People are using the 60% plus as a fixed number but this is not average, there is a significant range

According to NIH average is around 33%.. And, of course, a significant portion of indirect is dictated by federal requirements. Also , there are a lot of participating Universities in red states so expect blowback.

"NIH's mission is to "seek fundamental knowledge about the nature and behavior of living systems" in order to enhance health, lengthen life, and reduce illness and disability. In furtherance of this mission, NIH spent more than $35 Billion in Fiscal Year 2023 on almost 50,000 competitive grants to more than 300,000 researchers at more than 2,500 universities, medical schools, and other research institutions across all 50 states and the District of Columbia.[1] Of this funding, approximately $26 billion went to direct costs for research, while $9 billion was allocated to overhead through NIH's indirect cost rate."

socaltownie said:

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Rushinbear said:

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BearGoggles said:

---

Rushinbear said:

---

BearGoggles said:

---

socaltownie said:

---

BearGoggles said:

---

GoCal80 said:

---

BearGoggles said:

---

GoCal80 said:

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BearGoggles said:

---

Amazing to me that literally no one has asked or discussed the two question that matter most.

Why are universities including a 30-69% overhead and admin charge on grant applications? And what does Cal charge?

It seems like a really high percentage to me, but I fully admit I have no idea how the grant applications are structured.

Instead of dealing with the merits, we have the usual crowd having a negative reaction without any discussion of the merits of the change.

---

Cal's overhead is 62% set by the Office of Naval Research, which visits campuses, does a thorough analysis of the administration and physical plant, and sets the overhead. The overhead actually does not even cover the full research costs. If this change stands American research falls way behind China and some European countries, as do all the economic, health and national security benefits. Civilized societies invest in their future and well being rather than finding ways to finance tax breaks for billionaires.

---

Thank you for answering the question (in part). Can you share what does fall in the overhead calculation which you say doesn't cover the full cost? For example, at Cal, does that include the cost of the lab only, or costs associated with running the campus as a whole (including admin unrelated to the lab)?

And what costs are included in the "not overhead" categories?

---

There is complexity in that even within one disciplinary area, there are many types of research, and a campus has research in many disciplines (in the sciences: biomedical, engineering, physics, chemistry, etc.). Also, there are many federal funders, which include National Institutes of Health, National Science Foundation, Department of Energy, Department of Defense, etc.

The University with the Office of Navel Research sets an indirect cost rate through a site visit/negotiation process that is very detailed and involved. Labor costs in the bay area are very high. Grants generally do not keep up with inflation. There is, no doubt, opportunity to make things more efficient, but what was done will destroy research and future generations of research talent who will opt to take their talents elsewhere.

Federal grants to the university are structured so that individual investigators (faculty at Cal) write to an agency for a grant. If you get an award for $1 million/year, that is to cover the expenses directly related to your research, including the personnel working on the project directly, equipment, chemicals, repairs to equipment, publication fees (journals charge you to publish), service contracts on equipment, which can be very high, disposable items specific to your research area like plastic petri dishes in life sciences, and animals if you do research on mice, etc.

Indirect costs cover the F&A, which stands for Facilities and Administration. Facilities includes things like computing (super computers, high speed internet), water filtration systems, fume hoods, temparature-controlled rooms, clean rooms, all things that serve many research labs. Administration includes things like staff to administer your grant(s), purchasing staff to handle ordering, staff to remove hazardous waste, animal care staff to maintain animals and animal facilities, IT staff, compliance staff for anything that is potentially hazardous and to insure that grant funds are spent only on approved items.

University research is done at a fraction of the costs in industry in large part because much of the labor force is trainees (graduate students and postdoctoral research fellows). Importantly, University research produces two things of great value to society: (1) New knowledge, (2) A highly trained workforce. Those two things, produced at bargain rates, explain why there are ~400 biotech companies in the Bay Area (thanks to Cal, Stanford and UCSF) and a booming tech industry. The investment in university research produces enormous economic benefits, yet it now is all at risk because we have tech bros with the "move fast and brake things" ethos damaging our country's precious infrastructure. It will be very hard to recover from all the damage being done.

---

Thank you once again for a very detailed and informative explanation. And just to be clear, I do think university research is of critical value to our country.

I would be very interested to read your response to Rushinbear's post above, particularly his view that the indirect charges are a profit center to the university? That seems to be the potential political issue/concern.

https://bearinsider.com/forums/6/topics/125945/replies/2465677

---

Define profit center in the context of a R1 university? The indirect costs (say a portion of the facility cost of the Nat. Science building) is definitely flowing to the top line unrestricted. But that just means that tuition, state support, etc. can be that much less. It isn't like it is being distributed to shareholders.

Now, I know the criticism on the right - all that Woke and DEI stuff. But that is minimal. Again, indirect to UC would decrease (if we go from 50% to 15%) a minimum of $350 MILLION. That is like closing Merced. And just enabling MORE research doesn't really work because the post-docs and faculty stil lneed lab space, HR functions, administrative support, etc. etc. etc.

It is important to note that private foundations "get away" with less indirect because it is "blended" with the federal support (aka the feds are cross subsidizing) as well as the belief that higher than 10% indirect to gates would mean he would simply not fund the stuff at ALL.

Now we can have a rational discussion about higher ed, federal role in funding, etc. etc. But essentially this rule upends 60+ years of business model and throws up hands to "you guys figure it out". They will - by draconian cuts, tuition increases and likely a whole bunch of Post-docs let go.

---

I would define profit center as recovery of amounts in excess of the actual legitimately allocated costs. Rushinbear's post seems to lay all this out. Maybe address his points?

My only additional comment is that there has been tremendous administrative bloat at UC (and other universities) and I can't help but wonder to what extent (if any) that is being passed along as an indirect research expense. Again - I don't know but I do wonder.

---

There are many ways to define profit in this case. By profit, I meant an amount above expense. When you hack up the univ pres and office costs and collect more than that in indirect on all grants, you've got a piece of profit. Figure that for every conceivable cost center in the univ that might have the remotest connection to the grant subject and you've got profit. Univ grant admins argue very hard to include everything they can think of and the grantor admins are easily persuaded.

In my case, my indirect went from 12% to 52% in two years. Our guys would not have been so bold as to ask for that big an increase. Instead, the grantor let them know that they had acceded to those levels for others, so why shouldn't our univ. So,... In other management fields, this is called whipsawing.

