I started as an assistant professor of molecular biology at the University of Wyoming in 2001. Within a few years, I was running a bustling lab with support from both the American Cancer Society and the National Institutes of Health, the latter of which has continued to fund my research for my entire career at UW. I’ve been participating in a decades-old collaboration between the federal government and U.S. universities that has made our nation, its universities, and its biotech and pharmaceutical industries the envy of the world.
Opinion
My role in this collaboration has been to teach students to think critically and become productive, rigorous scientists. Their discoveries and papers contribute to our collective knowledge and propel these students into careers in medicine, teaching and research.
But I worry now that this successful model of education and scientific discovery may be coming to an end, along with the preeminence of the U.S. as the world leader in biomedical innovation and technology. There are several reasons for concern, but they all come down to fundamental misconceptions about how the federal government funds academic research.
One major fallacy is that universities use federal research grants to fatten their bank accounts. The reality is that most universities, including UW, barely break even on federal grants and more often lose money. This is because the allowable overhead dollars — also referred to as “indirect costs” — paid by the federal government don’t fully cover the costs of the research, just like the price of the ingredients alone doesn’t cover the true cost of a meal at a restaurant. As a comparison, when private companies are contracted to do federal research, they may receive more than two times the amount of overhead given to universities doing equivalent work. Viewed this way, federally sponsored university research may be considered a bargain. In fact, standard estimates indicate that every dollar invested in the NIH pays out $2.56 in returns to our economy.
Still, some in government are proposing to cut the overhead on federal grants to less than a third of what is currently received by most universities, including UW. If that happens, universities will no longer be able to support research on their campuses, and the entire research enterprise and innovation engine will stall. And because universities are where workforce
training in the STEM fields occurs, our reliable supply of qualified workers will rapidly shrink, and impacted industries will move their base of operations elsewhere. We would be relegating our profitable status as the leader in science and innovation to the rest of the world.
The situation gets even worse when looking at the proposed 2026 federal budget, which includes roughly 40% cuts to the NIH and 56% cuts to the National Science Foundation. The impact of such reductions cannot be overstated. They would collapse the vital network sustaining U.S. science and technology, end training and economic opportunities for many of our
young people, and push a major economic and strategic sector out of the U.S. and into the hands of our fiercest global competitors.
And the amount saved? Well, the NIH budget last year accounted for only 0.71% of the $6.78 trillion spent by the federal government. So, while fiscal responsibility is important, it shouldn’t come at the cost of slashing investments that clearly pay off. Just as federal funding for interstates is essential for commerce, federal funding for the sciences is necessary for technology, innovation, health care and economic growth.
Cuts to federal funding for research will have a strong impact on the state of Wyoming, well beyond the flagship university in Laramie. In addition to running my lab, I also help to oversee a separate NIH program grant, which
funds research, training and infrastructure at UW and our state’s community colleges. I’ve had the privilege of visiting these colleges, working with their faculty and meeting many of these students over the past 10 years. Since 2015, that program has provided roughly $40.2 million in support to Wyoming, of which approximately 30% has been distributed to community colleges for faculty and student training, collaborative research opportunities and infrastructure development. Our program helps to ensure that young people from rural areas across Wyoming have access to high-quality professional training opportunities to advance their careers.
Simply put, there is never a good time to pull out of an investment that continually pays such strong dividends and directly benefits the citizens of our state.
Hi Jimm. I appreciate the engagement and feedback! What I can say is that the “barely-break-even argument” is one I’ve heard from every university administrator I’ve ever spoken with, including one of my brothers who worked for Boston College for 35 years. I actually argued with him about this for several years but eventually conceded his point.
In truth, I don’t know the exact breakeven point for a university like UW. I agree that many of the “indirect” activities carried out behalf of research such as human resources, accounting, safety, compliance, and some facilities maintenance would still need to exist. But you’d need far fewer people doing those jobs if not for all the extra hires and activities that extramurally funded research requires. Indirect costs are also needed to maintain science infrastructure like autoclaves, purified water systems, cold rooms, animal facilities, and shared scientific instruments such as those used for microscopy.
And all that stuff adds up. Could some of the areas supported by indirect costs potentially be made more efficient? Undoubtedly, and I’d personally love to see that. But I’ve come to acknowledge that, much like employee benefits (health insurance, retirement, etc), the hidden costs of research are very real.
Lastly, for my home department in Molecular Biology, cutting our share of indirect costs would mean that our robust weekly seminar programs would cease to exist. Our graduate and undergraduate students attend these talks and discussions to hear and directly interact with world-class scientists. This exposes them to cutting-edge areas of research and allows them to build professional connections. Unfortunately, all that would go away without sufficient indirect costs.
Thanks again Jimm! David
While I completely support the need for continued funding for NIH projects, I disagree with the notion that in-direct costs don’t make a profit for the university.
As a independent federal grant reviewer for over a decade I can say that “direct” costs cover all costs associated with a project, while the “in direct” cost covers things the university is already paying for whether the grant is approved or not, such as salaries of ancillary staff, office space, lights, water, heat, depreciation of buildings and equipment, etc.
The typical maximum percent of the grant application amount that can be added to for “indirect charges” is usually 15%. Except most universities negotiate upwards of 50%, which is money that they wouldn’t have if the grant were not awarded and yet what it can go towards is for expenses they would have occurred anyway.
Federal grants are needed, no question, for the results they might bring in, but I think it wrong to say that universities barely break even or lose money in sponsoring a grant.
Yup, and the border patrol is getting 130 billion while NASA’s budget is getting cut, again, not that they received much to begin with.
Terrific article, Dr. Fay! I don’t know why we would want to put people out of work in Wyoming when they are contributing so well to our economy and to our need for an educated workforce.