Budgetary Uncertainties Abound at Science Agencies as Fiscal Year 2018 Begins

Oct. 1 marked the beginning of fiscal year 2018 for the federal government, and agencies are now operating under the terms of a continuing resolution (CR) enacted on Sept. 8. The interim measure extends spending for all the science agencies at levels close to those enacted for fiscal year 2017 until Dec. 8.

While the CR is keeping the lights on for now, agency officials are grappling with multiple sources of significant budgetary uncertainty that are making it difficult for them to plan for the months ahead. Questions over the ultimate duration of CR funding, final budget outcomes for fiscal year 2018, the future of statutory budget caps, and whether Congress and the White House can avoid a government shutdown confrontation are all shaping the rate at which agencies spend funds and make other important decisions.

At the same time, the president’s budget request for fiscal year 2019 is due in February, and agencies began working over the summer with the White House Office of Management and Budget on their submissions for it. OMB has instructed each agency to keep their topline budgets at the levels indicated in the fiscal year 2018 budget request, and to develop plans to reduce and eliminate programs and slim down their workforces. The administration intends to begin implementing these plans next year and has the authority to do so regardless of the budget Congress ultimately provides.

Agency budgets stable for now, long term uncertain

It has become a virtual certainty in recent history that the new fiscal year will begin on a CR, and agencies now plan for them. However, agencies for the most part cannot start new projects under a CR and often pare back spending to hedge against uncertainties in their future budget. They must also contend with the possibility that the CR period could be extended, potentially up to the entire fiscal year.

This year, these difficulties are compounded by further considerations. Since March, the Trump administration has been firm in its commitment to imposing widespread cuts and program eliminations on nondefense agencies, including those that fund science. This summer, that initial uncertainty receded for some agencies as Congress pushed back with its own spending proposals . Both chambers have, for instance, shown strong support for the National Institutes of Health, the Department of Energy Office of Science, and the National Science Foundation in the face of the administration’s proposed cuts.

On the other hand, the House and Senate proposals for some agencies differ significantly, leaving a number of science agencies and programs in limbo probably through December, possibly longer. The House, for instance, would slash over $1 billion from the budget of the Department of Energy’s Office of Energy Efficiency and Renewable Energy and impose steep cuts on the National Oceanic and Atmospheric Administration. The Senate would significantly scale back DOE’s Fusion Energy Sciences program.

Another important question is how Congress will deal with the spending caps set by the 2011 Budget Control Act and enforced through budget sequestration. The House has already passed spending measures that would violate the caps, and Sen. Tom Cotton (R-AR) unsuccessfully tried to attach a measure to a must-pass defense policy bill that would have eliminated sequestration. Democrats oppose the spending caps, but also insist that any repeal benefit nondefense spending to the same extent as defense spending.

Bipartisan momentum does appear to be growing for an agreement to raise both defense and nondefense spending caps. Depending on how the budget cap debate plays out, spending on science programs could end up either lower or higher than current congressional proposals. Yet, negotiations over the caps could introduce further complications to the process of reaching a final spending agreement, which is already behind schedule. The Senate, notably, has still not released some of its appropriations bills, including the sprawling one covering the Defense Department, and any final package will need to find Democratic support to evade a filibuster. Another CR is a possibility if the task cannot be completed over the next two months.

Another question mark is the intentions of President Trump, whose support could be necessary to secure a final deal. After signing the final appropriations legislation for fiscal year 2017 in May, Trump warned that he would press harder in the fall for priorities such as his proposed border wall, saying the country “needs a good ‘shutdown.’” So far, he has not chosen to take up the fight, and instead cut a deal over Labor Day weekend with congressional Democratic leaders to put off any conflict over the budget and the federal debt limit. It is impossible to say if there will be a stronger appetite for brinksmanship when the deal expires in December, but should a final deal prove elusive, the government could still see a shutdown.

Agencies preparing FY 2019 budgets, anticipating workforce cuts

Even as agencies await the final outcome to the fiscal year 2018 appropriations process, they have already begun working on the president’s next budget request, which is due in February. This year, the White House has taken a stronger hand in shaping their submissions than in the past.

In a memorandum dated July 7, OMB directed that agency proposals should total no more than what is called for “in the FY 2019 column of the FY 2018 Budget.” This means that the topline proposal for most agencies would be roughly in line with this year’s request. That could result in a repeat of this year’s confrontation, meaning agencies will have to navigate many of the same budgetary uncertainties next year.

In addition, at the end of September, the deadline passed for agencies to submit “agency reform plans” that align with their fiscal year 2019 budget submissions. In an April 12 memorandum , OMB stipulated that the plans should contain an “analytical framework” that would produce “appropriate proposals in four categories: eliminate activities, restructure or merge, improve organizational efficiency and effectiveness, and workforce management.” The memo said agencies should work to shed activities that are “not core to the agency’s primary mission,” adding,

A final “Government-wide Reform Plan” will be released alongside the president’s fiscal year 2019 budget request that will “encompass agency-specific reforms, the President’s Management Agenda and Cross-Agency Priority Goals, and other crosscutting reforms.” Agencies will be expected to begin implementing reforms immediately under their own authority, even as Congress recommences the months-long process of deciding how much funding federal agencies should receive. OMB plans to track progress on the plan through the Federal Performance Framework and Performance.gov.