Federal budget agreement for 2011 nearly settled

The last-minute agreement between leaders in Congress and President Obama last Friday night avoided a government shutdown and finally settled negotiations on the budget for fiscal year 2011.  Yep, that’s the fiscal year that began Oct. 1.  Although it was good to know they reached an agreement, we didn’t really know the details and how they would affect our budgets until Tuesday this week. And the news was even better on Tuesday.  The core funding for Cooperative Extension that comes from the U.S. Department of Agriculture Budget is authorized under the Smith-Lever Act of 1914, which established the national Cooperative Extension System.

In the budget settlement, Smith-Lever funding for this year is reduced by 1.2%.  That was great news in light of the version that had passed the House of Representatives in late February. In that version, our funding would have been reduced by 10%, which would have forced us to figure out how to reduce our budget by $900,000 with a handful of months left in the fiscal year. Instead, we have a much more manageable reduction to absorb, and we can accomplish that with the changes we’ve been implementing anyway.  Congress still needs to approve the deal, and that is expected to happen today or tomorrow.

Now our attention turns to the budget for FY 2012, and Congress is just getting started on that process. It will likely be as contentious as the FY 2011 budget process.  President Obama released his proposed budget back in February, and in that, the funding for Extension was targeted for a 5% reduction.  Given the politics of the budget, it’s likely the House will begin at 5% or an even larger cut in their proposed budget for FY 2012.  It’s doubtful that Congress and the President will come to agreement soon, and there’s a good chance we may end up in a similar circumstance to this year, with the budget decision put off until after the start of the fiscal year.  We’ll plan conservatively in that case so we aren’t caught with needing to make a significant budget cut well into the new year.

On the state front, the House Higher Education Appropriations Subcommittee passed out their funding bill for 2012 yesterday, and accepted the 15% reduction Gov. Snyder had proposed for MSUE and AgBioResearch funding. They also accepted the combination of MSUE and Michigan AgBioResearch funding into one line. They tweaked the funding for MSU and the other universities, cutting them all by 14% and then distributing the other 1% reduction unevenly among the universities, with universities that have a higher per student appropriation (like MSU, University of Michigan, Wayne State) taking a larger share of the remaining 1% and other universities taking a lower share.  The Senate has not passed out their bill for higher education, but their subcommittee held a hearing yesterday at which MSU President Lou Anna Simon and Farm Bureau President Wayne Wood spoke in support of the combination of the two funding lines into one and announced a summit that will be held this summer to bring representatives of state government, agriculture industries and MSU together to identify key strategic priorities for research, extension and education for production agriculture in the years ahead.  With this in the plans, both presidents encouraged the Senators on the subcommittee to avoid being very specific in their prescription of how the funding should be allocated among the various programs for research and Extension.

There is still a series of votes that will be required before our state appropriation is settled for the next fiscal year, but the early movement of bills like the one from the House subcommittee yesterday is encouraging. Gov. Snyder continues to say he wants the budget settled by June 1, and legislative leaders continue to say they would like that but are more optimistic about getting it done by the end of June. Either circumstance would be a welcome change from the years in which we didn’t know our budgets until after Oct. 1.

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