Can the Trump Administration Unilaterally Cut Indirect Costs for NIH Grants?

As with some other recent executive branch actions, the Trump Administration appears to have overreached.

On Friday, the Trump Administration announced that it would cap the indirect cost rate for federal grants from the National Institutes of Health at fifteen percent. According to the Administration, this cap is justified because the federal government often pays far higher indirect cost rates than do private foundations that fund health research, and that the generous reimbursement of such costs subsidizes administrative bloat at universities and other grant recipients.

However justified the Trump Administration's move may be as a matter of policy, it has significant legal problems, not least because it purports to apply to existing grants and appears to contravene an appropriations rider that remains in force for the current fiscal year. These and other legal short-comings are detailed by former HHS General Counsel Sam Bagenstos in his Inside/Outside newsletter. Bagenstos disagrees with policy on the merits, to be sure, but his legal analysis is persuasive whether or not one agrees with his policy priors.

So, for instance, I do not equate the Trump Administration's efforts to "reduce federal taxpayer subsidization of leftist agendas" with an "attack" on "independent institutions," as I do not agree with Bagenstos that all of the institutions he has in mind should be considered "independent," or that they are deserving of federal support. I also think it's quite reasonable for the federal government to be more deliberate about the degree of indirect costs that should be included in research grants, particularly given the way administrative costs and staffing have exploded at many universities. But I agree that these propositions should be debated, and that any unilateral action taken by the executive branch on such matters should comply with the law.

Comments

[damikesc]

Cancel all grants.

Permanently.

From hence forward.

Burn higher ed to the ground. Burn Big Pharma to the ground. Then salt the ground so they cannot come back.

[David Nieporent]

I understand why MAGA would not want any higher education in the U.S.; it's bad for their electoral and career prospects. (It's a bit harder to understand why they would not want medicine.) But of course they have no authority to do any of that.

[Lee Moore]

Just so, "Libertarian" Dave. How could either education or research or science even exist without government funding ?

[David Nieporent]

Does "Burn higher ed to the ground. Burn Big Pharma to the ground. Then salt the ground so they cannot come back." say anything about government funding?

[Lee Moore]

Big Pharma is a ward of state, reliant on the monopolies granted to it. If released from the state's loving womb it would be cruel to burn them. They could try to compete in an actual free market.

I agree though that burning private colleges to the ground would be wanton destruction of private property and most reprehensible. So all we (ie the taxpayer) need to do there is stop funding them. Let them sink or let them swim according to their fruits.

Government colleges. Yeah, burn 'em to the ground. Unless you can find a buyer. Otherwise burn 'em down and sell the land to hardfaced men who will carpet that land with condos or chemical factories.

[Kleppe]

It takes a really educated person to make that dumb of a remark.

[AtR]

It's an excellent policy decision ... universities currently have an incentive to push research funding so that they can offload their infrastructure expenses to grant overhead (and use the money for other stupidities, like DEI). You cannot get promoted in a major research university in the US without serious grant funding.

Reducing the indirect costs to a reasonable level would encourage researchers to only apply for grants that advance their scientific research.

[Noscitur a sociis]

Be that as it may, it still seems like it should be implemented legally.

[AtR]

No argument there.

[Mr. Bumble]

Yes, let's make it a crime and prosecute when they try it.

[bernard11]

Not to mention intelligently, rather than with this brainless "pull a number out of your ass" blunderbuss approach.

Whether you know it or not (actually talking to damiksec here) university research, and pharma research is quite beneficial to the country.

But Trumpists are pitchfork-waving fools.

[damikesc]

Nah. Fuck universities and fuck Big Pharma. Burn it to the ground. Salt the earth after.

[Noscitur a sociis]

Let’s say, hypothetically of course, that someone didn’t already agree with you on the desirability of that course of action. Is there any follow up you could offer that might change their mind?

[Bob from Ohio]

"university research, and pharma research is quite beneficial to the country"

Then the private sector will support it.

[Dan Schiavetta]

Why should they? Bottom line does not equal what’s good for the country.

[Dr. Ed 2]

We (taxpayers) fund it and Big Pharma uses it for profit. That's fair?

[Ciobair]

Well, most of the research these days is published as open access. So if you want to avoid "big pharm", you are in principle welcome to read the papers in your local library (oops....nevermind) and then you can use the insights to make the drugs yourself, using nothing but foraging and your trusted pestle and mortar, just as the pioneers of old.

OK, fair enough, the university may have taken a patent and licensed that to big pharma, that could be a problem. But the obvious remedy for that is simply to demand that all state-funded research is made available through an open license, I'd be all in favour of that. Might be tricky to get the research to the markets though, at least if you think that IP is needed to incentivise the investment needed for that

[Lee Moore]

What measure of "good for the country" are you using ?

