Apparently the Red States get upset when you do this.
{{ On Friday night, the NIH announced it was cutting payments toward overhead costs for research institutions that receive its grants, a policy that could leave universities with major budget gaps, The Associated Press reported.
Currently, some universities receive 50% or more of the amount of a grant to put toward support staff and other needs, but that would be capped at 15%, according to AP. }}
Back 50 years ago when I was a sophomore in college, I got a $1,500 National Science Foundation grant to purchase some research materials for a project. When I looked at the accounting reports, I found that the college actually collected $3,000 from NSF, so there was a 100% skim rate added to my grant.
And 50 years ago colleges were much leaner operations than they are today. The number of non-teaching administrators has exploded along with the tuition.
No way I’d recommend a young person borrow money to attend my alma mater at current pricing. Go to State U and put the savings in an index fund.
There’s a big article on university Facilities & Administrative (F&A) costs in WaPo. NIH says it averages 27% to 28%. It seems the flagship University of Washington charges 57%, Harvard, 69%. Are there institutions getting by on 15%? Be interesting to see a list from top to bottom. How does the shop charging 60% differ from those with much lower rates?
I bet we find that the most expensive research is done in close proximity to Division 1 football.
The interesting thing (at least when I worked for a non-profit) is that there are no absolute guidelines for what goes into overhead. Some expenses are clearly overhead, some expenses clearly aren’t overhead, and some expenses may or may not be overhead. That last group leaves lots of wiggle room for “judgment” about what is in overhead.
I didn’t work in the education arena, but my non-profit kept our overhead around 15%. That helped with fundraising, too.
I’ve seen overhead as high as 25%, but a 50% overhead? That’s egregious, IMNSHO.
Yes, the overhead charges pay much of the campus costs like heating, cooling, utilities, maintenance, etc. Lavish campuses with many old buildings are expensive to maintain and operate.
Its also noted that sciences are able to get grants while social sciences can’t. So its easy for accountants to use overhead charges to subsidize the needy.
High cost of maintenance reminds us that use of electronic teaching should reduce the need for classrooms. Most freshman courses could be taken on line. Zoom could be used for small group discussions or q&a with instructors.
Education as we have all known it is (I pray) entering a time of radical reformation. Our current system reeks of 19th Century and before preconceptions and limitations.
Yes, education needs improvement in many areas. All those advanced education degrees make you think most possible improvements have been investigated. But the powers in charge are extremely bound to tradition. They seem to resist most changes.
And it is much worse in Mexico, where free universal education through secondary school was a key accomplishment after the horrific Revolution/Civil War of over 100 years ago, but unfortunately the difficulty of that crucial victory locked the curriculum and methodolgy in quickset cement.
Both Republican and Democratic policymakers, in contrast, have tried to rein in overhead payments. Most notably, in 1994 the U.S. government capped the administration rate for universities at 26% after several instances in which universities were found to have applied the money for purposes outside the scope of the grant. Former President Barack Obama’s administration also floated setting an unspecified flat rate, which economists said would increase efficiency and reduce paperwork.
And then there is the increasing regulatory burden.
F&A Survey Capstone: Cost Reimbursement Rates, Actual Reimbursement, and Growing Regulatory Cost Burden
The federally mandated 26% cap on reimbursement of university administrative costs prevents universities from charging federal awards their proportionate share of the cost burden associated with the extensive growth in federal regulations since enactment of the cap in 1991…Recent COGR studies on the “Cost of Compliance” demonstrate that new regulations associated with research security and data management can add millions of dollars to an institution’s administrative infrastructure…
Figure 7 shows the extensive growth in federal regulations (see blue line) starting in 1991, and through 2024. Each point on the blue line represents the cumulative number of new and significantly changed federal regulations instituted since 1991.