---

It is easy to game a system when the operator of the system (the gov) is happy to be gamed. It certainly is remarkable how vociferously certain members of the beltway blob (from both parties) are opposing any attempt to audit expenses.

---

the irony is that the researchers complain that they will lose grant money is changes are made, when reductions in indirect could mean MORE for them. Let's put the savings into DIRECT.

---

LOL. But that isn't the plan. This is all about "Savings" so the tax extension scores better,. Not acknowledging that is pollyannish.

---

not if you write the grant app budget with more direct in it...unless, of course, you don't need more direct or cannot justify it. in which case...

Rushinbear said:

---

socaltownie said:

---

Rushinbear said:

---

BearGoggles said:

---

Rushinbear said:

---

BearGoggles said:

---

socaltownie said:

---

BearGoggles said:

---

GoCal80 said:

---

BearGoggles said:

---

GoCal80 said:

---

BearGoggles said:

---

Amazing to me that literally no one has asked or discussed the two question that matter most.

Why are universities including a 30-69% overhead and admin charge on grant applications? And what does Cal charge?

It seems like a really high percentage to me, but I fully admit I have no idea how the grant applications are structured.

Instead of dealing with the merits, we have the usual crowd having a negative reaction without any discussion of the merits of the change.

---

Cal's overhead is 62% set by the Office of Naval Research, which visits campuses, does a thorough analysis of the administration and physical plant, and sets the overhead. The overhead actually does not even cover the full research costs. If this change stands American research falls way behind China and some European countries, as do all the economic, health and national security benefits. Civilized societies invest in their future and well being rather than finding ways to finance tax breaks for billionaires.

---

Thank you for answering the question (in part). Can you share what does fall in the overhead calculation which you say doesn't cover the full cost? For example, at Cal, does that include the cost of the lab only, or costs associated with running the campus as a whole (including admin unrelated to the lab)?

And what costs are included in the "not overhead" categories?

---

There is complexity in that even within one disciplinary area, there are many types of research, and a campus has research in many disciplines (in the sciences: biomedical, engineering, physics, chemistry, etc.). Also, there are many federal funders, which include National Institutes of Health, National Science Foundation, Department of Energy, Department of Defense, etc.

The University with the Office of Navel Research sets an indirect cost rate through a site visit/negotiation process that is very detailed and involved. Labor costs in the bay area are very high. Grants generally do not keep up with inflation. There is, no doubt, opportunity to make things more efficient, but what was done will destroy research and future generations of research talent who will opt to take their talents elsewhere.

Federal grants to the university are structured so that individual investigators (faculty at Cal) write to an agency for a grant. If you get an award for $1 million/year, that is to cover the expenses directly related to your research, including the personnel working on the project directly, equipment, chemicals, repairs to equipment, publication fees (journals charge you to publish), service contracts on equipment, which can be very high, disposable items specific to your research area like plastic petri dishes in life sciences, and animals if you do research on mice, etc.

Indirect costs cover the F&A, which stands for Facilities and Administration. Facilities includes things like computing (super computers, high speed internet), water filtration systems, fume hoods, temparature-controlled rooms, clean rooms, all things that serve many research labs. Administration includes things like staff to administer your grant(s), purchasing staff to handle ordering, staff to remove hazardous waste, animal care staff to maintain animals and animal facilities, IT staff, compliance staff for anything that is potentially hazardous and to insure that grant funds are spent only on approved items.

University research is done at a fraction of the costs in industry in large part because much of the labor force is trainees (graduate students and postdoctoral research fellows). Importantly, University research produces two things of great value to society: (1) New knowledge, (2) A highly trained workforce. Those two things, produced at bargain rates, explain why there are ~400 biotech companies in the Bay Area (thanks to Cal, Stanford and UCSF) and a booming tech industry. The investment in university research produces enormous economic benefits, yet it now is all at risk because we have tech bros with the "move fast and brake things" ethos damaging our country's precious infrastructure. It will be very hard to recover from all the damage being done.

---

Thank you once again for a very detailed and informative explanation. And just to be clear, I do think university research is of critical value to our country.

I would be very interested to read your response to Rushinbear's post above, particularly his view that the indirect charges are a profit center to the university? That seems to be the potential political issue/concern.

https://bearinsider.com/forums/6/topics/125945/replies/2465677

---

Define profit center in the context of a R1 university? The indirect costs (say a portion of the facility cost of the Nat. Science building) is definitely flowing to the top line unrestricted. But that just means that tuition, state support, etc. can be that much less. It isn't like it is being distributed to shareholders.

Now, I know the criticism on the right - all that Woke and DEI stuff. But that is minimal. Again, indirect to UC would decrease (if we go from 50% to 15%) a minimum of $350 MILLION. That is like closing Merced. And just enabling MORE research doesn't really work because the post-docs and faculty stil lneed lab space, HR functions, administrative support, etc. etc. etc.

It is important to note that private foundations "get away" with less indirect because it is "blended" with the federal support (aka the feds are cross subsidizing) as well as the belief that higher than 10% indirect to gates would mean he would simply not fund the stuff at ALL.

Now we can have a rational discussion about higher ed, federal role in funding, etc. etc. But essentially this rule upends 60+ years of business model and throws up hands to "you guys figure it out". They will - by draconian cuts, tuition increases and likely a whole bunch of Post-docs let go.

---

I would define profit center as recovery of amounts in excess of the actual legitimately allocated costs. Rushinbear's post seems to lay all this out. Maybe address his points?

My only additional comment is that there has been tremendous administrative bloat at UC (and other universities) and I can't help but wonder to what extent (if any) that is being passed along as an indirect research expense. Again - I don't know but I do wonder.

---

There are many ways to define profit in this case. By profit, I meant an amount above expense. When you hack up the univ pres and office costs and collect more than that in indirect on all grants, you've got a piece of profit. Figure that for every conceivable cost center in the univ that might have the remotest connection to the grant subject and you've got profit. Univ grant admins argue very hard to include everything they can think of and the grantor admins are easily persuaded.

In my case, my indirect went from 12% to 52% in two years. Our guys would not have been so bold as to ask for that big an increase. Instead, the grantor let them know that they had acceded to those levels for others, so why shouldn't our univ. So,... In other management fields, this is called whipsawing.

