President Trump's FY18 Budget Focuses on Defense and Security Spending

With details still forthcoming, President Donald Trump yesterday released a budget plan for federal FY18, outlining his priority spending objectives and targeting a number of programs for reductions or elimination. The 62-page plan, titled, America First: A Budget Blueprint to Make America Great Again, calls for a $54 billion increase in defense spending, offset by $54 billion in reductions to non-defense discretionary programs.

Notably, the Trump document does not provide any discussion of entitlements or mandatory spending—Social Security, Medicare, Medicaid, or interest payments on the federal debt. Nor does the budget include any discussion of revenues and taxes, total government spending, and resulting deficits or surpluses.

Below, NACUBO reviews what the budget plan specifies for student aid, historically black colleges and universities, the Department of the Treasury and the Internal Revenue Service, research programs, and the Department of Labor. NACUBO also recommends steps for advocacy efforts.

The president's budget request is often viewed less as policy than as politics, since the next moves are in the hands of Congress. First, lawmakers must decide how to fund the federal government for the remainder of FY17; a temporary spending measure is keeping the federal government funded only until April 28. They will then turn to Trump's blueprint with the objective of having a spending agreement in place by October 1, when FY18 begins. The president's plan is just that—a plan or suggestion that does not have the force of law. Congress ultimately has the power of the purse as the Constitution gives the House and Senate authority to develop and adopt the final budget.

Trump's Priorities

The administration, as others before, uses the budget process to outline objectives and priorities. Trump clearly underscores a commitment to the Department of Defense, immigration enforcement and fighting crime, calling for budget increases not only for DOD but also for the Department of Justice, Department of Homeland Security, and Immigration and Customs Enforcement, and the Border Patrol. The proposal calls for investing $2.6 billion in "high-priority tactical infrastructure and border security technology, including funding to plan, design, and construct a physical wall along the southern border." The Department of Homeland Security would receive an additional $1.5 billion for detention and removal of illegal immigrants and $15 million to begin implementing nationwide E-Verify programs.

While a number of important programs are preserved, there is little good news for colleges and universities. The federal budget is already constrained by discretionary spending caps for defense and nondefense accounts established in 2011. Some favored programs are preserved by Trump, but others are slated for deep cuts or elimination. Unfortunately the blueprint released yesterday is silent on a number of important student aid and research programs. Notably, Trump slates for elimination the Institute of Museum and Library Services (IMLS), the National Endowment for the Arts (NEA), and the National Endowment for the Humanities (NEH).

Student Aid

President Trump calls for the Department of Education to focus on streamlining and simplifying funding for higher education, while continuing to help make postsecondary education more affordable. The president proposes level funding for the Pell Grant program but is silent on proposals to reinstate year-round availability.

The budget outline eliminates the Federal Supplemental Educational Opportunity Grant (SEOG)—a program for students with exceptional financial need. The president calls for reductions to the Federal Work-Study (FWS) program, though no specific figures were provided. The budget request made no mention of the Perkins Loan program, which is set to expire on September 30 unless Congress intervenes. Together, SEOG, FWS, and Perkins Loans comprise the federal campus-based aid programs; extensive loss of funding and availability for these programs would have a serious impact on the ability of colleges and universities to meet the financial needs of low-income students.

Federal TRIO Programs would be reduced to $808 million and GEAR UP would be cut to $219 million. TRIO includes eight programs targeted to serve and assist low-income individuals, first-generation college students, and individuals with disabilities to progress from middle school to post-baccalaureate programs. Similarly, GEAR UP is designed to increase the number of low-income students who are prepared to enter and succeed in higher education. Cuts to TRIO and GEAR UP would save $193 million.

The president's budget request calls for a 6 percent increase in funding for the Department of Veterans Affairs. The blueprint simply states that the administration "would provide access to education benefits" and calls for investments in technology to increase productivity and efficiencies while transforming VA's claims processes.

Historically Black Colleges and Universities

Funding for historically black colleges and universities and minority-serving institutions would remain steady, reflecting part of the commitment the administration recently made to HBCUs. Earlier this month, Trump signed an executive order re-establishing the White House Initiative on Historically Black Colleges and Universities, moving initiatives focused on HBCUs under the White House, rather than the Department of Education.