Finger in the wind or something even more sciency ?

[Sarcastr0]

Dan was talking about how government's motives aren't just profit, so the profit motive doesn't cover all of it.

Science is a good example. Infrastructure is another. Disaster relief.

The difference between a government grant and a government contract encapsulates when you don't want profit efficiency to be the sole driver:
The government uses grants as a means to fund something for the public good, whereas it uses contracts as a means of procuring a service for the benefit of the government.

Wait, what measure of good for the country are YOU using where our scientific preeminence isn't part of it?

[Lee Moore]

Scientific pre-eminence per se is of no more value to the country than pre-eminence in doll manufacture, pole vaulting, oral sex, cattle breeding, or swing dance.

All of these activities can be pursued privately to levels of surpassing excelence without the help or supervision of the government, and can fall out as they may, driven by the choices and talents of the citizens.

Scientific pre-eminence is important to the country-as-a-whole only in an instrumental sense - to the extent that it, or some of it, contributes to the sort of pre-eminence that the country-as-a-whole has a genuine collective interest in, most obviously military pre-eminence.

This argues for some support for some things, particularly though not absolutely exclusively STEM - iff, and to the extent that, private preferences fail to generate sufficient bodies available to contribute to the necessary military applications.

And contracts as you describe for those things that the government actually needs to buy for its miltary needs.

[Lee Moore]

Actually "pull a number out of your ass" is the favored means in the private sector when it's time to cut costs.

While it may seem a little pitchforky, the theory is that a department with a budget of $30 million, which has it cut to $15 million, probably knows which $15 million to cut better than the 5th Floor.

[Sarcastr0]

So what you're saying is that what Musk's pullig is stupid even in the private sector.

[Sarcastr0]

universities currently have an incentive to push research funding so that they can offload their infrastructure expenses to grant overhead

This is as intended!
Government grants supporting the research infrastructure required to do them is an obvious incidental cost.

And these costs are negotiated; it's not like they're universities just saying trust us.

[Dr. Ed 2]

35 years after the Stanford scandal, it seems they are.
69%?!?

I remember when it was in the 40% range.

[mike petrik]

Taxpayers might well view something to be a bug even if the powers who negotiated it see it as a feature.

[Sarcastr0]

Well then come in with that argument; don't act like there's graft going on when it's as intended.

[mike petrik]

Did I do that?

[Lee Moore]

Graft is intended. It doesn't happen by accident.

[Sarcastr0]

Still no argument.

[Armchair]

When the "infrastructure overhead" is more than 50% of the actual research....maybe there's a problem?

When "General State School" gets 30% indirects for a grant, but Harvard gets more than 65% indirects for the exact same grant...Maybe there's a problem?

The private funding agencies certainly think that 65% indirects is a problem...they won't pay anywhere near such a high rate.

[Sarcastr0]

No - this is a question I answer a lot.

Turns out paying to staff equipment, electricity, cloud computing time, etc. etc. is expensive.
And necessary to the performance of research.

It just can't be pegged to any one particular project; that's all.

This isn't going to university leadership. Or even to the business office.

The private funding agencies certainly think that 65% indirects is a problem...they won't pay anywhere near such a high rate.
Because they're small money, and free ride.

When "General State School" gets 30% indirects for a grant, but Harvard gets more than 65% indirects for the exact same grant
Harvard does better research; they have stronger infrastructure.
But that is an eye-popping number even so. Could you point to an example of this?
I'd be down to have NSF or whomever take a second look at the negotiations if there's a differential like that.

[Armchair]

"But that is an eye-popping number even so. Could you point to an example of this?"

Here's the Harvard Crimson.

https://www.thecrimson.com/article/2025/2/10/garber-nih-indirect-costs-email/#:~:text=Under%20the%20new%20order%2C%20Harvard,between%2027%20to%2028%20percent.

[Dr. Ed 2]

When I last reviewed this, there were state schools in the 20%-25% range. Harvard's research is not "better."

[Sarcastr0]

No - you said 30% as compared to 65% *on the same grant*.

I guess you mean 2 different grants under the same program.
So no monkeying with different agency's negotiations.

My agency's fundamental research IC's are negotiated by other agencies, so I don't have a hand in; I only know what I've happened to see.

While 65% seems a little high (I've seen average ICs of 50-55), 30% seems way low.

Not impossible, and not saying you're lying. But do you have a source for the cost differential you mentioned?

