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Comment by glofish | Hacker News Reader

also noteworthy elements:

university overhead 53%, so that leaves $250K. Over five years that works out to basically $50K/year

That needs to cover 1 month summer salary plus the salary and the tuition for a single student, and the travel to conferences, and the experiment ...

and that is a "prestigious" CAREER award only few people get ... no wonder the author jumped ship

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Actually the math doesn't work quite like that, but it's a common misconception. 53% indirect costs (overhead) is multiplied on the direct costs rather than the total amount, so it is actually 500K-500K/(1+0.53) = 173K taken by the university assuming the full amount can be charged indirect. In practice, some charges like tuition and equipment do not have indirects, so the actual amount taken by the university would be about 135K +- 35K out of the 500K. So you get about 365K of direct spendable money from the 500K if the overhead rate is 53% (as it is at the University of Tennessee where the author was).

The indirect cost rate is decided by the federal government based on data by the universities, so it's accounted for in the grant award amounts. So it's not as nefarious as it sounds.

The cool trick is that some of the direct costs are for things that the university didn't pay for.

Consider the building. Some rich people donate enough to pay for its construction. The university didn't pay anything. Moreover, that's a tax-deduction for them, so the Feds are effectively paying for part of it.

Now some sponsored research is to take place in that building. You guessed it, the university charges rent to the research grant. Remember that the university didn't pay for the building....

That sort of thing is factored into the programs and policies. Efficiency isn’t really the point.

You don’t pay for the building, but a bunch of Vice Associate Provosts get paid to do something and the union janitors make a living.

Economists can map this crap to direct and indirect labor hours generated and other economic metrics. At some level we do this stuff as a type of work program. Somebody calculates how many hotel nights and cheeseburgers are consumed for each construction dollar spent, etc.

The janitors are paid for by the rent.

The "efficiency" here is that the university gets paid for an asset that it didn't pay for.

Is that not allowed? If someone gives you a house or a car, is it wrong to profit off it by renting it out or offering it on rideshare?

The idea that universities or other public services should be profitable in any way is bewildering to me

They get paid for the whole institution. It’s not a contracting model in the traditional sense, it a model designed to support the educational mission of the university.

> it a model designed to support the educational mission of the university.

Except for the small problem that research contracts with orgs, some for profit, that don't have an educational mission, such as SRI, BBN, etc, follow the same model (absent the donated buildings).

And most of the time (if not always with NIH) when researchers say they got a $x grant, x is the direct cost so what they get directly. then you can often negotiate things back from your university such as time on shared equipments, students...

Also I don't think that is taxable income so basically multiply by 1.67 since most people end up paying roughly 40% of their income in state/federal taxes, social security, medicare, etc.

Where did you get 40%?

Sure, but what are new grad salaries in industry these days? 100k-200k/yr base?

Point is the same

At my institute, that's not how overhead is calculated. Overhead is a percentage of what the PI is budgeted for.

So for a $500K grant, 53% overhead really means about 34.6% of $500K. The university's cut is $173K, which is 53% of the PI's budget of $327K.

It's quite similar to the Australian system. The most prestigious, hard -to-get award with ~10% success rate, which took me two months to write last time (I was rejected) awards on average AUSD 400k over 3 years. That's a Discovery Project from the Australian Research Council.

A postdoc with overheads (postdocs make decent salary of around 100k + overheads similar to OP) budgets at about 150k per year. So with the most prestigious, biggest award the non-human researchers can get, you can barely fund one guy for 3 years. There is an ongoing exodus because this is insanity.

A couple notes:

- As mentioned by several people, your math is a little off, and indirects are not a flat tax, there's a calculation for what is eligible for being charged indirect costs and at what rate.

- The CAREER award is prestigious because it is a signaling mechanism - it's directly funding a particular PI more than it is a project. It's...sort of like being picked for a YC round in that respect.

- NSF funding is designed, philosophically, around smaller awards by and large, compared to say the NIH. The average "Oh, this'll make sure you get tenure" award for NIH-funded fields is an R01, which has a direct budget of about $1.25 million.

> university overhead 53%, so that leaves $250K.

At many universities large capital expenditures over some threshold ($5K for my institution) have no overhead. Also a lot of that money is supposed to go toward supporting students and that money is well spent.

How? From what are your admins paid then?

53% is pretty good! I believe Stanford and MIT have O/H over 100%

MIT is 55% Stanford is 58%

The only place I've ever encountered with an overhead rate above 100% was Scripps, and that's because they have to maintain research vessels.

US National Labs (e.g. LBNL) can easily top 200%, based on what my colleagues told me at the time. I never applied for funding myself while there, so I cannot directly confirm the actual figures.

How national labs are funded is its own completely bonkers system.

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