From the Director: Facilities & Administrative Costs

This is a guest post from David Wynes, Vice President for Research Administration regarding proposed reductions in Facilities & Administrative Costs for the NIH.

June 21, 2017

The Honorable Mick Mulvaney
Director, White House Office of Management & Budget 725 17th St., NW
Washington, DC 20503

The Honorable Thomas Price
Secretary, U.S. Department of Health and Human Services 200 Independence Ave., SW
Washington, DC 20201

Dear Director Mulvaney and Secretary Price,

We write to express our strong opposition to the President’s fiscal year 2018 (FY18) budget proposal for the National Institutes of Health (NIH), which proposes to reduce the NIH budget by $7.2 billion, or 21 percent, in part by restricting facilities and administrative (F&A) costs to 10 percent on NIH awards. These cuts would have devastating impacts on our Nation’s ability to perform health and biomedical research that leads to advances in medical treatments and cures.

F&A costs are an integral part of the cost of conducting research. Research cannot be performed in the absence of specialized facilities and laboratories, utilities, high-speed data processing and storage, human and animal research review boards, radiation and chemical safety activities, and other infrastructure and compliance activities required for the conduct of federally funded research. F&A reimbursement for costs incurred by institutions for the conduct of federal awards is implemented through a process that is tightly regulated and audited by the Federal Government to ensure that the government funds only that portion of costs that are attributable to the performance of federally funded research. This reimbursement is subject to restrictions which, when combined with growing federal requirements, result in significant unreimbursed F&A costs; $4.8 billion in FY15 according to the latest federal data. Universities, medical centers and research institutions are struggling to sustain this level of support even at current F&A rates. The reductions proposed in the President’s FY18 budget would result in the closure of research programs and significant reductions in the conduct of research at U.S. institutions which could not recoup the substantial unpaid federal costs per institution annually through tuition, state appropriations or other sources.

At its current level of federal research funding, the proposed 10 percent F&A would require Emory to subsidize this research at an additional annual cost of $85M.  This is not feasible.  While a final plan would be subject to the decisions of Emory’s Board of Trustees and leadership, the proposed cap would likely result in the discontinuance of significant portions of the federal research activity currently conducted at Emory. This could include the termination of promising research programs ranging from cancer to infectious disease, closure of a several state-of-the-art research facilities, reduction of graduate and post graduate training programs, and potentially large-scale layoffs.  Emory funds, fully or in part, 5600 employees through federal research dollars.  These salaries could not be sustained without compromising the educational mission of the institution.  The changes required by reducing F&A to 10% would occur in a relatively short timeframe (months to two years) but could take decades to reverse once the harm of this action is recognized.

Our nation’s nearly 70-year long partnership between the federal government and research universities is world renowned for its productivity and innovation—and for the tremendous improvements in human health that it has produced through basic and translational research.  NIH-funded research has led to an increase in life expectancy and declines in deaths from cancer, heart disease, stroke, diabetes, and other devastating and debilitating diseases. The U.S. is the global leader in medical research, basic scientific research, and innovation which has led to significant economic benefits, job growth and advances in healthcare that benefit all Americans. Stable and consistent funding of the entire spectrum of research infrastructure and activities is necessary to maintain our Nation’s standing.

Sincerely,

David L. Wynes, Ph.D.
Vice President for Research Administration Emory University