---

It is easy to game a system when the operator of the system (the gov) is happy to be gamed. It certainly is remarkable how vociferously certain members of the beltway blob (from both parties) are opposing any attempt to audit expenses.

---

the irony is that the researchers complain that they will lose grant money is changes are made, when reductions in indirect could mean MORE for them. Let's put the savings into DIRECT.

---

LOL. But that isn't the plan. This is all about "Savings" so the tax extension scores better,. Not acknowledging that is pollyannish.

---

not if you write the grant app budget with more direct in it...unless, of course, you don't need more direct or cannot justify it. in which case...

---

LOL. But then you are cross subsidizing. While Cal's indirect could go down by SOME it actually isn't that padded or have you noticed how deferred maintenance sucks.

A LOT of indirect these days are in equipment which NIH will not pay all off (usually only some portion of depreciation).

Rushinbear said:

---

BearGoggles said:

---

Rushinbear said:

---

BearGoggles said:

---

socaltownie said:

---

BearGoggles said:

---

GoCal80 said:

---

BearGoggles said:

---

GoCal80 said:

---

BearGoggles said:

---

Amazing to me that literally no one has asked or discussed the two question that matter most.

Why are universities including a 30-69% overhead and admin charge on grant applications? And what does Cal charge?

It seems like a really high percentage to me, but I fully admit I have no idea how the grant applications are structured.

Instead of dealing with the merits, we have the usual crowd having a negative reaction without any discussion of the merits of the change.

---

Cal's overhead is 62% set by the Office of Naval Research, which visits campuses, does a thorough analysis of the administration and physical plant, and sets the overhead. The overhead actually does not even cover the full research costs. If this change stands American research falls way behind China and some European countries, as do all the economic, health and national security benefits. Civilized societies invest in their future and well being rather than finding ways to finance tax breaks for billionaires.

---

Thank you for answering the question (in part). Can you share what does fall in the overhead calculation which you say doesn't cover the full cost? For example, at Cal, does that include the cost of the lab only, or costs associated with running the campus as a whole (including admin unrelated to the lab)?

And what costs are included in the "not overhead" categories?

---

There is complexity in that even within one disciplinary area, there are many types of research, and a campus has research in many disciplines (in the sciences: biomedical, engineering, physics, chemistry, etc.). Also, there are many federal funders, which include National Institutes of Health, National Science Foundation, Department of Energy, Department of Defense, etc.

The University with the Office of Navel Research sets an indirect cost rate through a site visit/negotiation process that is very detailed and involved. Labor costs in the bay area are very high. Grants generally do not keep up with inflation. There is, no doubt, opportunity to make things more efficient, but what was done will destroy research and future generations of research talent who will opt to take their talents elsewhere.

Federal grants to the university are structured so that individual investigators (faculty at Cal) write to an agency for a grant. If you get an award for $1 million/year, that is to cover the expenses directly related to your research, including the personnel working on the project directly, equipment, chemicals, repairs to equipment, publication fees (journals charge you to publish), service contracts on equipment, which can be very high, disposable items specific to your research area like plastic petri dishes in life sciences, and animals if you do research on mice, etc.

Indirect costs cover the F&A, which stands for Facilities and Administration. Facilities includes things like computing (super computers, high speed internet), water filtration systems, fume hoods, temparature-controlled rooms, clean rooms, all things that serve many research labs. Administration includes things like staff to administer your grant(s), purchasing staff to handle ordering, staff to remove hazardous waste, animal care staff to maintain animals and animal facilities, IT staff, compliance staff for anything that is potentially hazardous and to insure that grant funds are spent only on approved items.

University research is done at a fraction of the costs in industry in large part because much of the labor force is trainees (graduate students and postdoctoral research fellows). Importantly, University research produces two things of great value to society: (1) New knowledge, (2) A highly trained workforce. Those two things, produced at bargain rates, explain why there are ~400 biotech companies in the Bay Area (thanks to Cal, Stanford and UCSF) and a booming tech industry. The investment in university research produces enormous economic benefits, yet it now is all at risk because we have tech bros with the "move fast and brake things" ethos damaging our country's precious infrastructure. It will be very hard to recover from all the damage being done.

---

Thank you once again for a very detailed and informative explanation. And just to be clear, I do think university research is of critical value to our country.

I would be very interested to read your response to Rushinbear's post above, particularly his view that the indirect charges are a profit center to the university? That seems to be the potential political issue/concern.

https://bearinsider.com/forums/6/topics/125945/replies/2465677

---

Define profit center in the context of a R1 university? The indirect costs (say a portion of the facility cost of the Nat. Science building) is definitely flowing to the top line unrestricted. But that just means that tuition, state support, etc. can be that much less. It isn't like it is being distributed to shareholders.

Now, I know the criticism on the right - all that Woke and DEI stuff. But that is minimal. Again, indirect to UC would decrease (if we go from 50% to 15%) a minimum of $350 MILLION. That is like closing Merced. And just enabling MORE research doesn't really work because the post-docs and faculty stil lneed lab space, HR functions, administrative support, etc. etc. etc.

It is important to note that private foundations "get away" with less indirect because it is "blended" with the federal support (aka the feds are cross subsidizing) as well as the belief that higher than 10% indirect to gates would mean he would simply not fund the stuff at ALL.

Now we can have a rational discussion about higher ed, federal role in funding, etc. etc. But essentially this rule upends 60+ years of business model and throws up hands to "you guys figure it out". They will - by draconian cuts, tuition increases and likely a whole bunch of Post-docs let go.

---

I would define profit center as recovery of amounts in excess of the actual legitimately allocated costs. Rushinbear's post seems to lay all this out. Maybe address his points?

My only additional comment is that there has been tremendous administrative bloat at UC (and other universities) and I can't help but wonder to what extent (if any) that is being passed along as an indirect research expense. Again - I don't know but I do wonder.

---

There are many ways to define profit in this case. By profit, I meant an amount above expense. When you hack up the univ pres and office costs and collect more than that in indirect on all grants, you've got a piece of profit. Figure that for every conceivable cost center in the univ that might have the remotest connection to the grant subject and you've got profit. Univ grant admins argue very hard to include everything they can think of and the grantor admins are easily persuaded.

In my case, my indirect went from 12% to 52% in two years. Our guys would not have been so bold as to ask for that big an increase. Instead, the grantor let them know that they had acceded to those levels for others, so why shouldn't our univ. So,... In other management fields, this is called whipsawing.

