UT System leaders warn federal research cuts, grant terminations have already hit campus projects

Changes in the federal research landscape have already reduced new awards to University of Tennessee campuses and in some cases terminated existing grants, system research staff told the Education Research and Service Committee on May 31.

"Changes in the federal research landscape are impacting all public and private institutes of higher learning, both large and small," said Dr. Carrie Babbski Reeves, who briefed trustees on the national picture and specific effects on UT. She said the situation is fluid and that the slides she presented reflected data current about a month before the meeting.

Why it matters: UT’s research portfolio depends heavily on federal dollars. Reeves told trustees that nationally nearly 3,000 awards have been terminated, "totaling $7,000,000,000," and that the pace of making new awards has slowed at many agencies. For the UT system specifically, she said, "as of May 31, 60 awards had been terminated, adjusted in scope, paused or otherwise impacted, totaling nearly $57,100,000, with almost $939,000,000 of that being unspent funds at the time of notification for the federal agency." Reeves added that a significant proportion of that amount is tied to a single large USDA grant.

Reeves described two categories of federal changes: (1) current impacts — slowed new awards and terminated or paused existing awards — and (2) proposed policy changes, including cuts to agency budgets and proposals to cap indirect cost recovery. On the latter, she said many agencies have proposed a flat 15% indirect rate for total direct costs. "Within the UT system... the effective total direct cost indirect rate is about 38% across the system as an average," she said, noting the system currently has unit rates that vary from about 37.5% to 57% for portions of direct costs.

System-level impacts and mitigation: Reeves told trustees UT campuses have shifted funding sources so that graduate and undergraduate students supported on affected awards have not lost support. "Of the 58 graduate and undergraduate students funded on these awards, none of them lost their support as their funding was shifted to other sources so that their financial situations remain stable," she said, commending campuses for that work. She also said UT has not enacted hiring freezes or incentivized retirements at this time, unlike some institutions nationally.

Trustees asked for further context. When one trustee asked how the $37,000,000 figure compared to the system’s annual research expenditures, Reeves replied that fiscal year 2024 total research expenditures were $484,000,000, and that the roughly $57.1 million in affected awards represents a significant proportion of the recent disruptions. Trustees and staff discussed likely federal priority areas (Reeves and colleagues cited shifts toward chronic diseases, AI and nuclear-related research among the areas they were watching) and agreed the system should continue national engagement and expand industry and state partnerships.

Next steps: Reeves and other system staff said the situation will require tracking reinstatements and additional terminations, working with federal relations teams to influence policy where possible, and using the pause to refine internal processes. She recommended continuing to support affected faculty and students, identifying strategic hires, and expanding industry partnerships to diversify funding.

Ending: Trustees heard that this is a rapidly changing environment; Reeves repeatedly cautioned the data were evolving and that some awards are being reinstated while others are being terminated or paused.