Universities warn committee: federal caps on indirect costs could cut research support and campus infrastructure

BISMARCK — The committee heard two briefings on research funding and how federal grants — and the recovery of indirect costs — support research infrastructure, compliance, faculty start-up and other costs that are not billable as direct project expenses. How federal awards work: Scott Snyder, vice president for research at the University of North Dakota, outlined a hypothetical federal grant budget that showed direct costs (faculty and staff salary portions, graduate and undergraduate student support, supplies, travel, equipment and subawards). He explained that an institution’s federally negotiated facilities & administration (F&A) or indirect cost rate (UND’s negotiated rate is 41%, NDSU’s is 45%) applies to recover overhead on allowable direct costs, but exclusions — tuition, equipment, and most subaward costs beyond $50,000 — lower effective recovery. Snyder said UND’s effective F&A recovery is roughly 23% of direct costs across projects. State-funded research programs: Both Snyder and Heidi Grunwald (interim vice president for research at NDSU) told the committee that state-funded initiatives often prohibit indirects; the Economic Diversification Research Fund (EDRF) created in 2023 received a one-time transfer but was not funded in 2025. Grants that do not allow indirect recovery therefore leave campus-level overhead to be absorbed from other sources. Risk from federal proposals: Committee members asked about a federal proposal to cap indirect-cost recovery at 15%; Snyder said courts have enjoined recent agency attempts, but if a 15% cap were enacted it would significantly reduce recovery and, by his estimate, UND would lose $12–$15 million annually. He noted that university associations are collaborating on a new F&A transparency model (sometimes called FAIR or JAG concepts) intended to demonstrate how recovered funds are spent on buildings, compliance, start-up costs and research support. How F&A is spent: The vice presidents described F&A-supported items: utilities and maintenance for research facilities, hazardous-material handling, animal care, compliance and sponsored-program staff, library support for research, start-up packages for new faculty and long-term maintenance for specialized instrumentation and facilities. Why it matters: Indirect-cost recovery is a major source of flexible, mission-directed funds that keep research facilities and compliance functions operating between grants. Reductions in F&A recovery could lead to program cuts, deferred maintenance for research facilities, and lower capacity to win and manage grants. Ending: Committee members requested follow-up analysis about the potential fiscal impact of federal policy changes and the role state funding should play for strategically important research areas. Both campuses offered to provide more detailed numbers and examples of how F&A funds are deployed.