---

It is easy to game a system when the operator of the system (the gov) is happy to be gamed. It certainly is remarkable how vociferously certain members of the beltway blob (from both parties) are opposing any attempt to audit expenses.

---

the irony is that the researchers complain that they will lose grant money is changes are made, when reductions in indirect could mean MORE for them. Let's put the savings into DIRECT.

---

Great point. It is basically the admin skimming from research $$. Similar to the Cal AD's surcharge on football donations, which was hidden for many years and only recently disclosed.

socaltownie said:

---

BearGoggles said:

---

socaltownie said:

---

BearGoggles said:

---

Rushinbear said:

---

BearGoggles said:

---

socaltownie said:

---

BearGoggles said:

---

GoCal80 said:

---

BearGoggles said:

---

GoCal80 said:

---

BearGoggles said:

---

Amazing to me that literally no one has asked or discussed the two question that matter most.

Why are universities including a 30-69% overhead and admin charge on grant applications? And what does Cal charge?

It seems like a really high percentage to me, but I fully admit I have no idea how the grant applications are structured.

Instead of dealing with the merits, we have the usual crowd having a negative reaction without any discussion of the merits of the change.

---

Cal's overhead is 62% set by the Office of Naval Research, which visits campuses, does a thorough analysis of the administration and physical plant, and sets the overhead. The overhead actually does not even cover the full research costs. If this change stands American research falls way behind China and some European countries, as do all the economic, health and national security benefits. Civilized societies invest in their future and well being rather than finding ways to finance tax breaks for billionaires.

---

Thank you for answering the question (in part). Can you share what does fall in the overhead calculation which you say doesn't cover the full cost? For example, at Cal, does that include the cost of the lab only, or costs associated with running the campus as a whole (including admin unrelated to the lab)?

And what costs are included in the "not overhead" categories?

---

There is complexity in that even within one disciplinary area, there are many types of research, and a campus has research in many disciplines (in the sciences: biomedical, engineering, physics, chemistry, etc.). Also, there are many federal funders, which include National Institutes of Health, National Science Foundation, Department of Energy, Department of Defense, etc.

The University with the Office of Navel Research sets an indirect cost rate through a site visit/negotiation process that is very detailed and involved. Labor costs in the bay area are very high. Grants generally do not keep up with inflation. There is, no doubt, opportunity to make things more efficient, but what was done will destroy research and future generations of research talent who will opt to take their talents elsewhere.

Federal grants to the university are structured so that individual investigators (faculty at Cal) write to an agency for a grant. If you get an award for $1 million/year, that is to cover the expenses directly related to your research, including the personnel working on the project directly, equipment, chemicals, repairs to equipment, publication fees (journals charge you to publish), service contracts on equipment, which can be very high, disposable items specific to your research area like plastic petri dishes in life sciences, and animals if you do research on mice, etc.

Indirect costs cover the F&A, which stands for Facilities and Administration. Facilities includes things like computing (super computers, high speed internet), water filtration systems, fume hoods, temparature-controlled rooms, clean rooms, all things that serve many research labs. Administration includes things like staff to administer your grant(s), purchasing staff to handle ordering, staff to remove hazardous waste, animal care staff to maintain animals and animal facilities, IT staff, compliance staff for anything that is potentially hazardous and to insure that grant funds are spent only on approved items.

University research is done at a fraction of the costs in industry in large part because much of the labor force is trainees (graduate students and postdoctoral research fellows). Importantly, University research produces two things of great value to society: (1) New knowledge, (2) A highly trained workforce. Those two things, produced at bargain rates, explain why there are ~400 biotech companies in the Bay Area (thanks to Cal, Stanford and UCSF) and a booming tech industry. The investment in university research produces enormous economic benefits, yet it now is all at risk because we have tech bros with the "move fast and brake things" ethos damaging our country's precious infrastructure. It will be very hard to recover from all the damage being done.

---

Thank you once again for a very detailed and informative explanation. And just to be clear, I do think university research is of critical value to our country.

I would be very interested to read your response to Rushinbear's post above, particularly his view that the indirect charges are a profit center to the university? That seems to be the potential political issue/concern.

https://bearinsider.com/forums/6/topics/125945/replies/2465677

---

Define profit center in the context of a R1 university? The indirect costs (say a portion of the facility cost of the Nat. Science building) is definitely flowing to the top line unrestricted. But that just means that tuition, state support, etc. can be that much less. It isn't like it is being distributed to shareholders.

Now, I know the criticism on the right - all that Woke and DEI stuff. But that is minimal. Again, indirect to UC would decrease (if we go from 50% to 15%) a minimum of $350 MILLION. That is like closing Merced. And just enabling MORE research doesn't really work because the post-docs and faculty stil lneed lab space, HR functions, administrative support, etc. etc. etc.

It is important to note that private foundations "get away" with less indirect because it is "blended" with the federal support (aka the feds are cross subsidizing) as well as the belief that higher than 10% indirect to gates would mean he would simply not fund the stuff at ALL.

Now we can have a rational discussion about higher ed, federal role in funding, etc. etc. But essentially this rule upends 60+ years of business model and throws up hands to "you guys figure it out". They will - by draconian cuts, tuition increases and likely a whole bunch of Post-docs let go.

---

I would define profit center as recovery of amounts in excess of the actual legitimately allocated costs. Rushinbear's post seems to lay all this out. Maybe address his points?

My only additional comment is that there has been tremendous administrative bloat at UC (and other universities) and I can't help but wonder to what extent (if any) that is being passed along as an indirect research expense. Again - I don't know but I do wonder.

---

There are many ways to define profit in this case. By profit, I meant an amount above expense. When you hack up the univ pres and office costs and collect more than that in indirect on all grants, you've got a piece of profit. Figure that for every conceivable cost center in the univ that might have the remotest connection to the grant subject and you've got profit. Univ grant admins argue very hard to include everything they can think of and the grantor admins are easily persuaded.

In my case, my indirect went from 12% to 52% in two years. Our guys would not have been so bold as to ask for that big an increase. Instead, the grantor let them know that they had acceded to those levels for others, so why shouldn't our univ. So,... In other management fields, this is called whipsawing.

---

It is easy to game a system when the operator of the system (the gov) is happy to be gamed. It certainly is remarkable how vociferously certain members of the beltway blob (from both parties) are opposing any attempt to audit expenses.

