It's been another exciting week where I feel compelled to write about the practice of university-based research in the US. I've written about "indirect costs" before, but it's been a while. I will try to get readers caught up on the basics of the university research ecosystem in the US, what indirect costs are, the latest (ahh, the classic Friday evening news dump) from NIH, and what might happen. (A note up front: there are federal laws regulating indirect costs, so the move by NIH will very likely face immediate legal challenges. Update: And here come the lawsuits. Update 2: Here is a useful explanatory video.)
How does university-based sponsored technical research work in the US? Since WWII, but particularly since the 1960s, many US universities conduct a lot of science and engineering research sponsored by US government agencies, foundations, and industry. By "sponsored", I mean there is a grant or contract between a sponsor and the university that sends funds to the university in exchange for research to be conducted by one or more faculty principal investigators, doctoral students, postdocs, undergrads, staff scientists, etc. When a PI writes a proposal to a sponsor, a budget is almost always required that spells out how much funding is being requested and how it will be spent. For example, a proposal could say, we are going to study superconductivity in 2D materials, and the budget (which comes with a budget justification) says, to do this, I need $37000 per year to pay a graduate research assistant for 12 months, plus $12000 per year for graduate student tuition, plus $8000 in for the first year for a special amplifier, plus $10000 to cover materials, supplies, and equipment usage fees. Those are called direct costs.
In addition, the budget asks for funds to cover indirect costs. Indirect costs are meant to cover the facilities and administrative costs that the university will incur doing the research - that includes things like, maintaining the lab building, electricity, air conditioning, IT infrastructure, research accountants to keep track of the expenses and generate financial reports, etc. Indirect costs are computed as some percentage of some subset of the direct costs (e.g., there are no indirect costs charged on grad tuition or pieces of equipment more expensive than $5K). Indirect cost rates have varied over the years but historically have been negotiated between universities and the federal government. As I wrote eight years ago, "the magic (ahem) is all hidden away in OMB Circular A21 (wiki about it, pdf of the actual doc). Universities periodically go through an elaborate negotiation process with the federal government (see here for a description of this regarding MIT), and determine an indirect cost rate for that university." Rice's indirect cost rate is 56.5% for on-campus fed or industrial sponsored projects. Off-campus rates are lower (if you're really doing the research at CERN, then logically your university doesn't need as much indirect). Foundations historically try to negotiate lower indirect cost rates, often arguing that their resources are limited and paying for administration is not what their charters endorse. The true effective indirect rate for universities is always lower than the stated number because of such negotiations.
PIs are required to submit technical progress reports, and universities are required to submit detailed financial reports, to track these grants.
This basic framework has been in place for decades, and it has resulted in the growth of research universities, with enormous economic and societal benefit. Especially as industrial long term research has waned in the US (another screed I have written before), the university research ecosystem has been hugely important in contributing to modern technological society. We would not have the internet now, for example, if not for federally sponsored research.
Is it ideal? No. Are there inefficiencies? Sure. Should the whole thing be burned down? Not in my opinion, no.
"All universities lose money doing research." This is a quote from my colleague who was provost when I arrived at Rice, and was said to me tongue-in-cheek, but also with more than a grain of truth. If you look at how much it really takes to run the research apparatus, the funds brought in via indirect costs do not cover those costs. I have always said that this is a bit like Hollywood accounting - if research was a true financial disaster, universities wouldn't do it. The fact is that research universities have been willing to subsidize the additional real indirect costs because having thriving research programs brings benefits that are not simple to quantify financially - reputation, star faculty, opportunities for their undergrads that would not exist in the absence of research, potential patent income and startup companies, etc.
Reasonable people can disagree on what is the optimal percentage number for indirect costs. It's worth noting that the indirect cost rate at Bell Labs back when I was there was something close to 100%. Think about that. In a globally elite industrial research environment, with business-level financial pressure to be frugal, the indirect rate was 100%.
The fact is, if indirect cost rates are set too low, universities really will be faced with existential choices about whether to continue to support sponsored research. The overall benefits of having research programs will not outweigh the large financial costs of supporting this business.