[Dr. Ed 2]

from the NIH notice -- url below:
"Yet the average indirect cost rate reported by NIH has averaged between 27% and 28% over time. And many organizations are much higher—charging indirect rates of over 50% and in some cases over 60%."

To average 27% - 28% you have to have some lower than that...

[Dr. Ed 2]

AtR -- if you have access to LEXISNEXIS, look up the initial coverage on the Stanford scandal -- the President was initially quoted saying the money could pay for anything including the flowers in his office.

Remember too that money is fungible.

[John F. Carr]

From my understanding at the time, the problem at Stanford was that indirect cost recovery as applied by the school did not match what was in the contract. They forgot to put it in writing.

At the same time MIT had language in its contract with the Office of Naval Research to bless otherwise illegal billing practices. Specifically, MIT waived overhead costs for certain undergraduate employees in an attempt to get them more useful jobs on campus. This had the effect of subsidizing their employment with federal funds. The government paid more for indirect costs than it should have. Office of Naval Research was OK with this.

[Dr. Ed 2]

MIT wasn't paying for yachts and weddings.

[ducksalad]

There's nothing wrong with what you say. This might be an excellent thing, if you like to know exactly what you're paying for, which is not an unreasonable thing to want.

However when pricing the direct part of a contract we take into account the overhead rate.

If the overhead is reduced to 15%, we're going to put stuff like "use of 1500 sq ft of lab space at $1.50/sqft/mo" into the direct part of the contract. Currently space and utilities get absorbed into the 42% indirect/overhead.

If the overhead is reduced to 0%, we're going to put in stuff like the "$100/person fee to HR to file the federal employment paperwork for everyone that will work on this" and "15 hours of the vice president's time to supervise the project director". Because paperwork costs and higher level supervision normally get charged to overhead.

Lowering overhead also lead stuff like a bureaucratic procedure to to determine whether the janitor taking out trash should be charged to Contract 5678-A or Contract 5679-B, and whether it should be prorated by volume or weight or stinkiness. And so we'll add "4 hours of work at $35/hr to properly allocate trash pickup costs" on top "14 hours to work at $20/hr to pick up trash." And these aren't goldbricking, somebody does have to pick up the trash and decide where it's going to get billed.

This isn't criticism, there is a good case to do things this way if you want to make sure not one dollar goes to anything you disapprove of. I don't think we're Stanford stealing money to buy yachts but I imagine you wouldn't like some of the stuff we spend indirect cost on.

[Dr. Ed 2]

" "$100/person fee to HR to file the federal employment paperwork for everyone that will work on this" and "15 hours of the vice president's time to supervise the project director".

You won't get that, though -- it will be like managed care where they give you $10/person and nothing to supervise the PI because he/she/it is already being supervised by the VP.

"4 hours of work at $35/hr to properly allocate trash pickup costs" on top "14 hours to work at $20/hr to pick up trash."

1: That is indicative of the problem in higher ed today -- you probably didn't even notice that the person in the warm/dry/clean office is paid B>nearly twice what the people hauling trash out of the snowbanks are paid.

2: I'm not a janitor but I have supervised them, and 14 hours/week is a exorbitant waste for all janitorial services unless it includes snow shoveling. This isn't a 5 star hotel.

[The Drill SGT]

" According to the Administration, this cap is justified because the federal government often pays far higher indirect cost rates than do private foundations that fund health research, "

In my experience, the Feds take great umbrage against charging different customers, higher overhead rates. They seem to think that is unfair.

[Dr. Ed 2]

Well, UMass Amherst charges the DOD about twice what it charges everyone else. See the second page of this:
https://www.umass.edu/controller/media/21/download

[ducksalad]

Federal money (especially DoD and DoT) takes a lot more overhead in paperwork and reporting than private foundation money. Often the private foundation is trying to call it a donation so they usually give a check for the full amount up front and don't formally require very much in return. On a DoD/DoT grant there is no check, you front the money as you go and bill periodically, and the reporting is onerous. Someone is going to spend several full working days a month on required reports and billing.

Of course it's not the difference between 60% and 15% on a $1M dollar grant. But requiring literally X5 or X10 paperwork and reports for the same cost isn't real fair either.

[Ciobair]

"Universities currently have an incentive to push research funding so that they can offload their infrastructure expenses to grant overhead"

Ermm, that's the idea. There are two ways to fund public research universities: One is a block grant for infrastructure, with maybe a bit of grant money to top it up - that was at least in the UK the system before Thatcher, and I wouldn't be surprised if it was the same in the US before ber BFF Reagan.

