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F&A Costs in the News


Rep. Tom Cole (R-Okla.), chairman of the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies (which oversees the NIH), is urging the Trump administration and fellow Republicans to abandon the idea of capping the NIH’s reimbursement rate for facilities and administrative (F&A) costs incurred by institutions that provide the infrastructure to conduct experiments funded by the agency’s grants. Science covered the story.
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The Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education rejected President Trump’s proposal to cut NIH funding by 22% and instead approved increasing the agency’s funding by $2 billion for the 2018 fiscal year, reported Science. The subcommittee also blocked the administration’s proposal to cut the NIH’s reimbursement rate for Facilities and Administrative (F&A) costs. The AAMC released a statement today in support of the action.
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“Over the past 20 years, technologies based on university research have launched entire new industries, cured fatal diseases and even put new foods on your grocery store shelves. Since 1996, these technologies have contributed an estimated $1.3 trillion and 4.2 million jobs to the American economy,” said an op-ed from Inside Higher Ed warning that the Trump administration’s proposed cut to the NIH’s F&A reimbursement rate would cripple university research. The op-ed was written by 12 chief research officers at various universities in Florida.
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The U.S. House Labor-HHS Appropriations Committee released a draft appropriations bill that would give the NIH a 3.2% increase, bringing total funding to $35.2 billion, reported an article in Science. The article also noted that the bill blocks the Trump administration’s proposal to cut F&A reimbursements by two-thirds.
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On the same topic, an op-ed in Detroit News explained how a cap of 10% on F&A costs would “compromise the core mission of our research universities” and specifically highlighted that the caps would take away $14 million annually in Wayne State University’s federal research funding. The piece was written by Stephen M. Lanier, PhD, vice president of research at Wayne State University; Jack D. Sobel, MD, dean of the Wayne State University School of Medicine; and M. Roy Wilson, MD, president of Wayne State University and chair-elect of the AAMC’s Board of Directors.
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On a similar note, MLive reported that the University of Michigan estimated it stands to lose $92 million should the proposed cuts to F&A reimbursements come to fruition. The university received $457 million in federal funds from the NIH in 2016, which added up to 58% of its total federal funding.
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NYU President Andrew Hamilton wrote a letter to HHS Secretary Tom Price and OMB Director Mick Mulvaney opposing cuts to facilities and administrative costs. “F&A costs are real, identifiable, quantifiable, and audited costs that represent the research infrastructure and operating expenses incurred by universities that are integral to conducting quality research: F&A costs reimburse utilities, high-speed data processing and storage, hazmat waste disposal, security of select substances, radiation and chemical safety activities, and other infrastructure activities,” wrote Hamilton.
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An Inside Higher Ed article reported on the debate over university facilities and administrative (F&A) costs for research. The article reported that advocates for such “indirect costs” are suspicious of the Trump administration’s claim that the federal government can cut reimbursement payments to research institutions without hurting the quality of the research itself.
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Science also relayed criticism of the administration’s efforts to reduce NIH’s F&A payments to universities for NIH-funded research. The changes would “literally turn out the lights in labs where universities have no other funding to pay for essential research infrastructure and operating expenses,” said Mary Sue Coleman, PhD, president of the Association of American Universities.
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“[T]he Trump budget is proposing outright cuts to research funding . . . but it is possible to imagine an alternative vision where federal overhead allocations fall and the liberated money allows more scientists to get more (smaller) grants,” argued an opinion piece on F&A costs in Bloomberg View.
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On the topic of F&A costs, a piece in Science stated that reducing the amount of money the NIH can pay universities for overhead costs would shift the financial burden to faculty members and cause some schools to tell their faculty not to apply for NIH grants anymore, since the grants would no longer cover the full cost of experiments.
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An article in AAMCNews also explained the importance of F&A costs in supporting high-quality university research. “F&A includes the underlying costs required to maintain state-of-the-art research laboratories, such as precision climate control, utilities, high-speed data and telecommunications, security for sensitive and dangerous chemicals and microbes, radiation and hazardous waste disposal, computer systems and software, and infrastructure necessary to ensure compliance with federal and other rules and requirements,” said the article.
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An infographic displayed the vital role that F&A costs play in university research. The infographic was produced by the AAMC, the Association of American Universities, the Association of Independent Research Institutes, the Association of Public and Land Grant Universities, and the Council on Governmental Relations.
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Much of the proposed cuts to NIH are aimed at reducing the "indirect" of Facilities and Administrative (F&A) costs of conducting research that the NIH covers in its grants, said an article in STAT News. Specifically, the article reported that the administration is considering capping indirect costs at 10%, which "would seriously handicap the American research enterprise, in addition to immediately producing layoffs of thousands of fairly well-paid positions," according to Ross McKinney, MD, Chief Scientific Officer at the AAMC.
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Related to F&A costs, the Chronicle of Higher Education covered a House science committee hearing on Wednesday where some lawmakers appeared skeptical of the need for universities to be paid indirect costs. Duke University's associate vice president of finance and compliance, James Luther, defended F&A costs as vital to supporting the necessary infrastructure to ensure that university research is high quality.
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