Congress has made these true indirect costs steadily higher. Over the last decades, both because it is responsible stewardship and because it's good politics, Congress has passed laws requiring more and more oversight of research expenditures and security. Compliance with these rules has meant that universities have had to hire more administrators - on financial accounting and reporting, research security, tech transfer and intellectual property, supervisory folks for animal- and human-based research, etc. Agencies can impose their own requirements as well. Some large center-type grants from NIH/HHS and DOD require preparation and submission of monthly financial reports.
What did NIH do yesterday? NIH put out new guidance (linked above) setting their indirect cost rate to 15% effective this coming Monday. This applies not just to new grants, but also to awards already underway. There is also a not very veiled threat in there that says, we have chosen for now not to retroactively go back to the start of current awards and ask for funds (already spent) to be returned to us, but we think we would be justified in doing so. The NIH twitter feed proudly says that this change will produce an immediate savings to US taxpayers of $4B.
What does this mean? What are the intended and possible unintended consequences? It seems very likely that other agencies will come under immense pressure to make similar changes. If all agencies do so, and nothing else changes, this will mean tens of millions fewer dollars flowing to typical research universities every year. If a university has $300M annually in federally sponsored research, then that would be generating under the old rules (assume 55% indirect rate) $194M of direct and $106M of indirect costs. If the rate is dropped to 15% and the direct costs stay the same at $194M, then that would generate $29M of indirect costs, a net cut to the university of $77M per year.
There will be legal challenges to all of this, I suspect.
The intended consequences are supposedly to save taxpayer dollars and force universities to streamline their administrative processes. However, given that Congress and the agencies are unlikely to lessen their reporting and oversight requirements, it's very hard for me to see how there can be some radical reduction in accounting and compliance staffs. There seems to be a sentiment that this will really teach those wealthy elite universities a lesson, that with their big endowments they should pick up more of the costs.
One unintended consequence: If this broadly goes through and sticks, universities will want to start making new direct costs. For a grant like the one I described above, you could imagine asking for $1200 per year for electricity, $1000/yr for IT support, $3000/yr for lab space maintenance, etc. This will create a ton of work for lawyers, as there will be a fight over what is or is not an allowable direct cost. This will also create the need for even more accounting types to track all of this. This is the exact opposite of "streamlined" administrative processes.
A second unintended consequence: Universities for whom doing research is financially a lot more of a marginal proposition would likely get out of those activities, if they truly can't recover the costs of operating their offices of research. This is the opposite of improving the situation and student opportunities at the less elite universities.
From a purely real politik perspective that often appeals to legislators: Everything that harms the US research enterprise effectively helps adversaries. The US benefitted enormously after WWII by building a global premier research environment. Risking that should not be done lightly.
Don't panic. There is nothing gained by freaking out. Whatever happens, it will likely be a drawn out process. It's best to be aware of what's happening, educated about what it means, and deliberate in formulating strategies that will preserve research excellence and capabilities.
(So help me, I really want my next post to be about condensed matter physics or nanoscale science!)
55 comments:
nice summary
The great unknown is just how much fat there is to be cut amongst the ‘research adjacent’ in universities. Difficult to assess. However, ‘enabling’ research, as opposed to actually doing it, has never been so attractive… I’m personally pretty keen to see the system challenged, and maybe also to see it burn a little.
Doug, I think that your approach is somewhat imprecise. Recovered indirect costs (F&A) usually are pooled together and then distributed internally to a substantial degree according to the wishes and whims of VPRs. Universities have been claiming since the beginning of time that it is too hard to account for all these streams. Sure, whatever you say. The argument "reducing F&A hurts research" does not hold under these conditions. To put it differently and use you as an example: I would be perfectly happy if you and any other researcher who directly and substantially contributes to assuring this country's competitiveness and security were awarded even an 100% F&A rate and taxpayer funds were given for fancy new labs and equipment. I strongly oppose having any portion of "your" F&A diverted to keep the lights on at a DEI temple where social scientists are masterminding how to decolonize math, or to pay the administrative staff supporting them. 15% is a ridiculously small number but it sure will induce administrative efficiencies. Similarly, I no longer care about third- and fourth-rate research in a dire situation when the country has fallen behind its main competitors in all but few R&D dimensions. The necessary disclaimer at the end: I am not a Republican, I am an American.
