‘FAIR’ Model Aims to Preserve Federal Research Funding

When President Donald Trump returned to office in January, he took aim at the federal research funding system that has been the bedrock of technological and medical advances in the country since World War II.

Among other funding threats and grant freezes, the Trump administration has proposed drastic changes to how much of universities’ “indirect costs” for research the government will cover.  These expenses, also known as facilities and administrative costs, pay for things like office equipment, lab upkeep, and support staff that are necessary for research. 

Under the current funding model, universities negotiate a reimbursement rate every few years with the federal government to cover those costs. Depending on the institution, the rates fall between 30 to 70 percent of the school’s direct costs, which includes things like faculty salaries and the materials used in research.

Federal agencies have proposed slashing that reimbursement rate to 15 percent, causing widespread concern on campuses nationwide. The Trump administration has argued the lower rate is more in line with private grants’ indirect cost reimbursement and better stewards taxpayer dollars. If the proposal for the National Institutes of Health came to fruition, one estimate found North Carolina universities would lose approximately $659 million. 

While court orders have paused the changes, the Trump administration’s proposal ignited debate about the current model.

Enter the Joint Associations Group (JAG), which formed in April to devise a new reimbursement method. The coalition of 10 national higher education groups delivered its proposal to Congress and the White House in July. The plan, named FAIR for “Financial Accountability in Research,” would replace the flat-percentage rate with a system that accounts for the varied costs institutions incur for different kinds of research, considering factors like equipment and technology needs and government-mandated compliance requirements.

While the higher ed groups endorsing FAIR argue the model is the best path forward amid Trump’s threats, others in the research community have criticized it as too complicated.

Penny Gordon-Larsen, vice chancellor for research at the University of North Carolina at Chapel Hill, advised the committee that developed the model. Gordon-Larsen spoke with The Assembly about the proposal and how the group hopes to gain buy-in from the White House and some skeptical faculty.

This Q&A has been edited for clarity and length.

What were the JAG’s goals in creating this proposal?

The idea was really to think about a new approach for federal research funding and to do that in partnership between the research community and government leaders. Because there were so many questions about how indirect costs were spent, and there was a lot of confusion and misinformation about the current model, we wanted to address it.

In general, the current F&A [facilities and administrative] model is not really broken, but Congress has continued to raise issues about it every five or so years. This time, Congress really made clear that they wanted an alternative, and there were some caps on F&A that had been proposed by several agencies. So we saw an opportunity to step up and create a new approach that addresses the longstanding concerns but also keeps our research enterprise strong.

What are some of the current critiques of the indirect cost model?

When you get that [indirect cost] reimbursement and it arrives at the university, those dollars under the current model are not tracked in the same way that the direct costs are tracked. As a result, it is fair for the public to ask, how are you spending those dollars? At UNC, that side of the equation is where we’ve been very transparent. We have an all funds budget. You can see where we are spending our F&A dollars. Other institutions are not that transparent. And in the absence of transparency, it is possible to have lots of misinformation and questions that are raised—legitimate questions. So that’s the short story of where we are in this moment.

The other side of the story is that, after World War II, Vannevar Bush [who led the U.S. Office of Scientific Research and Development] created the current system, and basically, coming out of the war, said, in order for us to be an economically prosperous nation, we need to invest in the science and technology that will drive the future breakthroughs that will support American dominance. So the shared responsibility for creating that research ecosystem fell on both the federal government and the institutions, both contributing to this ecosystem that will allow science to prosper.

So the question has been raised: To what extent is that shared responsibility supposed to shift from what we currently do?  … When you look at NIH dollars, that research basically has led to 99 percent of the drugs that are on the market. It has led to advances that keep us safe, that keep us healthy, that provide the most cutting edge information about policies and education and so forth. And so it’s been a worthwhile investment for the government.

 How does the new proposal address those questions?

It’s a new approach to identify, account, report, and recover these indirect costs, and those are the costs that support the facilities and the research administration related to federal research activities.

Instead of using one single rate, like we do now, we have moved some of the indirect costs. We’ve identified them and called them out and said, for example, if you are doing clinical research in this kind of lab, it will cost this much. You can charge it directly so that you can see it on a budget, and you can track that those dollars go to that clinical infrastructure. 

… So at a university, instead of saying every kind of research gets charged 55.5 [percent, UNC-CH’s rate], if we have something that’s occurring in office space that has no specialized equipment, it would cost considerably less than something happening in a really highly specialized imaging facility or a really complicated clinical trial that requires special equipment.

All of those kinds of research would have different costs. And so it’s more fair in that it ties those indirect supports directly to the type of the research, the actual research, that’s being done.

How has the proposal been received so far?

Like everything, this is a very complex model. And the only people with true knowledge of how these models, even the current model, work are people in research administration who really understand all of the steps and all of the costs. A faculty member on the street doesn’t understand all of this in general. They don’t. 

The model was approved by all of the associations that oversee the JAG, but there are some in the broader community who don’t fully understand the model and think it’s too complicated. So we’re working right now to provide clarification so that people will understand the complexity.

What are your next steps?

It’s my hope that we can continue to work as we have done—in partnership with the federal agencies, with both parties in Congress, and with the White House—to continue all of that really good partnership and work to land in a place where we have a model that everyone is happy with.

It’s my goal—and I think it’s the goal of every institution—to have a model that adequately supports the cost of doing the research. Because universities, not being for-profit entities, do not have, in general, the resources to support all of the costs of conducting research. And so if those costs are not covered, it will mean that we can’t do research in this country at the level we’ve done it in the past. That means fewer cures, fewer discoveries. It reduces our health. That reduces our economic prosperity. It reduces the national security of our country. 

So it’s my hope that we can get to a place where those costs are covered in a way that allows us to continue to be strong as a nation.

Erin Gretzinger is a higher education reporter at The Assembly. She was previously a reporting fellow at The Chronicle of Higher Education and is a graduate of the University of Wisconsin at Madison. You can reach her at erin@theassemblync.com.