---

Again - I could care less about the blob or no blob. None of you MAGAs are answering the question of where UC finds 350 MILLION in ONE YEAR in savings.....

---

Why is this about MAGA? And that is not the actual question.

The question is why should the US government - US tax payers - overpay for research and/or give UC a subsidy of $350M (to use your number)?

Just to be clear, I'm not yet convinced that 15% is a fair reimbursement rate for overhead. But there's a huge gulf between 15% and the current 60%+. UC (and other research institutions) should receive a fair reimbursement for a reasonably allocated portion of reasonable expenses (i.e., not for admin bloat).

No university has the right to grant money or the reasonable expectation of receiving "reimbursement" for overstated expenses. If (again IF) UC has been overcharging for expense reimbursements and the government no longer wants to pay for that, then that is a UC problem.

---

Only _IF_ it is true that it is an overcharge.

And no - if you are a cal fan it is YOUR problem because a place to cut (see sonoma state) is in ADs...if you are a parent jacking tuition....or a parent of an applying student more out of staters....or a CA taxpayer jacking your taxes.

Moreover it is illegal. They (Trump) didn't do what you wanted them to do. Audit and adjust (which there is a process for). They cut and pasted apples to organes from Heritage that long ago gutted their staff that does policy work in favor of cherry picking public relations.

Why they got slapped last night with a TRO.

---

I'm a USA fan first, then a Cal fan. I'm also a fan of eliminating wasteful spending. And this is not just about Cal potentially overcharging - it is about other schools doing it first.

In terms of the process, please explain why this change is illegal. If it is illegal, then I would not support it.

I think this is something the voters need to decide on ultimately in terms of university funding and to my knowledge no voters are ever asked. I have a real issue with the private sector passing on, in my belief, their responsibility to train their employees onto the University system. It use to be that you went to University to get a broad and even broad in a specialized sense, education that would carry you in the job market. But in the tech sector they've essentially completely passed on their training to Universities and thus are passing on their own costs to the employees they'll hire and the state and federal gov't. This is a completely unsustainable model that needs to be re-worked.

MinotStateBeav said:

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I think this is something the voters need to decide on ultimately in terms of university funding and to my knowledge no voters are ever asked. I have a real issue with the private sector passing on, in my belief, their responsibility to train their employees onto the University system. It use to be that you went to University to get a broad and even broad in a specialized sense, education that would carry you in the job market. But in the tech sector they've essentially completely passed on their training to Universities and thus are passing on their own costs to the employees they'll hire and the state and federal gov't. This is a completely unsustainable model that needs to be re-worked.

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There is a somewhat related effect here in that the industries that reap the benefit of this are pharma. Now, improved health and drugs benefit us all but they also can reap patents, exorbitant prices and market monopolies. Instead of overhead reform, a wise government would institute patent reform

BearGoggles said:

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socaltownie said:

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BearGoggles said:

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socaltownie said:

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BearGoggles said:

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Rushinbear said:

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BearGoggles said:

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socaltownie said:

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BearGoggles said:

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GoCal80 said:

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BearGoggles said:

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GoCal80 said:

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BearGoggles said:

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Amazing to me that literally no one has asked or discussed the two question that matter most.

Why are universities including a 30-69% overhead and admin charge on grant applications? And what does Cal charge?

It seems like a really high percentage to me, but I fully admit I have no idea how the grant applications are structured.

Instead of dealing with the merits, we have the usual crowd having a negative reaction without any discussion of the merits of the change.

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Cal's overhead is 62% set by the Office of Naval Research, which visits campuses, does a thorough analysis of the administration and physical plant, and sets the overhead. The overhead actually does not even cover the full research costs. If this change stands American research falls way behind China and some European countries, as do all the economic, health and national security benefits. Civilized societies invest in their future and well being rather than finding ways to finance tax breaks for billionaires.

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Thank you for answering the question (in part). Can you share what does fall in the overhead calculation which you say doesn't cover the full cost? For example, at Cal, does that include the cost of the lab only, or costs associated with running the campus as a whole (including admin unrelated to the lab)?

And what costs are included in the "not overhead" categories?

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There is complexity in that even within one disciplinary area, there are many types of research, and a campus has research in many disciplines (in the sciences: biomedical, engineering, physics, chemistry, etc.). Also, there are many federal funders, which include National Institutes of Health, National Science Foundation, Department of Energy, Department of Defense, etc.

The University with the Office of Navel Research sets an indirect cost rate through a site visit/negotiation process that is very detailed and involved. Labor costs in the bay area are very high. Grants generally do not keep up with inflation. There is, no doubt, opportunity to make things more efficient, but what was done will destroy research and future generations of research talent who will opt to take their talents elsewhere.

Federal grants to the university are structured so that individual investigators (faculty at Cal) write to an agency for a grant. If you get an award for $1 million/year, that is to cover the expenses directly related to your research, including the personnel working on the project directly, equipment, chemicals, repairs to equipment, publication fees (journals charge you to publish), service contracts on equipment, which can be very high, disposable items specific to your research area like plastic petri dishes in life sciences, and animals if you do research on mice, etc.

Indirect costs cover the F&A, which stands for Facilities and Administration. Facilities includes things like computing (super computers, high speed internet), water filtration systems, fume hoods, temparature-controlled rooms, clean rooms, all things that serve many research labs. Administration includes things like staff to administer your grant(s), purchasing staff to handle ordering, staff to remove hazardous waste, animal care staff to maintain animals and animal facilities, IT staff, compliance staff for anything that is potentially hazardous and to insure that grant funds are spent only on approved items.

University research is done at a fraction of the costs in industry in large part because much of the labor force is trainees (graduate students and postdoctoral research fellows). Importantly, University research produces two things of great value to society: (1) New knowledge, (2) A highly trained workforce. Those two things, produced at bargain rates, explain why there are ~400 biotech companies in the Bay Area (thanks to Cal, Stanford and UCSF) and a booming tech industry. The investment in university research produces enormous economic benefits, yet it now is all at risk because we have tech bros with the "move fast and brake things" ethos damaging our country's precious infrastructure. It will be very hard to recover from all the damage being done.

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Thank you once again for a very detailed and informative explanation. And just to be clear, I do think university research is of critical value to our country.