I’m not willing to take your word for it that diverted F&A are used to “keep the lights on at a DEI temple” or support “third- and fourth-rate research”. You’ll have to put a lot more nuance, thought and evidence into your arguments for me to take you seriously.
Thank you for this post. I am a long time reader of your blog.
Let's analyze your sample budget of $67k annually to support a student. 15% overhead on that would be an additional $9k a year. That covers the $1200/year electricity, $3000/year maintenance costs, $1000/year IT support with $4000 left over for more overhead.
We can also analyze a lab of 5 students with $50k per year salary and $10k in supplies for each student. That is $300k in direct costs and $45k in indirect costs (15% overhead rate) annually or $3750 monthly. The cost of lab space is $1-$5 per square foot monthly so that overhead rate is enough to rent an adequate lab space.
I estimate the university I work at will lose ~$50 million per year with this reduced overhead. Yes cuts will have to be made but there just isn't enough transparency in a university budget for me to tell you what should be cut. However, I do see some cuts in the day to day operation that wouldn't hurt the research enterprise. Also, endowment distributions at my university are 3x the expected loss in revenue from reduced overhead.
How did you determine the 100% overhead for Bell Labs? In the glory days of Bell Labs, AT&T paid the salaries of all the scientists and gave them money for materials and supplies from their very profitable business. Are you saying that this was just 50% of the operating budget for Bell Labs that AT&T paid and the other 50% was spent on "overhead" to keep the facility running?
I am a big supporter of these reforms by DOGE which I think are long overdue. I also think you and I share a love for science and recognize the importance of it to our country and the world. In the coming weeks, people will argue what the final overhead rate should be, and I think these discussions are worth having and thank you for creating this platform to discuss these issues.
I'll end with this "Provocatively, 29% of [university] presidents even believe that some universities ripped off the federal government with excessive overhead charges on grants." source: https://time.com/7212572/college-presidents-defy-trumps-war-on-higher-education/
Anon@9:06, I recognize that I am unlikely to persuade you, but I think you are severely underestimating the costs of running research at a R1 university. The present rates were not determined without actual discussions of real costs - it’s not like the universities just tossed out a number. Assuming that lab space costs $1-5 per sq ft per month seems very low. That’s saying that a 1000 ft^2 lab costs only $5K/month to support and maintain, which isn’t much different than expensive residential rental property in some cities. Renovation costs on physics or chemistry type lab spaces can easily be $1000/sq ft these days. You haven’t mentioned the cost of employing any of the relevant staff either. I’m not saying that 60% rates are sacred, but a step function change to 15% with no discussion at all is just not reasonable and likely isn’t legal.
As for the Bell Labs number, that was told to me by my boss when I worked there. Yes, I think the cost of running and operating Murray Hill and its research significantly exceeded the (iirc when I was there) 1% set aside from the business units.
Regarding endowment returns: money is fungible, though there are restrictions on how much can be pulled from the endowments, how that money can be used, and what to do if the economy is down and endowment returns are greatly reduced. If the university loses out on tens of millions of dollars per year that it has been getting, either total effort gets cut back, or that money has to come from somewhere. Large, sweeping cuts to indirect, or large, sweeping taxes on endowment returns will have real effects. Ironically, a likely casualty will be the ability of private universities to offer financial aid at the level they have been doing, making them less affordable.
I am hesitant to accept the branding of draconian cuts, particularly ones done with no discussion or warning in ways that seem to be pushing the bounds of legality, as “reforms”. For this one, it really seems like it will be exceptionally bad for medical research and medical institutions. It’s hard for me to see upsides there. Similarly, threats to slash the NSF budget by 2/3 and their staff by half don’t sound like reforms with reasonable benefits, they sound like a very deliberate agenda. You’re entitled to your opinion, but I don’t think we will change each others’ minds on this.
Thank you for the discussion and the perspective from both the lab PI and the department/university side. This is very valuable.