That was then changed to a system where the block grant is minimal, and most of the income comes from competitive research grants, that however now charge the "true research costs", including maintenance of the infrastructure necessary for the research. The hope was that this would keep researchers on their toes, they have to think of new, fundable research all the time, and that means coming up with ideas better than their competitors who are applying for the same grant. The disadvantages were the hidden costs that come with constant grant writing and the time that takes, and the lack of planning security that discourages risky, blue-sky research that can take a long time to come to fruition.

But one way or the other, you need a way to fund the infrastructure costs of research, either up front through block grants or through recoverable overheads. Universities have no magic money trees, and neither does this research income go to shareholders.

[Dr. Ed 2]

This is my field -- a few things:

First, I don't think he can do this -- at least not this way -- because IHEs negotiate an overhead rate with ONE Federal agency (the one they get the most grants from, e.g. DOD) and then it applies to ALL federal grants, regardless of the grantor. So unless the overhead rate was negotiated with the NIH, the NIH can't change it.

Second, not every institution gets the same rate. Harvard gets up to 69% -- that means that if the Feds awaer Harvard $1, they actually give Harvard $1.69 -- see https://osp.finance.harvard.edu/fa-rate-agreements.

Third, Obama tried to reduce these rates (memory is to a universal 25%) and failed.

Fourth, the clawback on this money will be nasty because it's already encumbered if not spent by the IHEs. Particularly at state IHEs, this is free money that can be used for anything.

Fifth, there was a major scandal ~30 years ago where research overhead money was used for the university yacht and a wedding.

[Dr. Ed 2]

And a citation for my many critics:
https://www.latimes.com/archives/la-xpm-1992-01-03-mn-5719-story.html

[RedheadedPharoh]

Dr. Ed, you have that inside out. If the Feds award Harvard $1, that means $0.31 is spent on the purpose of the grant.

[Dr. Ed 2]

Are you sure about that?

I initially thought that to be the case, and then saw evidence to the contrary, although I also wouldn't put it past UMass to quote the net figure of awards.

Either way, it's a bleepload of money being diverted....

[Frank Drackman]

OK, "Dr" Ed2, I'll pretend to be the suave, cogent Perry Mason, (but no Homo), and you're the petulant, blithering Hamilton Burger,
"Evidence to the Contrary? Prosecution has presented no such Evidence!"
OK, at this point Paul Drake kicks in the door of a North Hollywierd motel, revealing the Corpse of a shapely model holding a Candlestick....
Cut to Hamilton Burger with that Constipated facial expression when he knows Perry got the best of him....

Frank

[RedheadedPharoh]

I've never gotten a grant for more than what I wrote the grant for.

[Dr. Ed 2]

Did you get all of your grant, though?
I'm thinking they cut a separate check to the school.

[AtR]

If Harvard wants $1 for research, it asks for $1.69. So, if it gets $1, (1/1.69 = )$0.59 is available for research.

[Sarcastr0]

All of it is going for research.

[RedheadedPharoh]

No it isn't.

[Stupid Government Tricks]

That's petty and meaningless. Whichever way they calculate it and whichever way they publish the final figures, 69% is 69%.

[RedheadedPharoh]

>A strong democracy requires a robust independent sector.

Are they independent if they're funded by the taxpayer and subservient to the agenda of the bureaucrats?

His opening thesis seems quite flawed.

[Armchair]

So, the next big hubbub is going to be about the NIH cutting indirect costs for NIH grants. However, it's important to understand what's really going on, and how cutting indirects actually increases the amount of real research that gets funded. So, we're going to hit 1. What are indirects? 2. Why the Universities are in a tizzy about it? 3. Why the current indirect system is unfair and inefficient? 4. And how cutting indirects increases research?

1. What are indirect costs?
So, with any grant proposal, there are direct costs. People working on the project need salaries. Equipment needs to be purchased. Supplies need to be purchased. Services need to be acquired. All direct costs. But, there are also indirect costs. These are typically things like the electricity and water for the labs working on the projects. The NIH gets this, and with a grant (for say $1,000,000) for direct costs (that goes to the researcher to spend), the NIH will allow "indirect costs" (for say 15%, or $150,000), on top of that $1,000,000 which goes to the university for keeping the lights on. So, a total of $1,150,000.

2. Why are the Universities in a tizzy?
Well...lately indirect costs haven't been 15%...they been closer to an average of 30%. With some institutions hitting 65% and higher. So, that means for every $1,000,000 grant, certain Universities have also been brining in $650,000 for "other" costs. And suddenly the NIH is saying "nope...just $150,000". That puts a $500,000 blow in their budget. It's a lot of money that suddenly goes missing. So, they're mad.

