Risks to Stony Brook's Research Infrastructure from Proposed F&A Rate Reduction

Risks to Stony Brook's Research Infrastructure from Proposed F&A Rate Reduction

Dear Faculty Colleagues,

I write today concerning a disturbing proposal that is being discussed in Washington that could have serious repercussions for the funding that we receive from federal agencies in support of research that is vital to the well-being of our citizens and our nation.

Recent discussions within the White House Office of Management and Budget (OMB) and the U.S. Department of Health and Human Services (HHS) have suggested that the federal science budget could be dramatically reduced by slashing facilities and administrative (F&A) cost reimbursements to universities. This proposal - which some in Congress may endorse - should concern all of us.

Federal research funding for universities includes two major components. First, grants or contracts awarded to universities (almost always through a competitive process) contain direct costs attributed to individual projects. These include items such as salary support, research staff and students, supplies, equipment, travel, and publication costs.

The other component of a grant or contract is the facilities and administrative cost rate (F&A or ‘indirect’ costs). These costs cannot be assigned to a single project because they include items such as laboratory space, heat, lights, IT infrastructure, animal care facilities, hazardous waste disposal, power, insurance, and the support staff required to manage grants and to ensure compliance with a myriad of federal and state regulations (human subjects protection, export controls, conflict of interest, etc). In negotiating these rates, Stony Brook, like other research universities, includes only those resources actually used to support research. Independent analyses have demonstrated repeatedly that the federal government only partially reimburses universities, including Stony Brook, for these expenses, many of which have been invested prior to the awarding of the grant. These are also costs that Stony Brook would not incur if we were not a research-intensive university.

I am well aware that faculty often question the F&A rate, how it is calculated, and who does the negotiation. Stony Brook’s current on-campus F&A rate is 59.5%, which falls close to the median rate of research institutions.  This rate is set through a comprehensive process guided by strict OMB rules, called Uniform Guidance 2 CFR 200. Our staff produce and file an extensive report in which they calculate our actual F&A expenditures based on prior years and apportioned to research, instruction, or other. Our actual rate is then negotiated with staff from the U.S. Department of Health and Human Services Division of Cost Allocation Services, and set based upon a comprehensive review and assessment of these costs. Compliance with the rate and OMB and agencies’ rules regarding these F&A reimbursements is then audited by the federal government every year under the terms established in the Single Audit Act. Importantly, many direct cost items are excluded from the base used to determine the final F&A reimbursement level (tuition, equipment, major renovations or repairs, and subcontract awards).

It is important to understand that Stony Brook is already subsidizing the actual F&A costs that federal research grants incur. This is due to two factors. The first is that since 1991, the federal government has imposed an administrative cap of 26% on the total F&A rate for administrative costs. At the same time, the cumulative number of regulatory changes relating to research with which universities must comply has dramatically increased. Ensuring compliance with these additional regulations—whether associated with human subject protections, animal care, export controls, effort reporting, conflict of interest, scientific fraud, and misconduct investigations—costs money and employment of additional administrative staff. The independent General Accounting Office (GAO) has estimated that research-intensive universities are already contributing about 25% of total dollars in support of faculty-led research projects.

Another question faculty often ask is why we accept funding from foundations that do not pay the federal F&A rate? There are several explanations. For some foundations, what would normally be considered an F&A expense may be charged as a direct cost since foundations are not required to use federal rules. In other instances, university funds are used to cover these costs. Finally, total research funding from private foundations amounts to a small percentage of our total research volume so the impact is less evident and often absorbed. Federal funds, however, account for more than 70% of our external funding. 

What is the risk to Stony Brook if the federal government drastically reduces F&A reimbursement for our research costs without any meaningful reduction in regulations and administrative compliance costs? Currently, our F&A reimbursement supports salaries for grants and contracts support staff, IRB and IACUC compliance specialists, IT specialists that support grant proposal submission and management, and technology transfer specialists, just to mention a few.  As a researcher, you are already aware that Stony Brook has undertaken a major assessment of administrative burdens that investigators shoulder during the conduct of research.  Initial findings call for investment in several of these key areas to better support faculty in obtaining and managing federal research funding. A significant reduction in F&A reimbursement to Stony Brook would not only preclude such investment, but would severely undermine existing research support services.  Negatively affected would be cost sharing, graduate student tuition subsidies, lab renovations, faculty start-up packages, benefits, and beyond. Almost every aspect of how our university supports research would be seriously impacted.

This is where all of us can help in protecting and sustaining the phenomenally successful 70 year university-federal government partnership for American science. While the Stony Brook leadership and our colleagues at other AAU institutions have been trying to educate all the relevant sectors about the importance of sustaining the partnership through robust funding of research and F&A reimbursement, we need the support of individual faculty researchers. It can be especially helpful for individual faculty members to understand the threat to Stony Brook’s research enterprise and to speak out to others to encourage their support.

With my best regards,
Richard J. Reeder
Vice President for Research

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