Government

Late last month, the Trump administration released its 2018 budget proposal, which indicates cutting indirect costs that the NIH makes to research institutions, as well as hospitals, to account for 10% of the total grant, a 66% decrease (see IBO 5/31/2017). In doing so, the current $4.6 billion spent on overhead costs, such as lab maintenance and regulation compliance, would be freed up and put towards research. This would also enable the administration to decrease the NIH budget by 22% with little affect on the NIH’s direct science expenditures. The potentially diminished budget would greatly effect research institutions’ abilities to conduct research, purchase equipment, maintain infrastructure and win grants. Although these budget cuts are not likely to be approved by Congress, the administration may still be able to decrease overhead payments to the agency.

Indirect cost payments have been added to research grants since 1947, and universities negotiate their own overhead rates (for both facilities and administration) with the government once every few years. These rates are dependent on geography, urbanization and field. On average, the NIH base rate for its grants is approximately 52%, which translates into $52,000 given to a university for overhead costs on a $100,000 grant. Universities have long voiced their concerns that these negotiated rates do not cover “true research costs.”

The Trump administration’s proposal states that a flat rate of 10% for indirect costs should be applied to all research institutions, which would cut NIH indirect costs expenditures by 71% from 2016, while direct spending would remain flat  at around $17 billion in 2018. Universities have spoken out about this flat rate, as it would not cover enough of the institutions’ overhead costs and would limit researchers in what grants they pursue.
Source: Science

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