I would be very interested to read your response to Rushinbear's post above, particularly his view that the indirect charges are a profit center to the university? That seems to be the potential political issue/concern.

https://bearinsider.com/forums/6/topics/125945/replies/2465677

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Define profit center in the context of a R1 university? The indirect costs (say a portion of the facility cost of the Nat. Science building) is definitely flowing to the top line unrestricted. But that just means that tuition, state support, etc. can be that much less. It isn't like it is being distributed to shareholders.

Now, I know the criticism on the right - all that Woke and DEI stuff. But that is minimal. Again, indirect to UC would decrease (if we go from 50% to 15%) a minimum of $350 MILLION. That is like closing Merced. And just enabling MORE research doesn't really work because the post-docs and faculty stil lneed lab space, HR functions, administrative support, etc. etc. etc.

It is important to note that private foundations "get away" with less indirect because it is "blended" with the federal support (aka the feds are cross subsidizing) as well as the belief that higher than 10% indirect to gates would mean he would simply not fund the stuff at ALL.

Now we can have a rational discussion about higher ed, federal role in funding, etc. etc. But essentially this rule upends 60+ years of business model and throws up hands to "you guys figure it out". They will - by draconian cuts, tuition increases and likely a whole bunch of Post-docs let go.

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I would define profit center as recovery of amounts in excess of the actual legitimately allocated costs. Rushinbear's post seems to lay all this out. Maybe address his points?

My only additional comment is that there has been tremendous administrative bloat at UC (and other universities) and I can't help but wonder to what extent (if any) that is being passed along as an indirect research expense. Again - I don't know but I do wonder.

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There are many ways to define profit in this case. By profit, I meant an amount above expense. When you hack up the univ pres and office costs and collect more than that in indirect on all grants, you've got a piece of profit. Figure that for every conceivable cost center in the univ that might have the remotest connection to the grant subject and you've got profit. Univ grant admins argue very hard to include everything they can think of and the grantor admins are easily persuaded.

In my case, my indirect went from 12% to 52% in two years. Our guys would not have been so bold as to ask for that big an increase. Instead, the grantor let them know that they had acceded to those levels for others, so why shouldn't our univ. So,... In other management fields, this is called whipsawing.

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It is easy to game a system when the operator of the system (the gov) is happy to be gamed. It certainly is remarkable how vociferously certain members of the beltway blob (from both parties) are opposing any attempt to audit expenses.

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Again - I could care less about the blob or no blob. None of you MAGAs are answering the question of where UC finds 350 MILLION in ONE YEAR in savings.....

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Why is this about MAGA? And that is not the actual question.

The question is why should the US government - US tax payers - overpay for research and/or give UC a subsidy of $350M (to use your number)?

Just to be clear, I'm not yet convinced that 15% is a fair reimbursement rate for overhead. But there's a huge gulf between 15% and the current 60%+. UC (and other research institutions) should receive a fair reimbursement for a reasonably allocated portion of reasonable expenses (i.e., not for admin bloat).

No university has the right to grant money or the reasonable expectation of receiving "reimbursement" for overstated expenses. If (again IF) UC has been overcharging for expense reimbursements and the government no longer wants to pay for that, then that is a UC problem.

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Only _IF_ it is true that it is an overcharge.

And no - if you are a cal fan it is YOUR problem because a place to cut (see sonoma state) is in ADs...if you are a parent jacking tuition....or a parent of an applying student more out of staters....or a CA taxpayer jacking your taxes.

Moreover it is illegal. They (Trump) didn't do what you wanted them to do. Audit and adjust (which there is a process for). They cut and pasted apples to organes from Heritage that long ago gutted their staff that does policy work in favor of cherry picking public relations.

Why they got slapped last night with a TRO.

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I'm a USA fan first, then a Cal fan. I'm also a fan of eliminating wasteful spending. And this is not just about Cal potentially overcharging - it is about other schools doing it first.

In terms of the process, please explain why this change is illegal. If it is illegal, then I would not support it.

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The AG filings lay out 2 central claims (summarizing)

First, the appropriation for NIH specifically precluded the use of federal $$$ to change the indirects. It was a way of Congress essentially using its power of the purse to lock in current policy. Happens all the time. But crystal clear in the appropriation language. My OP was prior to that (and reflects that there is oonly so much time in the day to do legal research for an Internet post).

Second, even if we say THAT is an unconstitutional infringement on the executive (I don't think so but YMMV), the Administrative Policy Act (which governs a ton of how the executive branch makes rules) required them to actually provide justification and data for it. Also 30 day noticing requirement with comment period before publication of the rule, etc. etc. They did NONE of that. What they did (it is so laughable you will not believe it) was lift 2 paragraphs from Project 2025 that was likely cherry picked data (no sources for that actually being the fringe rate that private foundations pay for ALL medical research, for example).

Sadly this is pretty much what they are doing - with at least a few of the fringes running with the idea that we have a unitary executive (and I am not sure what role they think Congress has in that - Maybe none?)

Anarchistbear said:

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MinotStateBeav said:

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I think this is something the voters need to decide on ultimately in terms of university funding and to my knowledge no voters are ever asked. I have a real issue with the private sector passing on, in my belief, their responsibility to train their employees onto the University system. It use to be that you went to University to get a broad and even broad in a specialized sense, education that would carry you in the job market. But in the tech sector they've essentially completely passed on their training to Universities and thus are passing on their own costs to the employees they'll hire and the state and federal gov't. This is a completely unsustainable model that needs to be re-worked.

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There is a somewhat related effect here in that the industries that reap the benefit of this are pharma. Now, improved health and drugs benefit us all but they also can reap patents, exorbitant prices and market monopolies. Instead of overhead reform, a wise government would institute patent reform

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There is an argument to be made on this point. However, having worked adjacent to that function for several years the flip side is that University (and I would assume Feds are even work) "Tech transfer" offices are HORRIFICALLY slow. I think in part because their incentives suck - first and foremost not screw up not getting $$$ for something that blows up (see Gatorade). So they are ultra cautious and often start with ridiculous demands. Industry will counter but from the university if the deal doesn't happen that is a lot less unimportant than a deal they don't get the upside (as defined by monday morning politicians).

socaltownie said:

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wifeisafurd said:

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socaltownie said:

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There are no merits to it. They are not planning on keeping nih whole. The money saved will be used as an offset to lower taxes at a time when inflation is high. I hate the gop

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The problem is when you go this direction is that you lose all credibility. There was an election over all this and your views lost, and the problem is that you are unwilling to accept the consequences of that election. You start with name calling and labeling people, especially guys like AunBurn. A tactic where someone attacks another person's character or identity with insults and derogatory labels instead of addressing the substance of their argument impedes any discussion of what actually is at stake.