3. Why is the current system unfair and inefficient?
No one doubts that a certain level of indirect costs are needed. Everyone needs electricity. But....65% is way too high. In fact, the private grant organizations recognize this and LIMIT their indirects to 10%-15%. They...want to fund research. Not "other stuff". And most universities happily take Private grant money, even with this restriction. Moreover, the "indirect costs" vary by institution. You can have the exact same project at Harvard versus General State School, with the exact same $1,000,000 grant....but Harvard gets $650,000+ in extra indirect costs on top of the grant, while "General State School" might only get $150,000 or $300,000 in indirect costs. And how is that fair? Why does Harvard get more money for the exact same proposal?

4. How does cutting indirect costs get more real research done?
-In short...it's the same overall pot of money. 65% indirect costs (versus 15%) is expensive. If you have three $1 million grants at 65% indirect costs, that's $4.95 Million. If you have FOUR $1 million grants at 15% indirect costs, that's just $4.6 Million. You can fund more direct research.

This needs to be emphasized. NIH funding lines are tight. Often only 25% or less of proposals are funded. You can fund more research....get more done....if you reduce the bloat. Or you can NOT fund more research, cut real projects from being funded, by insisting on bloated "indirect costs".

[Roger S]

So Trump's cut to 50% is generous. He should cut to 20%.

[Dr. Ed 2]

I believe he cut to 15%.

[bernard11]

So if 65% is too high, what is a better number? You have no idea, and neither do I. Why do some schools get bigger percentages than others? Do you know? I don't.

Can we reduce this cost somewhat without hampering research? Probably, but not like this. Just saying 15% across the board is a foolish approach, like the CEO who says, "cut every department 10%!" It's only virtue is that it saves thinking - which I suppose pleases Trump and his cult.

[Stupid Government Tricks]

Yes, he does know.

In fact, the private grant organizations recognize this and LIMIT their indirects to 10%-15%.

[Armchair]

As pointed out...the private research organizations limit it to 15%.

This isn't an empty exercise. Look at the details.

[Sarcastr0]

Think for a moment how indirect cost works, and thus how private organizations can do that.

[Armchair]

How can government organizations do it?

Here's a report from the NSF, and how they did their indirect costs. Between 16% and 24% on average. Note, this is from 2017.

https://www.gao.gov/products/gao-17-576t

69% is absurd. And importantly, having indirects be so high, limits the amount of real research that can be done.

[Sarcastr0]

69% is for medical research, though, right?

You can't compare NSF and NIH; they are funding different disciplines!
It's not at all strange to me that the indirect costs for medical science are higher than that for physics.

[Armchair]

You're just goalpost moving at this point. First you say "private organizations." Then when directly linked to other government organizations, you move the goal posts again.

Tiresome. All you do will move the goal posts again when I respond with more data.

[Sarcastr0]

I don't have a thesis, I'm questioning yours.

And you keep shifting your arguments when I blow up one of them.

Your thesis is that number is too high.

Your evidence is other number is low.

My pointing out that the second number isn't related to the first is quite relevant!

I did that with private industry, and now I did that with NSF vs. NIH.

Sorry if you find that tiresome, but the fault lies with your equating nonequal things.

As I said above, I'm adjacent to this not directly in it; I know what indirect cost is quite well. I know how it's set. But I'm not involved in setting it.
I'm open to being taught something.
You don't seem open to being questioned.

[RedheadedPharoh]

The implication is the private sector is unfairly offloading their "fair share" of indirect costs onto the taxpayer?

Since when did you guys like that sort of corporate welfare?

[Alpheus W Drinkwater]

Thanks for that, I was a little at sea on this topic. Of course the real question about the administration's actions isn't whether or not it's good policy, but rather whether or not the actions are legal.

[ducksalad]

Pretty good summary, a few nitpicks:

1. Electricity and water are great examples but it's a lot more than that. If you want a rough ratio, ask someone running a retail store
what it costs to have a store front and how much of that is electricity and water.

But it has to be admitted that we're charging stuff that isn't directly supporting the research. One thing we use indirect for that might make people upset is funding new unrelated research. Why? Because it's actually very hard to get a contract without showing some preliminary results, so we give out internal seed money to work toward the next contract.

2. We charge 42% and I believe we're in the middle of the pack for state universties.

3. Meh on the fairness argument. Harvard charges more for everything from tuition to dorm rooms, no reason they shouldn't charge more for research. If the feds think they're too expensive for what they deliver, just award the money to someone more cost effective (like the place I work).

Private foundations aren't a good measure, since they're a small part of total. I would suggest a good measure is what we end up charging industry sponsors - it's negotiated but ends up closer to the 42% than 15%.