Treasury and IRS

In the blueprint, the Department of the Treasury would see a 4.1 percent decrease in funding from FY17 as a result of a goal of "redirecting resources away from duplicative policy offices to staff that manage the Nation's finances." The outline also emphasizes strengthening cybersecurity by investing in a Treasury department-wide plan to "strategically enhance security systems and preempt fragmentation of information technology management across the bureaus." 

Internal Revenue Service funding would be reduced by $239 million from FY17. The outline notes that key operations of the IRS are preserved, with a focus on prevention of fraud and identify theft and moving away from "antiquated operations that are still reliant on paper-based review" toward additional electronic filing to achieve savings. 

Research

It is difficult to discern the overall intent of the Trump administration for a number of research agencies and programs. With such a "skinny" budget, it is hard to determine if the lack of mention should be taken as a signal for elimination or if the budget detail simply did not go that deep. 

DOD: The Department of Defense budget focuses on fighting ISIS, readiness measures, and military-wide infrastructure and capital improvements. While the president's budget fails to mention defense research programs specifically, calls to invest in DOD modernization, to address "cyber vulnerabilities," and combat "the spread of destructive technology" could result in new research investments in these areas.

Energy: The Department of Energy would face an overall funding cut of 5.6 percent, or $1.7 billion, to $28 billion, but notably, the Advanced Research Program Agency-Energy (ARPA-E) is slashed entirely; the Office of Science would be cut by $900 million or 17 percent.

EPA: The blueprint decreases funding for the Environmental Protection Agency by $2.6 billion, or 31 percent, to $5.7 billion. The EPA's Office of Research and Development would be cut by $233 million, or almost 40 percent, to $250 million.

NASA: NASA would not see a steep overall cut, with a call for $19.1 billion in funding—a decrease of 0.8 percent. The budget blueprint calls for:

• $624 million designated for research and development
• $1.9 billion for missions to Europa (fly-by only) and Mars
• $3.7 billion for further space exploration 

However, it eliminates NASA's Office of Education and cancels a number of missions including four earth science missions.

NIH: The National Institutes of Health would be funded at $25.9 billion—a $5.8 billion, or 18 percent, cut from FY17. Trump calls for a major NIH reorganization to focus on "highest priority research" and eliminates the NIH arm focused on global health.

NSF: Notably, the National Science Foundation is not mentioned in the president's budget request. While not included in the list of programs targeted for elimination, the blueprint indicates that it is a part of a group of agencies slated for a 9.8 percent cut. How that cut would be applied by the Trump administration is unclear.

USDA: The Department of Agriculture would see a dramatic 21 percent cut. The good news is that the plan expresses support for what NACUBO presumes to mean the Agriculture and Food Research Initiative (AFRI); however, details are sparse on what Trump has in store for other USDA funding lines important to land-grant programs. The plan simply states, with no additional detail, that it:

"Continues to support farmer-focused research and extension partnerships at land-grant universities and provides about $350 million for USDA's flagship competitive research program. In addition, the Budget focuses in-house research funding within the Agricultural Research Service to the highest priority agriculture and food issues such as increasing farming productivity, sustaining natural resources, including those within rural communities, and addressing food safety and nutrition priorities."

Other USDA Cooperative State Research, Education, and Extension Service programs may face dramatic cuts and sweeping changes.

Labor

The blueprint includes a $2.5 billion (a 21 percent decrease from FY17) cut to the Department of Labor, including elimination of and reductions to several federal job training grants and programs, shifting responsibility for funding to state and local governments and employers, likely including those programs authorized by the Workforce Innovation and Opportunity Act.

Outlook and Advocacy

It is possible, if not likely, that Congress will continue to fund the federal government at current levels for the remainder of FY17. Similarly, gridlock in Washington—debates over efforts to repeal and replace the Affordable Care Act and on tax cuts—could keep Trump's budget plan for FY18 from gaining traction. One possibility is that government programs in FY18 will be level-funded with a small across-the-board cut.

Concerned business officers should coordinate with their campus government relations staff and other administrators to determine how their institutions should respond to the budget proposals. Consider how your institution's research activities might be impacted by deep cuts to science programs. Inquire if your libraries will have fewer resources as a result of the elimination of IMLS, NEH, and NEA. How would a dramatic reduction in campus-based aid affect your student body?

These budget proposals and other federal actions could change the way colleges and universities deliver services and meet their educational missions. NACUBO urges business officers to actively engage to help illustrate how these budget changes can affect the institution's ability to carry forward its educational mission.