As I think you are aware, I sit on a board of large University science research entity that is fortunate to have the backing of several billionaires, but also is deeply engaged in federal research programs. (Just so everyone knows my biases). Federal funded research is not perfect . There is limited funding available, researchers often face fierce competition for grants, leading to the possibility of engaging in trendy or politically motivated research areas, potentially neglecting important but less fashionable research questions. And a lot of this research deservedly receives criticism, which is why most universities actually have people providing oversight. But yes, there are some really shaky projects, some which will be mentioned on this thread and in the public discussion, but they are a very small portion of the projects funded.

Federal funding also in not perfect. Governments Should Not Fund ResearchCato Institutehttps://www.cato.org blog governments-should-not-f...Moving to the more practical, there is a need to demonstrate tangible results within a short Federal grant cycle can result in prioritizing projects with quicker outcomes over long-term, high-impact research. For example, without long term defense department funding, there probably would not be an internet today. IMO, there is an old boys network to Federal funding causing unequal access to funding, a bias against younger or less prominent researchers, as opposed to picking projects on merits. Federal funding has the disadvantage of a massive amount of red tape slowing progress and having people who may not be the most qualified making decisions.

But what has not been discussed is the negatives with the alternatives. When research is funded by Billionaires, private companies or industries with vested interests, there can be pressure to produce results that favor the funder's agenda, potentially compromising research integrity. This pressure to secure funding can sometimes lead to unethical practices such as data manipulation or fabrication. And I don't mean to denigrate the objectives of funders. They often have the most highly pubic benefitting motivations. Then again, Federal funding has the advantage of being able to provide funds where the profit motive is not sufficient. Private funding has the disadvantage of not deep enough pockets - there just are many worth while projects that won't be funded by private sources. And I might add, Federal projects that have been quite beneficial to the Federal government.

The bottom line is that federal funding of research has improved public health, stimulated economic growth, provided for a stronger national defense, and provided a whole lot of other public good. Rather than end federal research grants and payment of indirect costs, a better approach is to improve the grant process and oversight so less merited, politically biased, or bad research is not funded, and only truly relevant costs, such as making sure the lights are on at laboratories are funded.

I think with such an approach, a reasonable result can occur. But in the present environment, with the shrill and "ad hominem" attacks, no one is going to listen. Clearly, very few people listen to what Politico has to say, just as an article from Fox News isn't going to hold much creditability for you. We need to move on and instead address a funding process that improves the benefit and efficiency of Federal research.

I also think this thread, while sometimes interesting, belongs in OT.

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Joihnson Flat out said he plans on scoring the ID savings as an offset for the tax cut so it will be 4+ billion LESS for unviersities like UC. Currently UC gets nearly 1 billion (with a B) in NIH funding. So assume we go from 50 to 15. That is 350 MILLION in cost savings.

When UC slices ICA to the bone or tuition rises or faculty is laid off if this stands I expect you to ask for what kind of crow you would like to be served.

Or maybe you just support that and see sports and a hobby and don't care squat about the overall mission.

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If in in fact the entire research grant budget is eliminated that clearly is throwing out the baby with the bath water (or whatever metaphor you choose). I have not read that is what is being discussed. Clearly my organization would suffer. Again most programs add public good and are not a situation where government agencies allocate taxpayer money to research projects that are specifically designed to promote or validate a particular political viewpoint, potentially influencing the direction and outcomes of the research to align with the desired political narrative. These concern even scientists who are liberal Democrats, raising concerns about scientific integrity and objectivity. We can't let some bad programs taint what has been very productive outcomes from projects supported by federal grants. You are missing the point. That should be your message - not the political crap that only makes people tune out. You need to sell the value of research programs.

calumnus said:

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The irony is the GOP controls Congress and Trump controls the GOP so spending cuts and elimination of programs could be done by Trump and the GOP without violating the Constitution. The only conclusion you can draw is that as important to them as slashing spending may be, establishing an unchecked unconstitutional autocracy is even more important to them.

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I wouldn't call a slim majority of 218 to 215 in the House "control".

calumnus said:

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BearGoggles said:

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Rushinbear said:

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BearGoggles said:

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socaltownie said:

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BearGoggles said:

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GoCal80 said:

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BearGoggles said:

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GoCal80 said:

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BearGoggles said:

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Amazing to me that literally no one has asked or discussed the two question that matter most.

Why are universities including a 30-69% overhead and admin charge on grant applications? And what does Cal charge?

It seems like a really high percentage to me, but I fully admit I have no idea how the grant applications are structured.

Instead of dealing with the merits, we have the usual crowd having a negative reaction without any discussion of the merits of the change.

---

Cal's overhead is 62% set by the Office of Naval Research, which visits campuses, does a thorough analysis of the administration and physical plant, and sets the overhead. The overhead actually does not even cover the full research costs. If this change stands American research falls way behind China and some European countries, as do all the economic, health and national security benefits. Civilized societies invest in their future and well being rather than finding ways to finance tax breaks for billionaires.

---

Thank you for answering the question (in part). Can you share what does fall in the overhead calculation which you say doesn't cover the full cost? For example, at Cal, does that include the cost of the lab only, or costs associated with running the campus as a whole (including admin unrelated to the lab)?

And what costs are included in the "not overhead" categories?

---

There is complexity in that even within one disciplinary area, there are many types of research, and a campus has research in many disciplines (in the sciences: biomedical, engineering, physics, chemistry, etc.). Also, there are many federal funders, which include National Institutes of Health, National Science Foundation, Department of Energy, Department of Defense, etc.

The University with the Office of Navel Research sets an indirect cost rate through a site visit/negotiation process that is very detailed and involved. Labor costs in the bay area are very high. Grants generally do not keep up with inflation. There is, no doubt, opportunity to make things more efficient, but what was done will destroy research and future generations of research talent who will opt to take their talents elsewhere.

Federal grants to the university are structured so that individual investigators (faculty at Cal) write to an agency for a grant. If you get an award for $1 million/year, that is to cover the expenses directly related to your research, including the personnel working on the project directly, equipment, chemicals, repairs to equipment, publication fees (journals charge you to publish), service contracts on equipment, which can be very high, disposable items specific to your research area like plastic petri dishes in life sciences, and animals if you do research on mice, etc.

