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WSU briefs regents on federal grants disruption, warns of $20–25 million indirect-cost shortfall
Summary
University research leaders told the Board of Regents that recent federal directives and stop-work orders are already pausing awards and could halve Washington State University's indirect cost recovery, costing the university tens of millions and threatening research, graduate funding and cash flow.
Federal research funding disruptions and federal executive orders over the past month are already affecting Washington State University's grants and could cut the university's indirect-cost recovery by tens of millions of dollars, university research and finance leaders told the Board of Regents on Feb. 17.
Research administrators said the most immediate risk comes from a federal directive that would cap indirect (F&A) rates at 15 percent and from a series of agency stop-work orders that have frozen some grant activity and reimbursements. The university's current negotiated indirect rate, Kim Christen said, is "53% on campus, 26% off campus," and WSU's effective NIH rate is about 30 percent; an across-the-board drop to 15 percent would cut an estimated $23,500,000 of indirect-cost recovery.
Why it matters: indirect-cost recovery pays for research infrastructure (labs, animal care, IT, compliance) and is a revenue stream the university uses to support faculty, facilities and administrative compliance. Regents heard that a significant cut would not only reduce discretionary revenue but would also force units to cover fixed costs that federal grants previously supported.
What leaders said: Kim Christen, who led the research briefing, said WSU had 1,149 active grants across 23 agencies totaling roughly $231 million in award balances, supporting 656 principal investigators and more than 1,100 employees on grant payrolls. Christen said 11 awards were under stop-work orders at the time of the meeting (down from 14), including seven USAID awards (about $3 million frozen) and one large Department of Energy component of the Pacific Northwest Hydrogen Association award (about $6 million balance).
Chief Financial Officer Leslie Brownelli and other finance leaders framed the cuts as a two‑pronged shock: an immediate cash pressure from award pauses and a multi‑year risk if future awards carry dramatically lower indirect recovery. As Brownelli put it, lower F&A revenue also reduces interest income because there are fewer dollars to invest.
Actions and next steps: Regents were told staff are tracking stop-work notices, aggressively collecting receivables, shutting down affected awards for new expenses, and asking departments to temporarily absorb payroll to avoid departmental deficits. University leaders said they are preparing scenarios and a —parking lot— of follow-up information (requests for data and analyses) to prioritize after the retreat, and they are coordinating legal and government relations efforts, including participation in litigation that obtained a temporary restraining order against the NIH directive.
Voices from the meeting (verbatim): "For the current NIH grants, we calculated our effective balance rate is about 30%," Kim Christen said. "If all federal agencies go to a 15% indirect cost rate, what does that look like? So you can see that estimated loss is 23,500,000.0." Chris (senior research leader) told regents: "We're going to lose millions upon millions of dollars in these units, simply stopping grants, if that's what we're talking about." Matt Skinner (treasury) summarized operational steps: when notified of a stop-work order "we actually shut down that grant award so no new expenses can post to that grant."
What the regents heard about downstream impact: leaders emphasized that stop-work orders and rate cuts would affect graduate stipends, tenure-track research capacity, and long-lived assets such as animal facilities and specialized labs; they cautioned that rebuilding lost capacity could take years. Glenda (government relations) described ongoing advocacy with state and federal delegations and participation in national consortia such as APLU.
Ending note: Regents did not take formal votes on research policy at the retreat but directed staff to continue scenario planning, to accelerate program- and unit-level financial reviews and to coordinate messaging with state and federal stakeholders about the broader economic and workforce consequences for Washington.
