As expected, the Musk/Trump administration has aimed its guns at the US university system, deciding that universities that get grants from the federal government’s National Institute of Health will have their “overhead” capped at 15%. Overhead is the money that is used to pay for the unsung things that make scientific research at universities and medical schools possible. It pays for staff that keep the university running — administrators and accountants in business offices, machinists who help build experiments, janitorial staff, and so on — as well as the costs for things like building maintenance and development, laboratory support, electricity and heating, computing clusters, and the like.
I have no doubt that the National Science Foundation, NASA, and other scientific funding agencies will soon follow suit.
As special government employee Elon Musk wrote on X this weekend, “Can you believe that universities with tens of billions in endowments were siphoning off 60% of research award money for ‘overhead’? What a ripoff!”
The actual number is 38%. Overhead of 60% is measured against the research part of the award, not the total award, and so the calculation is 60%/(100%+60%) = 37.5%, not 60%/100%=60%. This math error is a little worrying, since the entire national budget is under Musk’s personal control. And never mind that a good chunk of that money often comes back to research indirectly, or that “siphon”, a loaded word implying deceit, is inappropriate — the overhead rate for each university isn’t a secret.
Is overhead at some universities too high? A lot of scientific researchers feel that it is. One could reasonably require a significant but gradual reduction of the overhead rate over several years, which would cause limited damage to the nation’s research program. But dropping the rate to 15%, and doing so over a weekend, will simply crush budgets at every major academic research institution in the country, leaving every single one with a significant deficit. Here is one estimate of the impact on some of the United States leading universities; I can’t quickly verify these details myself, but the numbers look to be at the right scale. They are small by Musk standards, but they come to something very roughly like $10000, more or less, per student, per year.
Also, once the overhead rate is too low, having faculty doing scientific research actually costs a university money. Every new grant won by a scientist at the university makes the school’s budget deficit worse. Once that line is crossed, a university may have to limit research… possibly telling some fraction of its professors not to apply for grants and to stop doing research.
It is very sad that Mr. Musk considers the world’s finest medical/scientific research program, many decades in the making and of such enormous value to the nation, to be deserving of this level of disruption. While is difficult to ruin our world-leading medical and scientific research powerhouse overnight, this decision (along with the funding freeze/not-freeze/kinda-freeze from two weeks ago) is a good start. Even if this cut is partially reversed, the consequences on health care and medicine in this country, and on science and engineering more widely, will be significant and long-lasting — because if you were one of the world’s best young medical or scientific researchers, someone who easily could get a job in any country around the globe, would you want to work in the US right now? The threat of irrational chaos that could upend your career at any moment is hardly appealing.
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It beggars belief that these people have just found inefficiencies that no one else was seeing within a week of looking, and crafted any kind of reasonable solution.
One thing that research has taught me, although I believe it is true of life in general is that: “If an opportunity looks easy, someone has already done it,” The “inefficiencies” they are finding are a result of a complete lack of understanding or care. Like a grad student who needs to repeat their experiment or calculations that are off by an order of magnitude.. or worse like the guy that sends cosmology Profs their own solution to Quantum Gravity. Durable positive change and substantial new knowledge is only possible when you’re willing to do the work.
When someone who finds the truth repulsive and the research to confirm outcome by scientific method, including granting great minds the ability to access funds to be able to carry on the work, is in a position of so called power or at least legislative power, to dismantle or destroy opportunity, growth and discovery, then the nation dwindles in despair, wherein intelligence and knowledge is curtailed and ignorance prevails.
There has never been such an evil presence in the White House as there is now with Trump and his cronies. The hope of new discoveries with enlightened minds are diminished, not because of intelligence or empiric research opportunity but because weak men with limited intelligence and expanded ego’s hold the purse strings or rather the tax dollars of the citizens, holding hostage that which is good, From our theological perspective, we call upon a our Creator to intervene and to remove, by whatever means. these reprobates who pretend to call themselves Christians, who are in fact servants of Satan, seeking to destroy Truth while oppressing the poor, the disadvantaged and the scientists who are doing their best to move theory into the realm of reality. For a season they will have their say but the time will come when their own ignorance, hatred and animosity will become their ion downfall, from within their own ranks. In the meantime persevere until the evil is vacated
Unfortunately the area is political and I don’t want to avoid that in this instance. Moreover, being part of the rest of the world the responses I read center on the many lives that will be lost due to interrupted science and other aid.
“The actual number is 38%.”
The neo-nazi supporter Musk is now known for his politically skewed presentations, and consequently his Tesla company Europe business has tanked in January (while the rest of the EV market shows growth).
Specifically he wrote counterfactually that the first major school shooting in Sweden did not get international coverage. (The shooter went in to a job school for adults he attended, with 3 semi-automatic hunting rifles and shot 44 times in 12 minutes. At that time the incident police group had arrived and located him amidst his smoke bombs. He killed 11 people including himself.)
