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As Predicted in January 2010, the “R” Word, Rescission, is Finally Here

Every January for the past three years, I’ve written a post about why it’s a great time to apply for federal and state grants. Here I go again: this post explains why nimble organizations will start the New Year by kick-starting their grant writing efforts, albeit for a different reason than in past Januarys.

Now that Congress is back in session, the federal deficit and spending are at the front and center of political debates. Patrick O’Connor and Janet Hook covered this in their January 3,2011 Wall Street Journal article, “Congress Targets Spending”. They write:

. . . Republicans in the House say they plan to move on to offer a far more sweeping package of “recissions,” or elimination of spending previously approved, that will aim to bring domestic spending back to where it was before Mr. Obama became president.

Ah, there’s the “R” word, rescission.* Faithful readers will recall that I predicted this in a post I wrote almost a year ago, “Federal Budget Freeze Prospect Making You Shiver? Don’t Panic Until You Hear the “R” Word: Rescission.” As I wrote then, rescission should “strike fear into your hearts” because the potential creates vast uncertainty in federal grant writing and state grant seeking (many state grants are derived from formula federal grants). I have no idea which grant program budget authorizations, if any, will actually be rescinded—which requires making it through the House, Senate and presidential signature—but, given the tenor of the political debate, I assume at least some will.

One of the things that makes the prospect of rescissions this year so curious is the fact that Congress never adopted a FY 2011 budget, opting instead for a series of Continuing Resolutions, the latest of which will expire in March (see this recent post on the subject, “No FY 2011 Federal Budget? As Is Said in Jamaica, No Problem Mon!“). Thus, rescissions could begin in the most recent CR, which is more or less the FY 2010 budget, or may be included in a FY 2011 budget, if a budget is actually adopted in March.

For grant seekers, the important part in all of this budget mumbo-jumbo is the critical need to respond to every RFP that appears in the next few months, because the program may be rescinded or otherwise subject to the budget axe. Federal and state agencies will be scrambling to issue RFPs ahead of possible rescissions because they know that the applicant pool will become a built-in lobbying force against rescissions. Every program officers want greater budget authority, not less.

In essence, the more RFPs that are issued and the more applicants there are for programs, the lower the probability that rescissions will harm a funding agency’s program. In counterpoint, some nonprofits will be scared away from responding to RFPs because they think their funding might be rescinded. The nonprofits that apply despite the potential for rescission will have a better chance for funding, particularly if they scream at their representatives to preserve budget authority for programs of interest. Since grant applicants are not shy and elected officials, regardless of party, are inherently interested in spending OPM (“other people’s money”), there should be lots of grants for those organizations who hop on every grant bus that trundles by in the coming months.

One possible program that’s a good target for rescission appeared in this week’s e-mail grant newsletter: HRSA’s Affordable Care Act: Health Center Planning Grants. It’s a planning grant program, which means that it won’t affect services that are already being delivered directly to people. More importantly, however, it’s also part of the Affordable Care Act, which lots of incoming congresspeople oppose, and one way to attack previously passed legislation is by refusing to fund it—or to rescind whatever money is already allocated to it. Only $10 M is available, and the maximum grant amount is just $80,000. Rescinding its funding wouldn’t cause a lot of problems but would show symbolic unhappiness about the Affordable Care Act.

* There seems to be a bit of confusion about spelling “rescission.” My spell checker likes “rescission,” but sharp-eyed readers will note the WSJ spells it “recission.” To paraphrase one of my favorite actor / singers (oh, and he also danced a bit), Fred Astaire to Ginger Rogers in “Shall We Dance”, “You like potato and I like potaeto,You like tomato and I like tomaeto; You like recission, I like rescission; Potato, potaeto, tomato, tomaeto, recission, rescission! Let’s [not] call the whole thing off!”. Given the tough economic times, it seems appropriate to think of a song from a 1937 movie.