Suppose that the savings from an overhead cap is plowed into additional research or education funding (this is probably not what is happening right now), what would be the overall impact? I was told that much of the startup funds for new PIs come from savings from overhead, which also go to fund initiatives inside each department/school. Do you expect that the number of new AP hires and startup packages would go down? My impression is that US R1 typical startups are quite high compared to schools of similar stature/rank in other countries. I would also guess that schools would be less incentivized to build great research programs and will instead refocus on teaching and other activities. Would this ‘equalize’ the have- and have-not schools and close the gap between elite schools and the rest of the R1s? Thanks!
PPP, my intent was not to write a research paper, but to put in a few lines a perspective of how things are in the real world and how the sausage is made. Your agreement and approval are not needed or required. Universities are nothing but business entities today and they act accordingly. That may be ok, but the US taxpayers should have a say in what they subsidize. (By the way, my comment about third- and fourth-rate research was in response to Doug's second unintended consequence.)
I don’t expect you to care what I think. Just saying that you’d be a lot more convincing if you put a bit more effort into backing up your claims.
Case in point: the anon at 9:06 pm poster. even though I disagree with much of what is being said, it’s at least appreciated that the poster makes an attempt at thoughtful dialogue and discussion.
(Of course, it’s possible that you may very well be the same person, in which case I’d suggest that you stick with those posts and not keep this one that I’m responding to.)
As a non-academic, something very basic seems out of whack with the idea of expressing indirect costs as a multiple of direct costs. Facilities, hiring grant administrators, etc. have a cost that doesn't scale with the cost of the research being supported. It's rent, salary, utilities, etc. They cost ~the same whether you're growing newts in a terrarium or using diamond anvils and electron microscopes. There are exceptions, obviously, but the point is that indirect costs are kind of like tipping: A waiter serving a $50 meal shouldn't make 5x as much as a waiter serving a $10 meal just because "people should tip 15 or 20%". Same service should have same value. Indirect costs associated with basic services whose true costs are independent of the cost of the research they're supporting shouldn't be defined or negotiated as a multiple of those direct costs. That just seems dumb and bound to give rise to lots of inefficiency - can't be otherwise.
Or, oh wise and better-informed-than-I blogosphere, please relieve me of my ignorance and explain why it's reasonable...
Finally, to be clear, I am NOT arguing that slashing indirect costs is a good idea. I am, in fact, pretty despondent about it and worried that it will gut a whole generation and derail things. But a long discussion about the indirect costs should at least address this issue if it makes any sense.
Everybody who pushed for DEI in science, decolonizing math, 'indigenous knowledge' and so on... this is your fault. There is now not a cigarette paper between us and the fringe left and their posonous ideologies.
Without all of the above, we could have claimed an exception, lobbied that science/engineering were different or more useful... But no, we appear to be in ideological lock step with people who are nearly universally detested countrywide. Many of us tried to tell you that this pushback would happen... This is the stupidest, most self-inflicted thing to happen to science in my lifetime.
Congratulations. This might be the stupidest comments I’ve ever read on this blog, and there’s some stiff competition for that title.
(Doug, I know under normal circumstances you’d ask for civility, but please make an exception for this).
Perhaps you are a bit young to remember, but there WAS a time when parts of the University acted differently, and had different public profiles.
The arts were for the fairly well off, economics and business were for the ambitious but dim, science was for the smart kids, and the social sciences were for the certifiable. University administrators recognised where the serious stuff was done, and we all smiled politely at the others. We tolerated a few political firebrands around the place too. Employers and politicians also knew the difference.
That is what we have lost with the imposition of identikit virtue politics everywhere, not to mention the vast expansion in student numbers. The distinction between which bits of the University are the jewels in the crown, and which bits should be kept small, and on a tight leash.
The end result? A hodge podge of ideology, good research, bad research, and people who slavishly follow political fashion. It is hence no surprise to me that a new administration favours radical cuts, or even slash and burn, over reform.
This is ultimately on us all. We were in charge of academia, and preserving its legacy. Some serious soul searching is now required.
Regardless of one's views, and regardless of some gains in efficiency, a blanket slashing is going to throw out many babies with the bath water, including "non-woke" research. It'll hurt students because of less exposure to cutting edge research, it'll hurt the country because less research equates to less competitive edge in the long term.