Expectations is that it will continue at this rate, unless the US courts can slow the US administration down as they uncover unlawful actions.
Science and medical knowledge are under attack by neo-cons, even here in Canada university funding has come under attack.
Very short-sighted as countries that promote knowledge and education will soon overtake regressive countries.
Sorry to hear that. The neocons have done immense harm. Unfortunately, Biden is also a neocon.
Trump’s rise was a reaction against the neocons in both parties, though he may make it worse…
Let’s stick to the issue at hand, here; this is not a place for political sniping. We are talking about potential serious damage to the scientific and medical research enterprise in the US; that is a threat to all of us in this country and should not be a particularly partisan question.
I am very sorry for all the researchers that work hard and already have reduced budget for research and living.
Reduced scientific research is narrowing our future.
Can anyone explain to me why indirect costs (aka overhead) are quoted, contracted and thought of in terms of a fraction of direct costs? The cost of office space, grant administrators, utilities, etc. are largely independent of the cost of the research they support. They certainly do not grow linearly with the direct costs of the research. So why think of them that way? Surely there should be cost per square foot of office space, a funded salary rate for a fraction of a grant administrator’s time, etc. These can vary by location and hence institution, but have nothing to do with whether someone has a tiny grant to grow newts in a terrarium or a big grant that requires purchasing an electron microscope or 1000 Nvidia GPUs. Grant agreements should compute indirect costs independently of direct costs of the research the grant supports.
Also, lest anyone misunderstand me, I also think that the reduction in total dollars represented by the cut to 15% is likely to be disastrous for science. I just think that the whole idea of saying indirect costs = f(direct costs) rather than computing indirect costs directly is dumb and unnecessarily clouds the discussion.
This is history that I do not personally know. But I imagine that if every single grant had to be negotiated separately, it would force the federal government, the university, or both to have even more bloated administrations than they already have. And so my best guess is that this was arrived at as an imperfect but relatively fair and simple system.
Come on, Matt… The indirects all have observable market prices so it’s very easy to compute a reasonable indirect cost. No bloat required. And no indefensible consequences of a logically flawed process. It’s how it should be done.
But, again, I probably shouldn’t ever have posted because I don’t want to divert even a single person’s attention from the 1000x more important point: Killing medical research in the US by forcing universities to shut down labs that will now run in the red in order to save $4b at NIH is the world’s worse transaction. Thanks to Trump, the US will have lost the present value of hundreds of billions in order to save four. Nice trade. And that, of course, assigns zero dollar value to the lives that will be lost as a consequence. But he probably agrees with that.
Maybe these universities will have to make up the difference by selling some of the tens billions in stocks they own?
Cry more
You realize that the loss of overhead is a permanent yearly loss, while the selling of stocks works once, right?
As I said, a reasonable reduction in overhead over four years, with a selling of some stocks, would make sense. A sudden cut of 100 million dollars from somebody’s budget leads to layoffs and closures.
But I understand if you want the university research system in the United States to cease to be the world leader. Congratulations; you’re likely to get your wish. This is how superpowers cease to be superpowers.
Not sure selling stock is a solution. A blanket 15% limit may also be a poor strategy.
How about… Give grants to Universities for overhead? See how much they need, and put it in a budget.
Then scientific grants can be for science.
There are many reasonable solutions that could be proposed. A drastic cut from all the scientific funding agencies is counterproductive to the nation, and basically a way for a rich tech bro to show off how important and powerful he is, while convincing serious scientists that it’s time to go elsewhere.
The motto of the new fascist regime is evidently: “Maximize Suffering and Destruction.” And they’re just getting started. Oiy vay! We need to resist and fight back with all our might, and all our brains.
Yes! We need to resist!
We also had to resist the previous fascist administration, whose motto was “If you disagree with anything we say, you’re fascist.”
As a Carter democrat, let me say the DNC and GOP are not our friends. People are. People are awesome, our parties are awful. Partisanism gave us Trumpism.
I don’t really see the equivalence between the past administration, for all its many faults, and the present one. In fact I don’t currently see the equivalence between any administration I’ve ever known and the present one.
Agree, it’s unique. Why did it happen?
Folks should never forget that Elon Musk does not work for the United States. He has had regular friendly conversations with our country’s most vicious and casually murderous adversary, Vladimir Putin. Like Putin, Musk exhibits an absolute indifference to causing the deaths of innocent people. He directly and personally helped Russian ships slaughter Ukrainians with missiles by intervening personally in the back door he installed in the real-time command and control network whose use Musk had “donated” to them.
Want to make any bets on what a man with that kind of allegiances and behaviors is doing, in secret and with no supervision, using handpicked people with zero vetting by anyone else, to our most critical and sensitive government computer systems?
Also, as we speak, Musk has shown complete contempt for the survival of severely malnourished babies and young children babies in Africa who survived only due to the American-grown peanut-based superfood supplements provided by USAID.
Just from the number of egregious felonies Musk and his team committed by breaking into offices created by a coequal branch of government, Musk could legally accrue thousands of years of jail time if convicted, and the felonies served sequentially.
