Impact of the Stimulus Package and State Mid-Year Cuts

February 20, 2009

Members of the Rutgers Community:

This week, President Obama signed the American Recovery and Reinvestment Act of 2009, a $787 billion package that will yield significant benefits for New Jersey and the nation. While it is not yet clear how the provisions will work, from the perspective of higher education, I am pleased to say that Rutgers and our fellow institutions can anticipate important increases in student aid and research funding. We are grateful that this historic legislation recognizes the key role of colleges and universities in educating our nation’s workforce and stimulating our economy through innovation.

Tuition Support: Students and their families will be helped by a new American Opportunity Tax Credit for 2009 and 2010 that allows qualified taxpayers a deduction of up to $2,500 per year for the cost of tuition and related expenses. The Pell Grant program has received additional funding, including a $500 increase in the maximum award to a new limit of $5,350. More than 10,000 Rutgers students depend on this program for tuition aid, and Rutgers ranks among the top 10 public universities in the nation in the number of Pell recipients enrolled. In addition, federal funding for Work-Study, which helps hundreds of our students pay for college, will increase.

Research Support: Rutgers’ faculty, which already earns $200 million annually in federal research support, will be in a strong position to benefit from the substantial increases this legislation gives to federal research agencies. For example, the National Institutes for Health will receive $10.4 billion, including $800 million for new short-term grants. The National Science Foundation will receive $2 billion for its research directorates and offices. The stimulus package provides major new funding for agencies engaged in renewable energy and climate research, including the Department of Energy, NASA, the Department of Defense, and the National Oceanic and Atmospheric Administration. A number of agencies, including the National Institute of Standards and Technology, have received significant dollars for university research construction and instrumentation.

Operating Support: Within the stimulus package is a $53.6 billion State Fiscal Stabilization Fund that will help provide support for public K–12 and higher education across the nation. The details of New Jersey’s administration of this fund still need to be worked out, but this fund is designed to mitigate the need for tuition increases. In creating this fund, Congress and the president recognize the burden that decreased state funding has placed upon public universities and the impact this has had on access and opportunity.

The package also funds other initiatives that intersect the work of public research universities like Rutgers, including worker training in emerging industries, transportation projects, community development, and environmental cleanup, to name a few.

The signing of the federal stimulus package comes at a difficult time for New Jersey. On the same day, Governor Corzine announced $3.6 billion in cuts to the current-year state budget to reflect the continuing decline in state revenues resulting from the global recession. The governor will propose a budget for fiscal year 2009–10 next month, and we do not know how higher education will fare in that budget, but I can report that Rutgers did not receive a midyear cut in operating aid. We do not yet have the details from Trenton about the governor’s announcement of a requirement that all state employees take two unpaid furlough days this spring. We will monitor this and keep you informed about other potential impacts of the governor’s plan.

Richard L. McCormick
President
Rutgers, The State University of New Jersey