If there is an agenda of wanted outcomes , make laws restricting usage of overhead. That would work to the goals of this administration without the collateral damage.
Generally agree with that. However the problem with academics is that we are extremely cunning! We are world experts in adapting to evolving rules, and buggering on with business as usual. Perhaps (being charitable) that is why we are getting shock treatment?
Anon @4:02: Spot on. This is the outcome of Universities converting into businesses, driven by an ever-growing administrative caste fed with F&A steroids, delivering useless degrees to willing idiots. The problem is that one needs to be of a certain age to remember and also to have a brain that is capable of reasoning and understanding that goes beyond manichaistic logic.
One hopes that the hard sciences will be spared, especially in the looming science budget cuts. Hard to believe that the administration does not understand the mortal danger for the country from uniform cuts in science funding.
We could have a lengthy discourse on the True Purpose of universities sometime, but not here, please. Likewise, implying that everyone who disagrees with your ideas doesn't have a functioning brain capable of reasoning and understanding may feel good to the id, but it's not exactly a path forward. (Obviously everyone should completely agree with me on all these topics - my views are 100% correct. Ahem.)
I can buy that forced self-examination about how universities are run could have benefits. In general, I think many (most? nearly all?) of the people putting forth policies that would cripple the NSF and NIH are doing so without a genuine understanding of the consequences of their actions.
Anon@9:48, how indirect is allocated within the university varies from place to place. For my own department, I can tell you that departmental contributions to startup funds largely do not come from indirect cost returns, but mostly involve endowments and teaching revenues. In general, though, money is fungible. Certainly if universities get tens of millions fewer dollars per year associated with research, they are very likely to slow down or reduce in scope hiring, especially in expensive parts of the physical sciences and engineering. After the 2008 financial crisis, when endowments took a big hit, there was a major national slowdown in hiring in these areas.
PPP, you only called Anon@2:18 stupid. You forgot to call him/her a racist and a bigot. May I suggest that silence is the best option now for you and your minority of fellow DEI converts? You've done critical damage, vastly disproportional to your crowd size. The days of the cancel hordes are over. The rest of us need to figure out how to fix this mess.
Here's a reference: https://sps.wsu.edu/documents/2016/06/F&A-Primer.pdf/ I quote from the conclusion: "While the subject is of immediate relevance for those who propose and are awarded research grants, it is important that members of the faculty, staff, and student body recognize that funding for a proportion of the University's programs is derived from F&A cost reimbursements." Happy now?
Doug, I think the issue is that the latest developments could force a re-evaluation of the business model for most Universities. There is little hope for a long-term plan that includes necessary reform over a four-year plan based on the hope that a new administration will reverse course. In that case, your prediction will certainly come true.
Yes, this is certainly a step in the right direction. Thank you.
I’m still having trouble seeing how you go from that document to the claim that F&A subsidizes “DEI temples”, whatever that may mean. But I recognize that it takes a lot of bandwidth and time to engage in these discussions and I’ll understand if you’d prefer not to do so.
One further reply: Trump's first-term science advisor, Kelvin Droegemeier, testified before Congress about indirect costs. He pointed out that Vannevar Bush (founder of the NSF) estimated indirect rates initially at 50%, because that was *half* of the 100% indirect rate charged by private contractors during WWII. See here for a link to that testimony and a discussion that the effective rate within Microsoft Research today is around 38%. https://goodscience.substack.com/p/indirect-costs-at-nih
FWIW, indirect costs at national labs are significantly higher than at universities. There are good reasons for this - the net indirect costs have to pay all the people who keep the business of a lab running (HR department, security, grounds staff, fire department...everything). Many of these costs at a university are in effect greatly subsidized by other revenue streams (e.g. tuition). Academics tend to bemoan "thinking about a university as a business", but when the total budget for a large R1 university is counted in billions of dollars per year it would seem very strange not to have some people looking at it from a business perspective.