We shall have to wait and see if that happens, but no one should fool themselves, even for a moment, into thinking his man has a trace of normal human compassion or respect for our country that has enriched him so tremendously. He is ruthless, utterly un-American, and beyond vile under even the most forgiving definition of human ethics.
I worked in the aerospace industry for four decades. We had two forms of overhead, what we called overhead and G&A. Overhead was the facilities and support personnel for the those facilities, including HR, etc, while G&A included executives, marketing and sales, R&D, etc. G&A also included some remedial items like environmental remediation of polluted land. These calculations were required for all government programs. For commercial programs we used a different calculation. Is Musk just talking about overhead, G&A or both. For the big aerospace organizations I worked for the overhead and G&A were well above 15%.That woulfdn’t haven covered the G&A. Of course, the big aerospace companies have huge facilities. I wonder what Space X’s rates are? SpaceX’s biggest differentiator was their cost cutting. WS he able to get his rates down to 15%?
Whatever the answers, it is irrelevant. SpaceX and other industrial contractors have the option of making a profit; they sell objects that people want to buy. Universities are training organizations; education is not something you sell to make a profit. You make the price of education as low as you can afford. To compare the needs of corporations and universities is to compare apples and oranges. And if you turn universities into corporations, you will find they don’t work; even research areas that live inside of corporations work differently from the rest of the corporation.
Worryingly he’ll have a lot of public support because of SpaceX and people thinking if it can be done there then why not in universities.
Oh, he already has tons of public support, and can always build more on X whenever he needs to. More importantly, he has control of the government.
How much of Elon’s support is due to our $108,000 PER PERSON national debt?
If we didn’t have a Jupiter debt, would the Martian’s job exist?
TBC, I agree Elons methods may be wrong. So what if he built a few world-leading companies, as Matt says Govt is NOT a company.
It’s also not an infinite bank — the illusion perpetrated by Bush-Cheney, Obama, Trump, and Biden all together.
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Analogy: I took my truck to 4 different official dealerships. Each time they disconnected the brakes. By mistake? No! The Head Mechanic tells me it was on purpose: “We must drive fast to save time. Time is in GREAT danger!”
Can you blame me if next time I bring the truck to Dunkin Donuts?
A couple of comments:
1) Surely universities aren’t paying their janitors out of grants earmarked for research?
2) Machinists who help build experiments are not overhead.
Rather than argue with you, I’ll quote https://www.aau.edu/key-issues/frequently-asked-questions-about-facilities-and-administrative-fa-costs-federally :
“These research expenses – officially “indirect costs” but more descriptively called facilities and administrative (F&A) costs – include: state-of-the art research laboratories; high-speed data processing; national security protections (e.g., export controls); patient safety (e.g., human subjects protections); radiation safety and hazardous waste disposal; personnel required to support essential administrative and regulatory compliance work, maintenance staff, and other activities necessary for supporting research.”
This includes “maintenance staff” (including janitors who need special instruction as to how to clean a laboratory which might have hazardous chemicals or machinery stored in it) and “other activitiees necessary for supporting research”, such as department-wide machine shops. (As an example, though I don’t know how this particular one is funded — but I’m sure no one scientific grant pays for the shop’s staff directly — https://phys.washington.edu/physics-machine-shop .)
Every university has its own formula for the disbursement of indirect costs. They range from actual capital construction to, indeed, salaries for staff who tend to the upkeep of laboratories. If staff do more than one thing, then the formula would account for that. In between are all manner of administrative salaries that are devoted to research management. The entire staff in a “Contracts and Grants Office” would be. Staff charged with safety regulation would be. Staff charged with managing travel for researchers would be. Staff charged with ensuring that the law is followed within research efforts would be. Staff charged with caring for research animals would be.
At some universities, machinists would be covered and at others, not. It’s nuanced. For example, most universities return some overhead back to colleges and even departments (“overhead return”) and if a machinist was paid through department funds, it might not directly appear as overhead return, but in the aggregate it would be. Said another way, if that source is cut off, then research support at the department level would go down or be eliminated. Technical people need to be paid all year around, so no individual grant pays for that sort of professional assistance since each grant would not separately cover people’s annual salaries. It’s an aggregate, supported in large part by overhad return.
Doing this to existing grants overnight will cause a level of disruption that will be impossible to recover from. It’s not hyperbolic to say that unless states politicians, and yes, including red states with enormous biomedical research efforts (Texas, Florida, Georgia, Arizona, Louisiana, North Carolina, South Carolina, Virginia, Ohio, and Indiana), don’t stop this, it will be a catastrophe for individual researchers and in the long term, the most productive cancer research effort in the world.
The bottom line is that obviously the people making this decision do not understand how this complex and enormoust system of academic scientific research works. That they would guess what goes on and do this destructive deed overnight is more than alarming. This is not DEI punishment. It’s reckless in the extreme.