Federal Grant Accountability Act Caps Overhead Costs on University Research, Triggers DEI Staffing Review

The "Federal Grant Accountability Act" aims to tighten the reins on how universities spend federal research money, specifically targeting those pesky "indirect costs." Think of it like this: when a university gets a grant for, say, a new cancer study, part of that money goes to the direct research costs – lab equipment, researcher salaries, etc. But another chunk goes to indirect costs, which is basically overhead – keeping the lights on, administrative support, and, yes, even diversity, equity, and inclusion (DEI) staff.

Capping the Overhead

This bill puts a cap on those indirect costs. Instead of letting universities charge the feds whatever they deem necessary for overhead, the amount they can tack on will be limited to the average indirect cost rate charged for private research grants (SEC. 2). The Office of Management and Budget (OMB) will be in charge of figuring out that average, and they'll have to update it at least once a year. This could mean less money for university overhead and, potentially, more money going directly to the beakers and test tubes.

For example, imagine a university currently charges a 50% indirect cost rate on a $1 million federal grant. That's $500,000 for overhead. If the average private grant rate is only 30%, that same university could only charge $300,000 for indirect costs under this new rule. That's a significant difference that could impact how universities budget for research support.

The DEI Spotlight

Here's where it gets interesting. The bill also orders a deep dive into how indirect costs are calculated, and it specifically calls out DEI administrative staff (SEC. 2). The Comptroller General (basically the government's top watchdog) has one year to report back to Congress on:

• The average indirect cost rates for both federal and private research grants.
• Which research fields get the most money from each.
• How much of those indirect costs go to administrative staff, especially those working on DEI initiatives.
• How federal agencies make sure everyone's playing by the same rules when it comes to calculating these costs.

The report must include recommendations for improving the system, especially how indirect cost rates are determined and tracked. This provision seems to be scrutinizing how universities use funds allocated for overhead, with a particular focus on DEI-related roles. This could be a point of contention, depending on how universities allocate these costs and the value they place on DEI infrastructure.

Real-World Ripple Effects

While the bill aims for greater accountability, the practical implications are worth considering. If universities face tighter caps on indirect costs, they might have to make tough choices. Could this lead to cuts in administrative support, including DEI staff? Could it make it harder for some universities to compete for federal research dollars? Or, could it force a more efficient use of funds, freeing up more money for actual research? It's a mixed bag, and the answers will likely depend on how individual institutions adapt. The mandated study and report will provide more clarity, but the immediate effect is a potential squeeze on university budgets.