The Threat to Federally Funded Research

By John R. Finnegan | June 19, 2017

Dear SPH Community,

The School of Public Health is a research dynamo. Year to year, our faculty members generate more research dollars per capita than their colleagues at every college at the University of Minnesota, and most of the 60 accredited schools of public health in the US, Canada, and Mexico. About two-thirds of our school’s annual revenue comes from grants and contracts. Federal agency funds account for 80 percent of that money, with the lion’s share coming from the National Institutes of Health (NIH).

What’s the impact of our world-shaping research? Foremost, it drives advances in population and public health, in collaboration with partners everywhere. But it also generates tens of millions of annual research dollars that help to create and maintain jobs in Minnesota dedicated to promoting health and preventing disease.

Every new Congress and presidential administration shapes the priorities of research and budget allocations. That’s normal. Clinton and Bush sought unsuccessfully to double the NIH budget in their time. Obama launched several important scientific initiatives, but collided with a polarized Congress after 2010. From 2003 to 2015 through two presidential administrations, the NIH budget lost some 22 percent of its research funding power because of inflation, sequestration, and budget cuts.

But the Trump administration has broken even with that rocky history. It has thrown a curveball with its proposals that could have an unprecedented impact on the nation’s health sciences research universities, including our own.

In brief, for FY2018, the Administration proposes to reduce the NIH’s annual $30 billion budget by a further 22 percent, including reducing direct research funds and capping indirect cost recovery (ICR) funds — also called F&A funds — at 10 percent of each grant. (52 percent is the current average.)

What are ICR Funds and Why are they so Important?

First of all, ICR funds are not “free money” that comes along with grants. We earn every ICR dollar through the diligent and hard effort we put into each research proposal, and these funds are essential for the work we do. They support labs, offices, computing, and all sorts of other “indirect” costs that are necessary to carry out research. They also pay for the costs of compliance with federal regulations governing research, institutional review boards that monitor the ethical conduct of research, and so on. ICR funds allow universities such as ours to maintain the infrastructure needed to conduct research. In short, they keep the lights on.

If the Administration’s proposals presented in the media were to pass today, SPH would lose about $4.29 million each year in ICR funds, based on our total from 2016. If such a scenario occurs, all AHC schools and all colleges and schools in this University and across the nation that conduct federally funded research would be in serious financial difficulty.

So, How Likely is this Scenario?

Many Republicans and Democrats tell the media that the proposals to reduce the NIH budget all at once is “DOA” in Congress for a variety of reasons. Yet they acknowledge that Trump’s proposals provocatively raise important policy questions about Federal science funding that Congress may wish to address, but not now.

Others believe it is an open question whether the Administration might reduce ICR rates on its own by executive fiat. If so, how far and how fast is the question.

Still others predict that if Congress is unable to complete the FY2018 budget by the September 30 deadline, it might just pass a continuing resolution to keep the government open and funded at FY2017 levels for the next year.

I’m poor at reading any Presidential administrations’ tea leaves, but permit me to speculate (everyone else does!):

For FY2018, the NIH budget likely will remain flat, perhaps because of a continuing resolution as described above. There are several more important issues on the Congressional agenda which already has fallen behind schedule, including the repeal/replacement of the ACA, tax and regulatory reform, infrastructure investment, defense spending, and the ever-widening investigation of Russian activity in the last election. Notwithstanding these issues, the Administration could choose to use executive power to begin gradual but steady reductions in ICR funds during the next 3-5 years. If so, I speculate that some new target will be set — not the draconian 10 percent — but perhaps closer to 52 percent.

What We Can Do

Even if Trump administration proposals do not overwhelm us all at once, they are certainly going to require University of Minnesota leadership and its Board of Regents to consider some kind of “Plan B.”  It would be irresponsible to do otherwise. What steps could they take to assure that our schools and colleges remain an important force in federally funded research? Where will the University find the subsidy required to fund the rising cost of federal research? It is a discussion we need to have before the storm arrives.

Within SPH itself, we continue to explore cost-saving strategies that will not impair our mission, as well as research support strategies that will boost grants and contracts productivity. If necessity is the mother of invention, now is the time for innovative ideas! Please share yours with me by emailing finne001@umn.edu.

Finally, there is an army of universities, hospitals, research institutes, and professional associations massing to oppose the Administration’s proposals, including the Association of Schools and Programs of Public Health (ASPPH).

I continue to believe in the power of education. Consider educating your Congresspersons by letter, email, voice message, or other means of communication.

Stay committed, my friends.

John R. Finnegan
Dean and Professor, School of Public Health

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