless as possible.”

He said his office is also encouraging researchers to collaborate with other institutions to increase funding success rates.

Rusack said the best way to overcome budget cuts is to come up with the best ideas.

“We can’t do anything about this,” he said. “All we can do is continue to do the research the best we can.”

Mulcahy said he thinks the government will reach a compromise but that he can’t be sure.

“There are some who I think are probably willing to stick to their ideological positions to the detriment of the country,” he said. “It’s a possibility that some will say, ‘Hell, let them go over the cliff.’”