State, UC may face budget cuts from $85 bil budget sequester

The state of Calif. and the University of California system both face across-the-board cuts in federal spending that are scheduled to take effect this week.

The budget sequester, which automatically cuts $85 billion from federal spending, will take effect this Friday if Congress and the White House do not reach a solution by then, said Jason Furman, the principal deputy director of the National Economic Council, in a conference call with members of the press. The cuts can be avoided through legislation.

To avert the fiscal cliff two months ago, Congress passed a last-minute deal, which prevented major tax increases.

“The sequester was never meant to be enacted policy,” Furman said. “It is supposed to be a mechanism to make both sides in Congress to reach a balanced budget.”

The January deal only delayed the spending cuts for two months.

The sequester, to be implemented over seven months, will amount to a total of 7.9 percent cut from defense spending and 5.3 percent from domestic discretionary spending, according to a report by the Congressional Budget Office, a nonpartisan organization that conducts budgetary analysis. Most domestic discretionary programs would be cut, including the U.S. Food and Drug Administration and the Transportation Security Administration, according to a White House report.

The potential cuts will have a direct impact on federally-funded research programs at the UC, and could reduce the federal aid students can receive, said Gary Falle, UC’s associate vice president for Federal Governmental Relations.

Falle said the spending cuts will damage UC research programs from contributing to science and the economy. The sequester will cause a reduction of research awards given to the UC, unemployment of research staff and less opportunities for graduate science students to gain experience in science, Falle added.

“On the research front, we expect less funds from organizations such as the National Science Foundation and National Institutes of Health, resulting in fewer awards,” Falle said. “A professor may suddenly have to cut a few of his graduate students because of missing funds.”

Sequestration will also jeopardize more than 14,500 full-time research-dependent jobs for UC staff and students, according to a letter from UC President Mark Yudof sent to Calif. delegates in Congress. A maximum of 80,000 UC students who receive Pell Grants could experience “devastating” effects, according to a report by the UC Federal Governmental relations.

The automatic spending cuts will also harm federal work study jobs, according to the White House report. The report approximates the sequester would eliminate work study jobs for about 3,690 Calif. college students, including UCLA students.

Some students at UCLA said they are worried about the impact of sequestration on their ability to stay enrolled at UCLA.

“I want something to be done … for me and (for) other students,” said Vicente Carrillo, a second-year English student who currently has a work study job. “(Financial aid and work study jobs) both allow me to attend (UCLA) and get work experience in a professional field.”

The nation is projected to experience a slowdown in its economic recovery if the spending cuts go in effect, thereby dampening the recovery in Calif., said Jerry Nickelsburg, a UCLA professor and senior economist at the UCLA Anderson Forecast, which provides economic forecasts for Calif. and the U.S.

While the state will experience negative effects from the cuts, Nickelsburg said he doesn’t expect the state to plunge back into a recession, he added.

H.D. Palmer, deputy director for external affairs at the Calif. State Department of Finance, said the Department of Finance does not have an estimate for job loss numbers. But Californians with public jobs – especially for civilian Department of Defense jobs – may need to go on temporary leave without pay. The White House estimates 64,000 of these defense jobs to be on temporary leave without pay, reducing salaries of about $399 million, according to the White House report.

Gov. Jerry Brown will also have to account for the lost federal money in a revision of his proposed 2013-2014 budget plan, Palmer said.

While most programs will suffer from reduced funds, a few will be exempt.

Most mandatory domestic spending, including Social Security and Medicaid, are exempt from the cut, according to the Washington Post. Furman said the White House expects the U.S. to lose more than 100,000 private sector jobs as a result from the sequester.

The Senate is scheduled to vote on two bills to address the issue. One of the bills would let the sequester cuts go in effect and give President Obama more discretion to limit the impact of the cuts on defense and other “vital” programs. The second bill would freeze the sequester cuts but would raise taxes and cut other forms of spending. Both pieces of legislation are not expected to pass because they are divisive and might not get a backing of a majority of lawmakers, according to The Hill, a newspaper that publishes congress-related news .

Senators John Boehner (R-Oh) and Harry Reid (D-Nev), both leaders of their respective parties, said to reporters that the sequester cuts will likely go in effect because lawmakers disagree on the issue of raising taxes.

Reid said to reporters on Wednesday that he thinks lawmakers should let the sequester cuts happen if there is no agreement on taxes.

But Furman said the cuts, if not averted in time, would have dire consequences.

“Some critics say that the sequester cuts only a small part of the entire budget,” Furman said. “But these cuts over a small window of time would be devastating.”