4. Assuming we don't start charging more direct costs. If the indirect doesn't cover the costs of having a building we'll have to itemize it and put it in the direct. 15% is probably enough for a project that's mostly people sitting at their teaching desk writing code and doing stats. It's nowhere near enough for something needing high end labs and other special infrastructure.

[Armchair]

1. A retail store is an interesting counter example. Issue is...they have a unified budget. But, the numbers for many of these places are pseudo-public.

2. Good to know.

3. "If the feds think they're too expensive for what they deliver, just award the money to someone more cost effective"

That is, in fact, part of what this is. As far as I'm aware, the feds are not able to take into account the indirect costs when awarding a grant. A grant application asks for "so much" (Say $1 Million), and the feds review it based on that number. They are not allowed to differentiate based on "Well, it will really cost $1.42 Million to award to state university X but $1.69 million to Harvard".

4. That is an option, that universities start charging their PIs directly more for certain items. (Of course, to a certain extent they do that now). But what that does, is it puts the money in the PI's hands...and not the university's hands. And PI's tends to be more careful with their own money.

Right now, a PI at State University X might have 30% indirect costs, but a PI at Harvard has indirect costs%. They issue the same grant for $1 Million, and they get the same $1 million, whether or not they're at State University X or Harvard. The difference is Harvard gets $390,000 more in indirects than State University X.

Let's say, this proposal goes through. Let's also say, Harvard says "You have to cover the remainder of the indirects out of your direct costs, while State University says "we got this"

That means that the PI for State University X gets the full $1 Million to spend. The PI at Harvard by contrast has to pay $540,000 from his grant to the university. Leaving them with less than half the amount of money to spend on actual research.

I expect you see a flood of researchers leaving Harvard then.

[Dr. Ed 2]

To further complicate things, I've seen references to IHEs kicking some of the Overhead money back to PIs.

But what you aren't mentioning is that you would have to be doing the research anyway in order to (a) maintain your Carnage Classification (i.e. R1, R2), (b) have a graduate program, and (c) attract students in a competitive environment.

There's more if you are a state school -- the late John Silbur used to have a list.

You also aren't mentioning that (public or private), you don't pay property taxes (which the store does), you don't pay sales or income taxes (as an institution), your liability is limited by either the state tort claims act (if public) or charity laws (if private), you can solicit donations (the store can't), and you can borrow cheaper.

[ducksalad]

But what you aren't mentioning is that you would have to be doing the research anyway in order to (a) maintain your Carnage Classification (i.e. R1, R2), (b) have a graduate program, and (c) attract students in a competitive environment.

The Carnegie Classification is - perhaps unfortunately - based on how much you spend on research (including indirect!) and the number of PhDs you graduate, rather than quality/quantity of research. No state school has enough state/tuition money to make R1 and actually get courses taught. So R1 comes *because* you're bringing in the money, not the other way around.

You also aren't mentioning that (public or private), you don't pay property taxes (which the store does), you don't pay sales or income taxes (as an institution), your liability is limited by either the state tort claims act (if public) or charity laws (if private), you can solicit donations (the store can't), and you can borrow cheaper.

These are very fair points. In the other direction, though, to accept a single penny of federal money we have to set up a Title IX office, a Clery reporting system, and a whole bunch of other similar crap. If we're lucky Trump and Congress could cut back on Title IX overhead but most likely they'll require us to replace it with an Anti-DEI Office with the same number of people.

(When Texas passed the no-DEI bill, I believe some of our DEI staff switched to doing anti-DEI enforcement. Sounds fishy but actually makes sense - they know what to look for and where.)

[Ciobair]

What a lovely prospect. More research, the biggest! Just the tiniest of hiccups I'm afraid, a minor detail for sure: all the additional researchers that the money will now pay for will have to work outside, sitting on the grass - if we are lucky, the weather is inclement and it does not rain.

If they bring their own pens and paper, they might even be able to keep a record of the brainstorming they can do. I mean, who needs equipment to do biomedical research, right?

Because that's what the overheads pay for, the buildings and the maintenance, heating, electricity, maintaining existing equipment infrastructure and their maintenance, etc etc.

Even with 65% btw, my guess is the university will lose money on most grants - in the UK the rate for all universities is 80% FEC (Full economic costing. As this is sector-wide, for all universities and disciplines, it arguably overpays for some and underpays for others, but overall is the by far cheapest system to administer.- and overall, most universities lose ( a little) bit of money on research, which they then have to make up from other income.

So what can we expect when this goes ahead? Lots of research not happening at all any more, especially that at universities that don't have extensive other income streams. Shift from overhead expensive research to research that is less so - so expect fewer new drug discoveries and more papers that analyse Middle English stress doubles based on Chaucer's meter.

