The High Overhead of Scientific Research
Last year American taxpayers spent more than $42 billion for scientific research and education at universities and nonprofits across the country. Most of this investment contributed to American innovation, economic competitiveness and national security.
Taxpayers would be surprised to learn that approximately one-quarter of that funding — more than $10 billion — pays not for the cost of research but to cover universities’ and nonprofits’ overhead.
Since World War II, the federal government, universities and nonprofit research institutions have worked in partnership to conduct research in our nation’s interest. Congress has authorized federal science agencies to reimburse researchers for their overhead expenses — called indirect costs, or facilities and administrative costs.
Indirect costs are supposed to pay for utility bills for university laboratories, security services and compliance with federal regulations. Over time, universities have included items like university presidents’ salaries and benefits, and new university buildings in the indirect costs of federally funded research. Some universities now claim that up to 60 percent of federal research grants are needed for facilities and administration costs.
About $1.3 billion of the National Science Foundation’s (NSF) annual budget for scientific research is consumed by indirect cost payments to universities and research institutions. $1.3 billion is a lot of taxpayer money. It could pay for 2,000 more scientific research projects in critical areas like physics, biology, computer science and engineering. Scientific discoveries and innovations in these fields are essential to our future economic and national security.
Universities and nonprofits should be reimbursed for reasonable costs of sponsoring federally funded research. However, the Government Accountability Office has warned that indirect costs are taking a larger and larger share of funds for scientific research. Many universities are pressing to raise indirect costs even higher.
Are taxpayers paying for reasonable and legitimate overhead expenses connected to federally funded research projects? Or are taxpayers subsidizing excess and waste? And are our universities and nonprofits just using the NSF as another source of revenue?
Several studies have shown that facility and administration costs at American universities have risen dramatically in the last three decades, fueling the higher cost of tuition and research and resulting in an unsustainable trajectory.
From 1978 to 2014, administrative positions at universities rose 369 percent, according to a report by the American Association of University Professors. Faculty positions, however, have increased much more slowly: part-time teaching jobs increased by 286 percent, but full-time tenure and tenure-track faculty appointments increased only 23 percent.
Universities have been on a building boom. In 2015, American colleges and universities spent $12 billion on construction and renovations, double what they spent in 1995. New university buildings are being financed by federal taxpayers, embedded in indirect costs of research.
I recently met with a university president who described having to spend $1 million to build a new lab in order to recruit a high-profile scientist from another institution. Why should taxpayers foot the bill for the debt payments on these costs?
Taxpayers need to know that their investments in science are not being wasted on low-priority projects, marble-floored buildings and college administrators’ salaries. The Trump budget has proposed a thorough reassessment of indirect costs. Congress should follow through and determine what changes should be made to assure that federally funded research is conducted efficiently, responsibly and transparently.
Reducing federal agencies’ redundant reporting and regulatory requirements on research would peel away one layer of wasteful expenses. Legislation to streamline federal overregulation of research originated in the House Science Committee, which I chair, and was signed into law last year.
Congress also should consider improving and simplifying the outdated and complicated system for negotiating indirect costs. Universities’ and research institutions’ indirect costs should be made public. A flat-rate cap, an approach used by other Western nations, should be considered.
America’s future depends on remaining a global leader in technology and innovation. We can’t afford waste and excess. Every dollar we spend on scientific research must count.
Lamar Smith is a Republican member of the U.S. House of Representatives from Texas.