National Institutes of Health cuts support to universities
arstechnica.com
arstechnica.com
Grant proposals don't cover things that don't directly cover the project. Journal subscriptions, facilities, copy paper, administrative staff, etc. all aren't eligible, and so get rolled into the vague notion of indirect rates.
When an NIH grant is awarded for a particular direct cost amount, the indirect rate is then added on. So for my institution, if I get a $100,000 grant, my institution gets $153,000, because we have a 53% indirect rate. These are periodically renegotiated with the Federal government, and used widely.
Private research companies can and do just tuck this into their costs, but universities aren't allowed to do that.
A 15% rate is, to be blunt, catastrophic. It's "Every University in the U.S. Loses Money on Every Single NIH Grant" levels of bad.
And yes, this is the rate a lot of foundations charge. That's not because it's a reasonable rate - it's because it's a charitable foundation, and we all sort of indulge them because of their missions, and their own need to be efficient. But they're also a minuscule amount of the funding landscape, and often small grants. We tell ourselves its find - they're worthy causes, and loss leaders, etc. But applying that to the NIH will be a massive blow to biomedical research in the United States.
These changes also directly impact research hospitals, not just universities.
That doesn't mean indirect costs shouldn't be reformed. This is just simply the most disruptive possible way to do it.
And yeah, the rates private foundations pay is enabled by the NIH rates, and also that the NIH makes up the bulk of the funding in the first place. There's an argument - that I'm sympathetic to - that they shouldn't get a discount and the rate is the rate, but that's a very different reform than what we're seeing now.
The losers of this will be patients of the entire world, the slow down of advancements in medicine and STEM fields of all kinds, and the sucking sound of brains leaving for other countries.
In 2023, UCLA had $270M in indirect costs [1] and they negotiated a rate of 57% with the NIH [2]. So, they had about $473M in direct costs. The new rate would be 15%, which is ~$71M. $270M-$71M = $200M.
[1] Page 24: https://ucla.app.box.com/v/acct-pdf-AFR-22-23 [2] https://ocga.research.ucla.edu/facilities-and-administrative...
(Reposting from a less popular posting)
"From what I hear from multiple people in the space, the latest NIH indirect costs for medical research grants will basically mean the end most academic medical centers"
I anm almost certain this will get a TRO from a federal judge while it’s litigated given how insane this is.
Last paragraph:
For any new grant issued, and for all existing grants to IHEs retroactive to the date of issuance of this Supplemental Guidance, award recipients are subject to a 15 percent indirect cost rate. This rate will allow grant recipients a reasonable and realistic recovery of indirect costs while helping NIH ensure that grant funds are, to the maximum extent possible, spent on furthering its mission. This policy shall be applied to all current grants for go forward expenses from February 10, 2025 forward as well as for all new grants issued. We will not be applying this cap retroactively back to the initial date of issuance of current grants to IHEs, although we believe we would have the authority to do so under 45 CFR 75.414(c).
Notice how no one is going after the F&A (indirect) rates for DOD R&D contractors…
"This will be the end of American excellence in science.
Universities will struggle and many (likely most) will terminate their research programs.
Independent research institutions will not be able to survive this."
There are arguments to be made that university budgets are too high (I don't agree, but they exist). So renegotiate indirect rates. There's a framework for doing this.
An across the board, utterly devoid of context arbitrary cut to 15% isn't a sane policy.
Your institution might have a large endowment. Mine is a rural state school.
Note: I was not typical. I set up as a digital nomad a long time ago. A scientist with a lab on campus who pulls power, AC, and other resources from central services, must have some way of compensating the university, and you could argue that instead of a prenegotiated (and amortized) overhead, it could instead be a cost center billing (scientist gets contract, uses campus resources, gets billed directly for their consumption). Don't forget also that because of Bayh Dole, the university gets monetize the IP generated by their scientists (who typically do not see any direct revenue; instead, they have to make a startup that licenses the tech from the university).
My experience with overheads showed that the universities I worked at had the highest (50-75%) while less prestigious regional universities were more like 30%.
Oh! This is new: I just looked up Berkeley's rates now and they explicitly have an off-campus rate that is 25%, while the on-campus is 60%. Apparently the federal government was already capping off-campus at 25%! I also see that funding agencies like Gates, Chan-Zuckerberg, etc, already cap at around 10-15%. Man, the deans must be furious
Ironically, prohibiting “breaks” to Gates, Chan-Zuckerberg, etc. and saying the rate they get is the same as your NIH rate would probably go over well. Most people I know in research admin are perpetually annoyed that private foundations act like being subsidized is their right.
Off-campus is capped because the grant is then paying for rent on the lab space from the private landlord. Universities don't charge research labs for power, cooling, rent, janitorial, Internet, etc. Maybe they will start now.
Some private foundations do charge less, but they’re usually not providing the bulk of the funding for a given lab. There are generations of researchers and American industries based on the model where NIH/NSF provide a stable foundation for research, and while that can change it’s incredibly disruptive to try to break existing agreements.
To put it in HN terms, do you know anyone who take lower paying non-profit work because they’re married to someone with a tech job which means they never worry about their mortgage or health insurance? This is like that spouse’s employer saying they’re getting a 30% pay cut.
When looking at the whole system it clearly becomes woefully inadeqate. To extend the example, the only direct costs of an airplane flight are the crew, the fuel/food, and any airport fees. Could you run the rest of an airline (training, ground staff, scheduling, booking, IT, maintenance) on 15% of the crew+fuel costs? Not even close.
If you look at federal contractors and other companies, the overhead on staff is probably closer to 100-200%, so 50-60% is very defensible.
I work at a small state access university, without a meaningful endowment, that has traditionally had ~48% indirects. The majority of those go to research administration (e.g. research integrity, human subjects protection) and department general funds. Don't worry about facilities: we will literally be trying to figure out whether to cut journal subscriptions or startup funds for new hires, since we can't touch compliance.
Of course, it's not as if Team Red cared that much about universities anyway, or medicine, or biology...
It's a complicated situation and I can't speak for every scientist, but I certainly saw tons of waste (closet clusters that were "free" for the investigator because the university paid for it... through overhead... adminned by grad students since they were "paid for" by training grants.) Similar complaints about wet labs. After working in that environment and moving to industry, I've seen what infrastructure built around efficiency can achieve.
Mentoring grad students is inefficient. Giving research opportunities to undergrads is even more inefficient. Universities would be far more efficient if they would only hire researchers with PhDs and professional support staff. But then they wouldn't be educational institutions.
Research universities are bloated and epically inefficient, and hopefully soon go the way of Blockbuster.
You know what's a much bigger problem for people doing research? That the budget for a non-modular R01 from the NIH hasn't changed since the Clinton administration.