A Followup on NIH Reforms

taking an ax to indirect costs

Today (June 26), the House Appropriations Committee released its FY25 bill for NIH etc., and this could get really interesting (press release, actual bill).

First, remember the House white paper arguing for substantial reorganization and consolidation? The appropriations bill assumes that the reorg has already occurred, and allocates money to institutes that don’t currently exist:

What does this mean? Appropriations can precede authorization (indeed, that happened with ARPA-H itself), but it gets a little confusing to think about appropriating money to a hypothetical consolidation of two or more entities that are currently separate.

We might therefore interpret this appropriations bill as sending a signal that the reorg isn’t entirely hypothetical, and that the House is seriously considering authorizing/mandating NIH reorganization by October (the typical time when the House and Senate start working on an omnibus appropriations bill), or at least by December (when the omnibus is typically enacted).

Second, the appropriations bill includes a sharp cut to indirect costs for (likely a handful of) wealthy private universities:

What does this mean?: “facilities and administration costs” under section 200.414 = indirect costs, and an organization “subject to taxation under section 4968” means a private (not public) university that has net assets of at least $500,000 per student.

It’s not easy to find a comprehensive list of which universities fit these exact criteria, but I’d expect that Harvard (current rate: 69%), Stanford (current rate: 54.4%), and similarly wealthy private universities would see their indirect rates on NIH grants drop to 30%.

The politics of this will be fascinating. Most universities won’t be affected, and it seems politically difficult to claim that Harvard (endowment: over $50 billion) has any sort of right to a 69% indirect rate so that it can keep subsidizing the building spree that it has been on since I attended law school there.

a typical headline about Harvard’s wealth

One question will be how such a cut gets incorporated (if at all) into other federal agencies’ grants, such as NSF, NASA, Energy, Education, etc. After all, universities negotiate a federal-wide indirect rate (usually with HHS), and it would be odd to have a special rate just for NIH.