University Indirect Costs Set to be Slashed?


U.S. research universities are facing dramatic cuts to their federal overhead payments, known as facilities and administration (F&A) or indirect cost reimbursements.  These are costs not attributable to a single research project but include support costs such as rent, facilities maintenance and libraries.

This concern is triggered by a proposal contained in the recent Trump administration budget framework for the National Institutes of Health (NIH).  While a detailed budget has yet to be released the document included language that notes:  “[t]he Budget also reduces administrative costs and rebalances Federal contributions to research funding.”  According to a report in journal Science, this language is targeted at reducing reimbursements to universities for conducting federal research.  Full budget details are scheduled to be released in mid-May but proposals to reduce overhead payments are likely to engender strong opposition from universities as their rates are pre-negotiated with the government and must cover costs of compliance with numerous federal rules and regulations.

This will likely be a highly contentious issue during the 2018 budget debate and Arch Street will be watching closely.

— Tim

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