Indirect costs cover the F&A, which stands for Facilities and Administration. Facilities includes things like computing (super computers, high speed internet), water filtration systems, fume hoods, temparature-controlled rooms, clean rooms, all things that serve many research labs. Administration includes things like staff to administer your grant(s), purchasing staff to handle ordering, staff to remove hazardous waste, animal care staff to maintain animals and animal facilities, IT staff, compliance staff for anything that is potentially hazardous and to insure that grant funds are spent only on approved items.

University research is done at a fraction of the costs in industry in large part because much of the labor force is trainees (graduate students and postdoctoral research fellows). Importantly, University research produces two things of great value to society: (1) New knowledge, (2) A highly trained workforce. Those two things, produced at bargain rates, explain why there are ~400 biotech companies in the Bay Area (thanks to Cal, Stanford and UCSF) and a booming tech industry. The investment in university research produces enormous economic benefits, yet it now is all at risk because we have tech bros with the "move fast and brake things" ethos damaging our country's precious infrastructure. It will be very hard to recover from all the damage being done.

---

Thank you once again for a very detailed and informative explanation. And just to be clear, I do think university research is of critical value to our country.

I would be very interested to read your response to Rushinbear's post above, particularly his view that the indirect charges are a profit center to the university? That seems to be the potential political issue/concern.

https://bearinsider.com/forums/6/topics/125945/replies/2465677

---

Define profit center in the context of a R1 university? The indirect costs (say a portion of the facility cost of the Nat. Science building) is definitely flowing to the top line unrestricted. But that just means that tuition, state support, etc. can be that much less. It isn't like it is being distributed to shareholders.

Now, I know the criticism on the right - all that Woke and DEI stuff. But that is minimal. Again, indirect to UC would decrease (if we go from 50% to 15%) a minimum of $350 MILLION. That is like closing Merced. And just enabling MORE research doesn't really work because the post-docs and faculty stil lneed lab space, HR functions, administrative support, etc. etc. etc.

It is important to note that private foundations "get away" with less indirect because it is "blended" with the federal support (aka the feds are cross subsidizing) as well as the belief that higher than 10% indirect to gates would mean he would simply not fund the stuff at ALL.

Now we can have a rational discussion about higher ed, federal role in funding, etc. etc. But essentially this rule upends 60+ years of business model and throws up hands to "you guys figure it out". They will - by draconian cuts, tuition increases and likely a whole bunch of Post-docs let go.

---

I would define profit center as recovery of amounts in excess of the actual legitimately allocated costs. Rushinbear's post seems to lay all this out. Maybe address his points?

My only additional comment is that there has been tremendous administrative bloat at UC (and other universities) and I can't help but wonder to what extent (if any) that is being passed along as an indirect research expense. Again - I don't know but I do wonder.

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There are many ways to define profit in this case. By profit, I meant an amount above expense. When you hack up the univ pres and office costs and collect more than that in indirect on all grants, you've got a piece of profit. Figure that for every conceivable cost center in the univ that might have the remotest connection to the grant subject and you've got profit. Univ grant admins argue very hard to include everything they can think of and the grantor admins are easily persuaded.

In my case, my indirect went from 12% to 52% in two years. Our guys would not have been so bold as to ask for that big an increase. Instead, the grantor let them know that they had acceded to those levels for others, so why shouldn't our univ. So,... In other management fields, this is called whipsawing.

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It is easy to game a system when the operator of the system (the gov) is happy to be gamed. It certainly is remarkable how vociferously certain members of the beltway blob (from both parties) are opposing any attempt to audit expenses.

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The auditors are the Inspector Generals, but Trump eliminated them. If you are doing an audit you do not hire teenage hackers, you hire forensic accountants and investigators.

This is not an audit. It is a slashing of programs and spending established and appropriated by Congress that Musk/Trump doesn't like without any oversight and in violation of the Constitution.

The irony is the GOP controls Congress and Trump controls the GOP so spending cuts and elimination of programs could be done by Trump and the GOP without violating the Constitution. The only conclusion you can draw is that as important to them as slashing spending may be, establishing an unchecked unconstitutional autocracy is even more important to them.

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Trump did not eliminate the inspector generals. He fired most of the current IG's (whose responsibilities continue to performed by depute IG and staff). They will be replaced.

From google AI: "An audit is an examination or review of records, activities, or systems to ensure compliance with standards. Audits can be financial, operational, or quality-related"

The dictionary definition is similar.

By definition, DOGE is conducting an audit - an inspection of records.

Is there a particular reason you feel only the IG have audit rights? Not only is that not the case, it would be a disaster if true. The president and congress have those same rights.

For people you regard as unqualified, Doge and its young minions sure seem to be highly effective at identifying spending programs that are wasteful or not aligned with Trump's policy. It is a computer project and yes - damn right I want genius 19-25 IT people to handle that project. These are the same people Twitter, Palantir, Meta, Alphabet and other companies are dying to hire. One of the DOGE guys graduated from Cal with a 3.95 GPA in electrical engineering and computer science. That is insane.

What you fail to understand is that Trump doesn't just want to reduce spending. He wants to end programs he feels are wasteful or fraudulent or not aligned with his policies (as is his right). In some cases, he may spend the dollars on other things. This is about policy as much as $$.

The only unchecked autocracts are the entrenched bureaucrats who feel they can spend money in such a wasteful manner without accountability.

Per DOGE, US taxpayer dollars were going to be spent on the following items, all which have been cancelled:

- $9.7M for UC Berkeley to develop "a cohort of Cambodian youth with enterprise driven skills"

bear2034 said:

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Per DOGE, US taxpayer dollars were going to be spent on the following items, all which have been cancelled:

- $9.7M for UC Berkeley to develop "a cohort of Cambodian youth with enterprise driven skills"

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How dare we train the future Elon Musks of Cambodia!

Eastern Oregon Bear said:

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bear2034 said:

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Per DOGE, US taxpayer dollars were going to be spent on the following items, all which have been cancelled:

- $9.7M for UC Berkeley to develop "a cohort of Cambodian youth with enterprise driven skills"

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How dare we train the future Elon Musks of Cambodia!

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I highly doubt the $9.7 million was actually supposed to be doing that.