Some universities might be in a position to cross-subsidise research with teaching more (as many already do), so even fewer, and more highly indebted, new doctors who will have to charge you even more, to pay back the debt.

But mostly, less research - in the US that is. We already had a "Trump I recruitment boom" here back in the day when we suddenly got an influx of highly skilled, US-trained researchers at every job interview (mostly US trained foreigners, but now worried about Visas, and also a few Americians). So I'm looking forward to round 2.

[Armchair]

"Even with 65% btw, my guess is the university will lose money on most grants "

If that was the case, then they just wouldn't accept private grants that only reimburse at 10%. They'd lose more money that it was worth.

Most universities don't do that.

[Sarcastr0]

Back onto the private grant game, eh?

Yes, federal indirect costs pay for the infrastructure private companies also take advantage of.

So you are once again comparing 2 unequal things.

Do you have any thoughts in the negotiation process or just gonna keep at this?

[Ciobair]

They sure would. Lots of reasons for this - a private grant can make good PR for instance (if you are cynical, less cynically, the university just thinks that research should be done) or even when costly in the long run might bring in temporary cash to keep an RA in position.

They may enable to hire someone who can also teach an attractive course, increasing income through student fees that then (as they so often do) subsidise the research.

They can be loss leaders in the hope that the research will enable a successful future grant application for a FECed grant. They also might give access to data, personnel and know how they would not otherwise get.

[Ciobair]

"In fact, the private grant organizations recognize this and LIMIT their indirects to 10%-15%. They...want to fund research. And most universities happily take Private grant money, even with this restriction."

And that works only because the grant overheads already pay for the infrastructure costs. With other words the public grants massively subsidise those from private donors. Once the building I'm in has been paid, they can get away with paying only to hire new staff etc.

Universities can, under the current system, take some of that money - but only under the current system. and even there it's not universally true. The researcher makes de facto a significant loss for the university when accepting this type of grant. so typically someone in the relevant finance management group will make the call if
a) there is enough other income around to make up for it and
b) if there are strong reasons why doing this project is good for the university (which may or may not include evaluating if it meets a particularly strong need of society)

Then and only then will the researchers be permitted to go for this type of grant.

[Armchair]

"And that works only because the grant overheads already pay for the infrastructure costs. With other words the public grants massively subsidise those from private donors."

You said above "Even with 65% btw, my guess is the university will lose money on most grants "

They can't both simultaneously be "losing money" on these 65% intrinsic overhead grants while also "massively subsidizing" other grants.

[Frank Drackman]

I'll make this simple for you Simpletons
1: Yes, "He" (oh wait, "Trump Administration"? so should it be "They"?) can do that
2: Can't wait to see RFK Jr. sign whatever documents are required to 'Execute" "47's" "Executive" Decision

Frank

[Dr. Ed 2]

Apparently it's legal.

"In issuing grants, NIH generally uses the indirect cost rate negotiated by an “agency with cognizance for F&A/indirect cost rate (and other special rate) negotiation.” Grants Policy Statement at IIA-68; see 45 C.F.R. 75.414(c)(1). NIH may, however, use “a rate different from the negotiated rate for either a class of Federal awards or a single Federal award.” 45 C.F.R. 75.414(c)(1). NIH may deviate from the negotiated rate both for future grant awards and, in the case of grants to institutions of higher education (“IHEs”), for existing grant awards. See 45 CFR Appendix III to Part 75, § C.7.a; see 45 C.F.R. 75.414(c)(1)."

https://grants.nih.gov/grants/guide/notice-files/NOT-OD-25-068.html

[MollyGodiva]

Quite the opposite. What you are quoting as proof that this action is legal, is the action itself. Very tight radius circular reasoning. If you look at CFRs the cite, you will see that they can't just cut all indirect costs at will across the board. To do what they want requires a proper change of the regulations under the APA.

[Dr. Ed 2]

Even if you are right, and I don't think you are, all Trump has to do is tell IHEs that they can have 15% now, or NO NEW GRANTS.

They'll take the 15%.

[MollyGodiva]

Again, no he can not. Federal grants are awarded based on a long list of guidelines. The President can not just declare some groups ineligible for grants.

[RedheadedPharoh]

If the Executive can make certain groups get favored, then the Executive can make certain groups get disfavored.

[MollyGodiva]

What part of "Federal regulations can not be changed on a whim" do you not understand?

[David Nieporent]

What part of anything does he understand?

[Dr. Ed 2]

Realpolitik.

