February 4, 2002

Budgetary Shortfalls Have Varied Impact

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The fiscal impact of the Sept. 11 attacks and the accompanying economic slowdown is reverberating throughout the Cornell community with varied and far-reaching effects.

In response to the events of Sept. 11, funds on the state and federal levels were allocated to aid the recovery effort. In New York City, the estimated cost of this undertaking has been as high as $100 billion, before compensation by insurance.


Coupled with a slowdown in the economy, an effect on New York and most other states across the nation has been shortfalls in state budgets.

Consequently, Cornell, like other statutory colleges and universities, will feel and has already felt the impact.

“The major impact on Cornell thus far has been at the state level — Albany didn’t do the state budget funding that Cornell had been expecting before Sept. 11,” said Stephen Johnson, assistant vice president for government affairs.

State Funds

The supplemental budget would have included increased money for statutory colleges. The situation is also complicated by snags in the government’s dispersal of recovery funds. For instance, New York will be receiving fewer federal dollars than previously expected.

“The way this could affect Cornell would be if it causes a budget shortfall for the state,” said Kevin O’Connell, communications director for local Rep. Maurice Hinchey (D-NY). “The state would then have to cut in other areas.”

Hinchey fought to secure the $20 billion in New York recovery funds that President George W. Bush pledged to the state in the hours following the September 11 attacks. The supplemental package supported by Hinchey would have kept all of the slated funds going to New York through the extension of healthcare benefits to those directly affected by the attacks.

However, this amendment was overturned, and the final amount approved for dispersal was $10.7 billion–just over half of the anticipated funds. This generates another fiscal stress on the New York State government.

“The funds that we wanted to go toward New York, instead were spent on defense,” O’Connell said.

The White House Budget Office publicly maintains that New York will eventually receive at least the remaining $9.3 billion for recovery. However, prospects for some research funds may actually be improving.

“The federal appropriations processes for most of the committees that consider issues important to Cornell have increases and several of the research related accounts have significant increases also,” Johnson said.

Among the committees with increases are the Department of Energy, National Aeronautics and Space Administration, and the National Science Foundation. The Department of Defense has a increase of 10.9 percent.

The National Institutes of Health reported the most substantial increase of 15.5 percent. By way of contrast, budget increases for the United States Department of Agriculture were a meager 0.3 percent — not large enough to offset an inflation rate of 1.7 percent.

“We have long been concerned about the lack of significant growth in USDA research budgets to address significant problems confronting agriculture and rural communities of New York and the region,” said Daniel Decker, associate dean of the College of Agriculture and Life Sciences and director of the Cornell University Agricultural Experiment Station.

Decker also indicated that this problem is not peculiar to this year, as funding for agricultural research “has, in effect, been losing ground in real buying power by nearly 20 percent during the last decade.”

Decker said he found this especially alarming since the decline comes at a time when scientific discovery and understanding could allow for great advances. He also commented on Cornell’s access to selective funding.

“Fortunately, our scientists are very competitive, so Cornell tends to do well in competitive grants programs,” Decker said.

“However, if Cornell, as New York State’s land grant university, is to continue to do public research on agricultural issues of broad public concern, and not be limited to issues determined by external and sometimes private interests, USDA support of such research needs to be expanded markedly,” he added.

Additionally, financial aid for students is also being affected. “Several federal student aid programs have slight increases,” Johnson said.

However, he added that this increase will not be noticeable to any one student because the greater funding is being distributed to an increased volume of students who will need it — a product of recession.

What has increased is the maximum the Federal Pell Grant will pay. Its new $4,000 maximum is about 18 percent higher than the previous amount.

All in all, the question is not how economic fallout from recession and terrorism will affect the Cornell community. Indeed, it already has. Last year brought the largest decline seen in the University’s endowment in 20 years, and students are already seeing the effects.

The University has stated that fiscal pressures spurred the recent hiring freeze, the tuition increase for the endowed colleges and the rise in Resnet fee.

Archived article by Philip Lane