Some comments on academic endowments from a former department head at a large public R1 in the US: The total value of an endowment significantly obscures what can actually be done with those funds. For my department the overall endowment was actually a collection of well over 100 individual funds, each with specific restrictions from the donors. These aims are often very specific (e.g. support an undergraduate student from the southern half of the state). Several commenters here have described funds at universities as fungible. This is a strong simplification. In my experience, only a small fraction of the annual funds available from an endowment are fungible, since most must be allocated to very specific things (that have nothing to do with research) as dictated by the university's agreement with the donor.
There are a number of things about the NIH announcement indicating that they are using a few extra or fewer cards. First, the announcement limited the 15% rate to institutions of higher education (IHE). Hospitals and non-profits are not IHEs although some are. Some universities run their grants through foundations (for publics often to avoid conflicts with state laws/rules)
For another thing, the statement that NIH offered as justification
"Last year, $9B of the $35B that the National Institutes of Health (NIH) granted for research was used for administrative overhead, what is known as “indirect costs.” Today, NIH lowered the maximum indirect cost rate research institutions can charge the government to 15%, above what many major foundations allow and much lower than the 60%+ that some institutions charge the government today. This change will save more than $4B a year effective immediately."
Makes no sense. 9B$ out of 35B$ is 26% which is the maximum for administrative overhead stated in Circular A21. Craming 26% down to 15% results in a savings of 4B$.
So is the NIH going to set a maximum of 15% on administrative overhead or on total overhead? Someone should ask
Yeah, the statement that this will save taxpayers $4B/yr immediately is silly, in the sense that any cut ostensibly saves the value of the cut. They could just as well say, we are cutting the NIH budget by $20B and saving the taxpayers $20B/yr.
I agree that a business perspective with a focus on efficiency is useful. Where things have gone wrong though is a business perspective on what is good for science and /or teaching.
And the latter is missing in the approach of the current administration too imo.
Regardless of any disagreements we have about these recent policies, I hope we can all unite around the fact that NFL refereeing is utter bullshit.
Given the cultural aversion to DEI and the pushback from the Trump administration, I almost feel like there is no choice but for scientists to seriously start considering moving abroad. A lot of talented professors have moved to Hong Kong recently (Hongjie Dai for example) and it might be worth it for other faculty to follow in their footsteps. All the best students in US graduate schools were largely international so it’s not like the US was adding intrinsic value. Sad to see how science will disappear from the US but it feels inevitable between the extreme left pushing for decolonizing math and the right pursuing a path of anti intellectualism.
I work at a top 10 research institution and agree there is not only research that the general public would not support, but the administrative requirements imposed by the government are so burdensome that it necessitates the need for bloated administrative support. I've always looked at grants as a very large planned redistribution of wealth. Government should be funding public goods. Truth be told we are all going to die. I can't really think of anything that has been a significant improvement in health due to research over the last 30 years. Not many solutions to diabetes, heart attacks and cancer...instead we keep hearing diet and exercise. Perhaps we'd all live longer if government funded other public goods like better transportation methods, quicker road maintenance so we aren't stuck in traffic hours a day or put more money to cleaning up garbage in cities and more access to public parks. That improves quality of life. Regarding administrative burden and the reason for high F&A. NIH is obsessed with monitoring unspent balances and effort. The admin time to gather and collect Other Support Pages for faculty is tedious. Who cares if a PI reduces effort by 25% or more.....if the quality of work and output is acceptable one can make the decision this was $ well spent. The RPPR should solely be a scientific progress report and not an administrative update. Because it is administrative it can take up to 20+ individuals to have a hand on preparing it. i welcome the 15% cut...It is a devastating cut and it should be increased, but hopefully it forces a discussion to get rid of so much BS we are all dealing with.
Just imagine what it is like in the EU/UK, with all the bullshit overhead from EU projects. Mediocre 'societal goals', guild language, and permanent jobs for all the enablers, just not the people who actually do the work... We are turbo fckd, and the sooner somebody- anybody- like Trump or Musk gets in the better.
You don't think CAR-T cell therapies are an improvement? The Human Genome Project? The HPV vaccine? Let alone what was accomplished with the COVID-19 vaccine in such a short timeframe. The new medication therapies for cystic fibrosis? PrEP? Not only are these amazing, life-saving therapies and discoveries, but they have driven additional innovations and created capital for our economy. Oh yeah, and saved people's lives.