[Dr. Ed 2]

Trump proposed 10% in 2017 -- and apparently could:
https://www.science.org/content/article/nih-plan-reduce-overhead-payments-draws-fire

[bernard11]

Trump has no fucking idea what the rates are for, and how much they should be.

He and Musk pulling numbers out their asses and blustering.

It's an insane way to treat one of the country's great assets.

[Dr. Ed 2]

Not exactly:
https://www.heritage.org/education/report/indirect-costs-how-taxpayers-subsidize-university-nonsense

Higher ed stopped being a "great asset" 30 years ago...

[Frank Drackman]

One of the Great Assets??
I know an Internist ("Flea" in the Doc Slang, as "Fleas are the last to jump off of a dying Dog") who worked for NIH for years, when he got tired of jumping off dying Dogs,
I asked him what he actually did there, over drinks (No Homo, we ran into each other at the Hooters on Peachtree*)
"I look at Research Grant Proposals and find reasons to deny them"
"Do you ever approve any?"
"No, they have someone else to do those"
and he complained that he should have gone into Anesthesia, (OK he didn't, but he probably wanted to)
and there are 1,000's of Docs like him, would love to actually see and treat patients (I know, crazy) on a reasonable schedule, and get paid fairly, (As big an American Fan as I am, Germany actually has a pretty good "Hausarzt" program, Doctors who actually go to Patient's homes, How Insane! They could see 2.3 more patients in the 22.3 minutes to drive to each Patient's house!)
But do some bullshit administrative job, just to earn some Shekels,

Frank

[John F. Carr]

From the linked article by Samuel Bagenstos I infer that he tried and Congress shut him down. An item in the annual budget freezes indirect cost rules where they were in the third quarter of fiscal year 2017.

[F.D. Wolf]

Adler and many of his co-bloggers here might as well call themselves "Libertarians for Government Waste and Inefficiency". I imagine Trump has attorneys on staff who hold differing views than those of the Reason brain trust, but I guess we'll see. Regardless of how these things end up in court, Trump has placed his opponents in the position of defending obscene government boondoggles from millions to left-wing journalists to international drag shows. We'll see how that shakes out electorally.

[Kazinski]

What they ought to do is claw back the cost of the grant from the researcher and institution if the research can't be reproduced.

https://www.bbc.com/news/science-environment-39054778

[DaveM]

Lost in the shuffle is the fact that a grant is a GIFT. To listen to these people whine, you'd think they were owed that grant money.

Personally, when I make a charitable donation, you bet I look at the ratio of overhead to delivered services or goods. 15% overhead is plenty, provided the charity is economizing and working hard to make sure every dollar of the donation that can be gets used for its intended beneficiary.

The universities and NGOs don't have to accept the taxpayer's monies. The government agencies can find other people willing AND able to do the work efficiently. There's not a thing wrong with that.

[David Nieporent]

Grants are not "charitable donations."

[DaveM]

Correct. To clarify, I'm noting that grants are VOLUNTARY payments by the government, similar to, but not the same as, charitable donations by individuals. They should be treated as if they are gifts, they are not "owed".

Good thing I was never tempted to be a lawyer. I don't think I would last very long.

[John F. Carr]

Research grants are contracts because the recipient has an obligation. The government's ability to alter existing contracts is limited by statute.

[ThomasHuff]

Update: 22 state AGs filed suit today in D.Mass. and moved for TRO: https://www.courtlistener.com/docket/69625055/commonwealth-of-massachusetts-v-matthew-memoli-md-ms/

(Incidentally, I can't seem to find the actual memorandum ISO the TRO motion.) Case was just assigned to Judge Angel Kelley.

[John F. Carr]

Twenty-two states sued to block the indirect cost rate reduction. Case 1:25-cv-10338 in the District of Massachusetts. Quoting the complaint:

In 2017, during his first administration, President Trump made a budget proposal that would have reduced the indirect cost rate for research institutions to an across-the-board, categorical rate of 10%. Congress unequivocally responded to ward off such a change to the calculation of indirect cost rates. In 2018, Congress enacted an appropriations rider prohibiting HHS or NIH from spending appropriated funds “to develop or implement a modified approach to” the reimbursement of “indirect costs” and “deviations from negotiated rates.” Consolidated Appropriations Act, 2018, Pub. L. No. 115-141, 132 Stat 348, § 226. That rider has remained in effect through every appropriations law governing HHS to this day. See Further Consolidated Appropriations Act, 2024, Pub. L. No. 118-47, § 224.

In my opinion the states are not the proper plaintiffs. If state schools are authorized to sue and be sued in their own names they are the proper plaintiffs.

https://www.mass.gov/doc/ecf-complaint-mass-v-nih/download