COLUMBIA-Researchers at MU are concerned that a provision in a spending bill being debated in the U.S. House of Representatives today will squeeze the university’s general operations budget and make it harder to do defense-related research in the future.
The provision calls for a 20 percent cap on reimbursements paid to universities by the Department of Defense for overhead costs, such as workspace, building depreciation, utilities, accounting and a host of other activities that are related to, but not part of, the research itself.
“The cap would be very problematic for this university,” said Robert Hall, associate vice chancellor for research and director of compliance. “We would gradually be digging a fiscal hole.”
Traditionally, federal agencies that sponsor research reimburse universities for overhead at a negotiated rate. Currently, the Defense Department reimburses MU for 49.5 percent of all “facility and administrative costs” associated with defense-related research, a number Hall said is consistent with other peer institutions. In other words, for every dollar MU receives from the Defense Department for the direct costs of research, MU can bill the agency another 49.5 cents for facility and administrative costs.
The likelihood that the 20 percent cap will become law is hard to predict, said Mary Licklider, MU director of grant writing and publications. If approved, the House bill would have to be reconciled with a Senate version. However, Licklider said “there is a precedent for the federal government making exceptions to negotiated rates.”
Cuts in overhead reimbursements would have to made up by the university. Hall and Licklider said the most likely source of those funds would be MU’s general operating budget, which is already being scrutinized for $7 million in spending cuts under a plan announced in July by Chancellor Brady Deaton.
Right now, MU officials do not know how much money the university stands to lose if the bill becomes law, but it could be substantial. Licklider said that it would be conservative to predict MU would have to make up at least $1 million dollars a year in facility and administrative costs; Hall said it could be as much as $3 million annually.
MU received $3,562,348 in research awards from the Department of Defense in fiscal year 2006, which ended June 30. The money funded a wide range of projects, from nanotechnology to studying breast and prostate cancer.
“People think of the DOD as being an organization principally interested in the stuff of war,” Hall said. “But it actually funds a remarkable amount of health research. It’s got tendrils in the schools of nursing and medicine.”
Kevin Gillis, associate professor of biological engineering and physiology, is part of a team of MU researchers doing nanofabrication work for the Defense Department. He said that although his specific research wouldn’t be directly affected by the proposed cap, he thinks it could have a “big impact on the university itself.”
“The ability of the university to support infrastructure would be curtailed,” Gillis said. “In addition, there would be a chilling effect on the university’s enthusiasm to accept defense funds.”
Licklider echoed that concern, saying MU could be “forced to make decisions about whether or not to keep seeking funds from organizations that force the university to subsidize the research.”
Hall said he was working with the American Association of Universities and the National Association of State-Universities and Land Grant Colleges to see what could be done to stop the bill before it becomes law.
Jennifer Poulakidas, a spokesperson for the state and and-grant colleges, said that part of the strategy would be to dispel some of the mystery surrounding the overhead costs of research.
“Probably what has befallen us here is that there is a lack of understanding of what indirect costs are,” Poulakidas said. “I think that education is a big part of this, explaining to all parties that in fact these indirect costs are necessary and completely appropriate for work that is being done.”
Both associations and the Council on Government relations drafted a letter to the U.S. House and the Department of Defense on Wednesday expressing their opposition to the proposed cap.
To see the letter and additional information about the costs of research go to aau.edu/research/costrese.cfm.