Good article and description of research in the US. NOTE: the federal government officially calls indirect costs facilities and administrative costs AND they'd frozen the administrative costs at 26% (called "the administrative cap" since 1991. Thus, any institution with increasing indirect costs has grown them because of their investment in their facilities. Also, then our medical institutions historically have had and maintained much higher indirect cost rates than schools without such things.
Regarding medical improvements due to research grants.....I keep hearing CAR-T cell therapies, but I honestly have no reports as to who or how many are benefiting from it and who is paying for it. I for one don't think an individual's access to healthcare is a public good. Many doctors hide behind research and why does government need to fund it. If these doctors were actually treating patients with general care, health costs to individuals would go down. Let's face it too, COVID originated from gain of function research funded by NIH/DOD and the vaccines were already being worked on....yes even more profit for the institutions. The government totally blew it by forcing it on individuals without posting the risks like every other drug taken as well as suppressing other remedies. Informed consent was thrown out the window. You know it and I know it!! Now we have complete distrust of the medical industry. How many were killed with remdesivir and ventilators, when treatments for lung function like budesonide or anti-virals hydroxychloroquine/ivermectin could have alleviated symptoms? I'm sorry, but NIH and Fauci caused such tremendous damage to medical research.
Another thing, small businesses everywhere are failing, yet we look at universities constantly thriving....construction is continuous....business is always booming for institutions and big Pharma. Government has not been successful in driving down healthcare costs.
FYI, I am not going to entertain a debate here about the origins of COVID, nor pandemic response, nor about the economics of healthcare.
Reading the comments, I’m shocked by the number of people — a lot apparently working in science —who are expressly advocating for the wanton destruction of US university research.
This was me above “Reading the comments, I’m shocked by the number of people — a lot apparently working in science —who are expressly advocating for the wanton destruction of US university research.” We are living in a golden age of science and technology. And there are lots of people who think that it makes sense to gut funding with only 3 days notice all because of a tiny percentage of $$$ is going to something they disagree with. And unintended consequences be dammed.
I have a hunch that at least some of the anonymous posters calling for collective system-wide suicide aren’t really who they say they are. I suspect that at least some of them are (and I hate using the word, but can’t think of an alternative) trolls masquerading in an attempt to spread misinformation and foster anti-intellectual sentiment.
Nobody is advocating for the destruction of US university research. I don't think any of the anonymous posters are trolls and sound to me like academic scientists wanting reform. I am a professor at an R1 institution also supportive of these reforms. Historically indirect costs used to be much lower than what we see today. I do think that we just can't cut the indirect rates and not reform other aspects of grant/university administration but by necessity those changes will follow. "For many years, the limitations on rates payable for indirect costs varied among agencies. For example, the National Institutes of Health (NIH) limited its rates to 8 percent before 1955, 15 percent from 1955 to 1963, and 20 percent starting in 1964. NSF limited its rate to 15 percent before 1960, 20 percent from 1960 to 1963, and 25 percent from 1963
to 1964." Reference: https://www.nsf.gov/pubs/1997/oig912/oig912.pdf
I suspect some of you may say that there are so many more important regulations now and everything is so much more complicated than it was in the 1950s and some of that is true but it is also true that things can swing too much in the other direction of overregulation and administrative burden.
We can debate what the appropriate rate today should be, but even if we accept the premise that 15% is good, you can’t just do a first order phase transition on it - the people within the system need time to plan and adapt. I think it’s extremely risky to assume that the system will just naturally fix itself (ie, that the necessary changes will follow fairly quickly and smoothly).
Speaking for experimentalists only - the equipment available today is nothing like those of the 50s and the complexity of experiments today is also vastly higher. Papers routinely have multiple co-first-authors often because that’s what’s required simply to run the instruments. Complex instrument requires sophisticated facilities/labs. In electron microscopy I was told the cost to build the lab/room exceeds that of the microscope.
We can debate what the appropriate level of overhead should be, but a step function cut to 15%, in my opinion, reflects a will to harm the academic research enterprise. And no, I really don’t think the guys in charge care one bit about your or my opinion on DEI, whatever it is.
One silver lining is that they are not yet cutting the number of grants (yet). But I expect they will do that soon.
