Clinton budget has good and bad news for universities

After declaring education to be his number one priority in his State of the Union address, President Clinton unveiled a budget proposal Feb. 6 that called for a substantial increase in federal aid to college students, small increases in budgets for scientific research funding agencies, large increases in funding for the arts and humanities and national service and a decrease in funding to cooperative extension.

The president also proposed to expand his federal direct loan program and to overhaul the guaranteed student loan program.

Vice President for Research and Advanced Studies Norman R. Scott called the president's budget proposal a "good news, bad news" deal for university research and outreach.

"While we're pleased with increased appreciation shown toward basic, competitive research, many spending increases barely out-distance inflation, and the cuts to key outreach efforts really don't square with the emphasis the administration has placed on an informed society, technology transfer and a highly educated workforce," he said.

"We see a major step forward for college and university students in the president's agenda," said Henrik N. Dullea, Cornell vice president for university relations. "We're encouraged by the administration's focus on making the cost of higher education more affordable through both the tax system and student financial aid programs. We will be actively participating in the development of these proposals as they move through the Congress."

Some in Congress have already questioned Clinton's proposed increases for student aid, for the arts and humanities and for the direct loan program, though their criticism was less strident than it has been in previous budget debates. More support is expected for the president's slight increases in scientific research funding, Dullea said.

Clinton's 1998 budget proposal includes a five-year balanced budget plan that he says will result in a $17-billion surplus by 2002.

Clinton proposes a two percent increase for university-based research in his 1998 budget, adding $289 million to the 1997 allocation for a total of $13.3 billion. R&D spending would increase by 2 percent, as well, to $1.6 billion in 1998; basic research spending would go up by three percent to $15.3 billion and applied research funding would go up by six percent to $15.2 billion.

Clinton's proposed 1998 budget allocations for federal agencies are:

• National Institutes of Health, Cornell's largest funding source, up 3 percent, to $13 billion;

• National Science Foundation, Cornell's second-highest source of funding, up 3 percent, to $2.5 billion;

• National Science Foundation, education, up 1 percent, to $625.5 million;

• Cooperative Extension, down 1 percent, to $418 million;

• Energy Department, high energy and nuclear physics, up 5 percent, to $865.7 million;

• Defense Department, basic research, up 8 percent, to $1.2 billion;

• Defense Department, applied research, down 2 percent, to $2.8 billion;

• National Endowment for the Humanities, up 24 percent, to $136 million;

• National Endowment for the Arts, up 37 percent, to $136 million;

• National Service, up 31 percent, to $809 million;

• National Oceanic and Atmospheric Administration, up 4.1 percent, to $1.989 billion. The Sea Grant program would receive $50.18 million, a 7.6 percent decrease.

Other proposed increases in R&D programs include 18 percent for the departments of Energy and Transportation and 10 percent for the Environmental Protection Agency.

In the bad news category, the R&D budget for the Department of Agriculture would decrease by 4 percent. Funding for the Cooperative State Research, Education and Extension Service (CSREES) program, which administers funds going principally to the nation's land-grant college system, is slated for a sobering 8 percent cut. Most higher-education programs are either level-funded or increased slightly, but extension efforts relating to renewable resources, rural health and safety, farm safety and agricultural telecommunications are slated for termination.

Also, funding for the Regional Climate Centers program, which includes Cornell's Northeast Regional Climate Center, is not included in the president's budget proposal.

In student aid, the proposal calls for:

• Increasing the Pell Grant maximum by $300, to $3,000. In addition, funding would be provided to enhance the eligibility of single, independent students to receive Pell Grants, at a cost of $725 million. Some $1.7 billion in additional funding is proposed for the Pell Grant program, for a total budget request of $7.6 billion. An additional 348,000 students would qualify for Pell Grants under the president's plan.

• Increasing Work-Study funding by 3.3 percent to $857 million; Supplemental Educational Opportunity Grant (SEOG) funding would remain at $583 million. Perkins Loan contributions would be level-funded at $158 million.

• Funding the Graduate Assistance in Areas of National Need (GAANN) account at $30 million, with $26.8 million being allocated for new and continuing GAANN traineeships and $3.2 million allocated for continuing Javits fellowships.

Clinton also proposed several tax cut initiatives related to higher education:

• The Hope higher education scholarship program, with a projected cost of $1.6 billion, includes a two-year $1,500 nonrefundable tax credit for families that have some tax burden. Students must maintain a "B" average to qualify for the program and would be limited to receipt of a Pell grant of $1,500. The Hope tax credit would begin phasing out for individuals with incomes of $50,000 and families with incomes of $80,000.

• A $10,000 tax deduction for tuition costs, available for undergraduate and graduate tuition and fees. Families could choose to take advantage of either the Hope tax credit or the tuition tax deduction, but not both. The tuition tax deduction would also begin phasing out for individuals with incomes of $50,000 and families with incomes of $80,000.

• Special IRAs whose funds could be withdrawn without penalty at any time to pay for several things, including higher education.

The full text of the president's budget and supplemental documents is available on the World Wide Web at http://www.access.gpo.gov/omb/omb003.html .