The "No Subsidies for Wealthy Universities Act" aims to limit or eliminate federal research funding for indirect costs at higher education institutions with large endowments and increases oversight of how indirect costs are reimbursed. It requires annual reporting on university endowments, caps indirect cost rates based on endowment size, and mandates a report on how reimbursed indirect costs are used.
Ben Cline
Representative
VA-6
The "No Subsidies for Wealthy Universities Act" aims to limit federal research funding to higher education institutions based on the size of their endowment funds. It prohibits the use of federal research award funds to cover indirect costs for institutions with over $5 billion in endowment funds and sets caps on indirect cost rates for institutions with endowments between $2 billion and $5 billion, as well as for all other higher education institutions. The Act also mandates annual reporting on endowment funds and requires the Comptroller General to submit annual reports to Congress on indirect costs reimbursed to higher education institutions for federal research awards.
Wealthy Universities Face Federal Funding Cuts Under New Bill: Indirect Cost Reimbursements Capped
The "No Subsidies for Wealthy Universities Act" is changing the game for how some universities get federal research money. Starting a year from its enactment, the bill targets indirect cost reimbursements – basically, the overhead expenses universities tack onto research grants. Think utilities, administrative support, and facilities maintenance.
Slashing the Overhead
This law sets some hard limits based on how fat a university's endowment is. If an institution has over $5 billion stashed away, they're getting zero reimbursement for indirect costs on federal research awards (SEC. 3). Schools with endowments between $2 billion and $5 billion face an 8% cap on their indirect cost rate, while everyone else is capped at 15% (SEC. 3). For example, a university with a $6 billion endowment currently getting a 30% indirect cost reimbursement on a $1 million grant would lose out on $300,000 in overhead funding. They would have to cover those costs themselves.
Show Me the Money (Spent)
Beyond the caps, the bill demands more transparency. The Comptroller General will now produce an annual report detailing exactly how universities spend their indirect cost reimbursements (SEC. 4). This report will break down how much goes to administrative staff salaries, specifically those in diversity, equity, and inclusion (DEI) roles (SEC. 4). It'll also list which research fields, agencies, and universities are getting the most federal research dollars (SEC. 4). The idea is to shine a light on where taxpayer money is actually going.
Real-World Ripple Effects
This could shake things up. Universities with hefty endowments might think twice about chasing federal research grants if they can't recoup overhead costs. This could mean fewer research opportunities for students and faculty at those schools. On the flip side, smaller institutions, which often struggle to compete with the big names, might find themselves on a more level playing field when applying for funding. It could free up some federal research dollars, potentially boosting other research areas or institutions.
The Fine Print and Potential Challenges
The bill relies on the Commissioner for Education Statistics to gather endowment data annually (SEC. 3). Universities are now legally required to hand over this info (SEC. 3). However, there's room for interpretation, especially around that definition of "administrative staff involved in diversity, equity, and inclusion" (SEC. 4). It is not defined in the bill, and could the way universities categorize staff and expenses potentially shift to work around the new rules? Also, it's worth noting that focusing solely on endowment size might not paint the full picture of a university's financial situation or its commitment to research. The bill goes into effect one year after it's enacted, applying to all federal research awards made after that date (SEC. 5).