Let us all strive to do the best work that we possibly can, and show the world once again that what we do is of value. This is the moment to remember that we work to advance humanity itself.
I have been following closely what Elon Musk has been saying about these reforms, as he is leading DOGE. He did a similar first order phase transition at Twitter when he took it over. Staff was cut by 80%, advertisers were lost, revenue went down but earnings doubled. In university grant terms I would equate revenues with research expenditures and earnings with high quality publications and students educated. If done right you can increase the quality of science with reduced research expenditures.
Reference: https://www.teslarati.com/elon-musk-x-doubled-ebitda-since-2022-takeover-report/
What is frustrating about Trump directives, which I agree would decimate research in the US if acted upon in this way, is that he is able to enact sweeping change that could have been done in a positive way by Democrats when they were in office. There was so much talk, but no effective changes made by Democrats to address efficiency and spending in academic research.
For example, if Trump wanted to tomorrow, he could force all publishers to make all US scientific research open source, even retroactively. Publishers might fight it, but he would probably threaten to back charge them for any money they made of selling research. Now, can you imagine a Democrat fixing the publishing inefficiency of academia even if you gave them 4 years instead of a few weeks? No, it would flow through committee after committee, with very gradual encouragements instead of courageous changes. Democrats might be socially liberal, but certainly love keeping up the status quo with all their heart.
@7:57 Or perhaps people could simply drop unpopular and probably illegal activities, and do the actual work of research and teaching?
What's frustrating about indirect cost recovery for universities is that most indirect rates are wayyy too low, not too high. Most private sector indirect rates range from 150%-200% because a private business has to recover all of its indirect costs--it doesn't have tuition to backstop a loss on operations (I suspect the 100% rate for Bell Labs that Doug quoted was an underestimate of the real rate).
Increasing the F&A rates for universities would put downward price pressure on tuition.
And you know who is watching and laughing all the way to scientific, economic, and world power dominance, helped by this self- inflicted decline ? China.
Tuition has outpaced inflation for the last 40 years. Indirect costs have only increased during that time. The real reason for higher tuition and higher indirect costs is administrative bloat which plagues every university.
A private business with 100%-200% overhead rates implies they are spending 1x-2x the annual cost of a scientist's salary, materials, and supplies on facility and administrative costs. I doubt Bell Labs was spending that much on the upkeep of their Murray Hill facility but maybe someone can point me to financial statements which show otherwise. It would be interesting to know what administrative overhead they had during the glory days of Bell Labs that led to all those Nobel Prizes.
I have a few questions for those supporting Musk's plan to cut federal spending (except for the ones that don't benefit him directly - and before I get questions just look at the EO tailored to support Afrikaners 'who are victims of unjust racial discrimination' - yes, you read it right):
How will this improve the lives of thousands of citizens? How the effects of having so many people out of jobs, including out of health insurance, will pan out in the medium-to-long run? What will happen when current employees of federal agencies being dismantled find themselves without income, and the same goes for the many research workers who will be on the chopping block if the NIH vendetta comes to fruition?
I am all for efficiency, but shouldn't efficiency goals serve a purpose that is beyond efficiency itself?
the perspective that one can simply translate a private sector action into the public sector is baffling to me. Does anyone wonder what is happening to the 80% staff that was cut off? These real people, with lives, children, diseases, things to take care of and pay for. Mr Musk may not give a damn about them, but the President of a country MUST care about what happens to a workforce in result of their decisions. Unless of course we are all okay with diving into a huge recession while licking boots.
Who cared for all the families when the breadwinner lost a job for not taking a shot? Yes 15% is ridiculous, it needs to be a much higher rate and that low rate has now been stopped by a judge. What doesn't change is the debate needed as to where efficiencies can occur. I would assume that most faculty agree that administrative burden is out of control and would welcome some change to reduce burden and focus on the science.
Just when you think they couldn't get any lower, they go even low:
https://www.commerce.senate.gov/2025/2/cruz-led-investigation-uncovers-2-billion-in-woke-dei-grants-at-nsf-releases-full-database
This includes REU sites, CAREER award winners, funding for conferences...
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