Millions in student-loan costs, clinical cancer trials, research into treatments for autism and Alzheimers, who-knows-how-many jobs at the city of Lawrence's largest employer — all these could be at stake at Kansas University as the calendar turns to 2013.
Should the nation tumble over the "fiscal cliff" as January begins, the potential effects on KU during 2013 add up to tens of millions of dollars.
"Fiscal cliff" is the nickname that's been stuck to the federal budget sequestration — billions' worth of mandatory spending cuts and tax increases — that will go into effect Jan. 1 if Congress does not reach a deficit-reduction agreement by then. To major research universities like KU, where millions of federal dollars each year flow to students and faculty in the form of financial aid and research grants, it's a particularly perilous prospect.
Should Congress go the entirety of 2013 without reaching a deal, the effect on KU would be staggering. Tim Caboni, KU's vice chancellor for public affairs, said officials estimate the potential annual damage at $27.1 million in additional student-loan costs and $18.1 million in lost research funding between the Lawrence campus and the KU Medical Center in Kansas City, Kan.
"That is a tremendous hit to the university," Caboni said.
That said, if midnight strikes on Dec. 31 and no deal has been reached, it won't exactly signal panic alarms on the KU campus. Steve Warren, KU's vice chancellor of research and graduate studies, said the severity of the effects would depend on how long a sequestration lasts.
If the cuts stretch on for only a month or two, he said, the university could largely function as it normally does. It could dip into cash reserves to tide over federally funded research projects and the jobs and student assistantships they fund.
"It'll be a weird and maybe challenging couple of months for us, but we'll come out of it OK," Warren said.
So if political pressure ramps up and forces congressional leaders to get a deal done by around the end of February — something Warren said many onlookers think is likely — the effects would likely not be calamitous.
But if the situation stretched out much longer than that, it could be a different story. Research projects could slow or stop. Graduate students might lose assistantships that pay their tuition and provide them stipends to live on. Research assistants or others could lose their jobs. At the Medical Center, cancer patients who could have had access to clinical trials could be cut off.
"It would get really ugly and really sad, frankly," Warren said.
And then there would be student loans. Federal direct unsubsidized loans would tack on an additional origination cost of about 0.1 percentage points, and federal direct PLUS loans would gain an extra cost of about 0.4 points.
Altogether, the potential annual cost for all KU students would total $27 million, Caboni said.
"We don't think it's in the best interest of preparing the trained young people we're going to need to attract business to the state of Kansas," Caboni said.
The effects on research are a bit tougher to pin down.
About $215 million in federal research funding flowed into KU and the medical center during the 2011 fiscal year. That funds about 85 percent of the university's research.
The federal agencies that grant such funds — the National Institutes of Health, National Science Foundation and Department of Education primary among them for KU — would be forced to cut their research budgets by about 8.4 percent.
So a corresponding cut to KU's research funding would be about $18 million.
But agencies haven't announced how exactly those cuts would affect their funding. Would all research projects face an across-the-board cut? Would some projects continue freely, while others are halted?
The answer's not clear, Warren said.
"I don't know if they know," Warren said, "but if they know, they're not saying."
KU officials' best guess, he said, is that the first thing to go will be the awarding of new grants. That could end as soon as the calendar hits January, or perhaps even this month as agencies brace for impact.
That could put the brakes on a successful run of landed grants for KU researchers this fall, including the largest single grant in the university's history.
If the sequester stretches on, then existing grants may see cuts.
A typical research grant, Warren said, might pay for the tuition and stipends for a couple of graduate student assistants, part of a faculty member's salary and perhaps provide jobs for one or two other research assistants. Reserve funds might allow the university to bridge those people along if a sequester lasts a month or two.
But any longer than that, and it could spell danger.
"It would not just stop research," Warren said. "There would be people who'd lose their jobs."
Wayne Sailor, a professor of special education, is administering that largest grant ever awarded to KU: $24.5 million from the U.S. Department of Education over five years to create a center aiming to change the way children with disabilities are taught in the country's schools.
He said he's waiting to see if Washington can solve the problem before sequestration sets in, and wondering how it might affect the project. Some observers say education grants would be largely safe, he said; others say they could be first on the chopping block.
"I'm worried about it, clearly," Sailor said.
Cuts to such a grant could ruin a great deal of planning and affect many people's lives, he said.
As a result of such risks, the university is working this month to push congressional representatives to work for a sustainable budget solution.
Caboni spent this past week meeting with the Kansas congressional delegation in Washington, and the university's full-time federal lobbyist is working on the issue, as well.
"For the next four weeks, this is where all of our time, effort and energy will be spent," Caboni said.
KU Chancellor Bernadette Gray-Little joined with Brady Deaton, chancellor of the University of Missouri, to write an op-ed piece published in the Kansas City Star this week spelling out the risks posed by the fiscal cliff to students and research universities.
"The best way to solve our long-term debt challenge is by creating an economy that has both the educated workers and new discoveries that lead to sustained growth," they wrote.
Caboni said KU will push representatives to reach an agreement that considers the outsize role that entitlement programs play in the federal budget picture compared to discretionary spending, which is the pool from which research and student-loan funding comes. The pitch is that those funds lead to innovation, development in industry and healthcare and jobs.
But Warren said that any long-term solution would be preferable to kicking the can down the road for another year, even if it included cuts to research budgets.
"If we knew what to plan for, even if it led to long-term cuts in some of the research agencies, at least it would be orderly and we could plan for it," Warren said.
At the very least, he said he believes a doomsday scenario — sequestration lasting for a year or more — is unlikely, as the economic damage would force Washington to act.
"We believe that, at least, if any of it occurs, saner minds will somehow prevail," he said, "and the worst case will be avoided."