Montana university leaders warn federal research pauses, proposed NIH cap and Education Department changes could reduce funding

Montana University System officials briefed the Board of Regents in March 2025 on a set of federal actions that are disrupting research and student‑aid operations and could reduce future funding for the system.

The developments have immediate and potential consequences: the system reported roughly $17 million in canceled grants and more than a dozen awards on formal stop‑work orders, while a proposed National Institutes of Health rule capping indirect‑cost reimbursements at 15% — though enjoined nationally — would have reduced MSU/UM institutional indirect‑cost revenue by an estimated $3.7 million from NIH awards and by about $28 million if a 15% cap applied across all federal awards, officials said.

"We will be intensely watching the developments out of Washington, D.C., and the reorganization of the U.S. Department of Education to make sure that we don't see adverse effects related to that reorganization," Commissioner Christian told the Regents. The commissioner and deputies described three linked federal issues: a short‑term continuing resolution (CR) in Congress, Department of Education personnel changes and guidance, and a broader set of disruptions to research grants and indirect‑cost recovery.

Deputy officials said the U.S. House had passed a continuing resolution extending government funding to Sept. 30 but removing earmarks; they said the CR is "clean for education" but that the Senate had to approve it to avoid a shutdown. Department of Education staffing changes were cited as an unknown in terms of service delivery; system officials said they are monitoring how the department's reduction in force could affect Pell and other federal student programs.

On research funding, Deputy Commissioner (research) described $17 million in canceled grants across the system, the two largest being a $10 million Environmental Protection Agency award to Montana State University for a multi‑state community infrastructure collaborative and a $3.1 million Department of Defense civic‑education grant to the Mansfield Center at the University of Montana. The deputy also said more than a dozen awards carry stop‑work orders and that federal agencies have issued varying guidance to grantees that has created uncertainty on how sanctioned funds may be spent.

Officials also discussed a February NIH announcement that would cap indirect costs at 15%. That policy was enjoined by a nationwide preliminary injunction on Feb. 10 and is paused for now, but system officials said the agency action illustrates the risk: most Montana institutions negotiate indirect‑cost rates in the 40–50% range, and a broad cap would reduce institutional capacity to maintain research infrastructure, staff and facilities.

Financial aid changes were also on the agenda. Officials said the new FAFSA system is operating more smoothly than last year and that FAFSA submissions have increased versus the prior year, but are still below 2022–23 levels; they cited timing differences in the season open date as a partial explanation. Officials flagged a structural shortfall in the Pell Grant program that will require congressional action to address in the near term.

Chief legal counsel reported that the U.S. Department of Education had issued a “Dear Colleague” letter on constitutional protections against race‑based discrimination. Counsel said the Office of the Commissioner had reviewed Montana University System policies and concluded the system is in compliance with the department’s guidance on admissions and hiring practices.

Regents and campus leaders were briefed on materials that system staff said are being shared with campus communications teams, faculty and students, and on a system spreadsheet estimating the potential budgetary impacts if federal changes proceed. Board members encouraged continued monitoring and outreach to federal delegation offices.