The overhead "problem"

Apr 11 2013 Published by under [Education&Careers]

Everyone is looking for ways to keep research money on the table for the science these days. I watched the end of the OSTP budget request presentations yesterday and caught both the NSF and NOAA announcements. In both cases, and in the breakout sessions, each agency made a point to mention that only ~6% and ~4%, respectively, goes to administrative costs in their budget. The subtext, of course, being that they channel almost every tax dollar they can directly into the science.

But. That money for science doesn't all go to science, does it? In any discussion of declining science budgets, the issue of university overhead is always a topic that comes up. Each institution negotiates its own overhead rate with the Feds, mine happens to be just north of 50%. This means that for ever dollar I bring in, a little more than 50 cents is deposited into the university.

Fascinatingly (to me, anyway), this number manifests very differently between NIH and NSF. NIH budgets take only the direct costs (those $$ spendable by the PI) into account when the project is reviewed. For NSF, reviewers get the total budget, with both direct and indirect costs factored in. Theoretically, proposals with higher overhead rates can be penalized in the NSF case, whereas these costs are obscured from review in the case of NIH.

That little tidbit aside, overhead money ALWAYS comes up in conversations about federal research budgets. "Reduce the overhead rate and we'll all get funded!" While that all sounds well and good, the conjured images of overhead-funded Dean's Maseratis is so ridiculous that it's hard to engage anyone spouting that view with a straight face. So what does overhead really do?

Among many things, overhead has two major functions: 1) pay for the research enterprise, 2) fund start-up packages. Point 2 is pretty straight forward - a research career isn't going to get off the ground without funds to create data prior to the first grants rolling in. The first point, however, is where many people seem to have a blind spot. It's a blind spot often created by not having to worry about the costs that this evil overhead covers. Also, it is often unclear how much it actually costs to keep the lights on and the research supported. If we ignore support staff who are funded off overhead money (a major cost) and just focus on the lab space, what does that cost?

Ironically, crowd funding crusader Ethan Perlstein, is providing the answer. As Drugmonkey highlighted, Ethan is reporting a market cost of $900/bench/mo. And that's just an empty bench.

How many benches does your lab occupy? How about equipment use (because, recall, the crowd funding movement comes without start-up funds)? Service contracts? I can only speak from my experience, but overhead not only covers the costs of my bench space and all that is associated with that, but certain costs that I can't use fed money for. Software? Computers (in most cases)? Service contracts for equipment in my lab can run north of $20K annually (which is relatively small) and luckily we get much of that covered from college overhead. And we're not even talking about specialized bench space (laminar flow hoods?) or activities that need to be conducted in physically separated spaces.

This is the reason that I can't take people seriously when they claim that the current academic model is just a way for universities to gorge themselves off the federal government. These proclamations are often tightly coupled with a flagrant lack of appreciation for what the infrastructure of the research enterprise actually costs. Maybe you can convince the general public to donate $20,000 for a project. Maybe. But it better get done fast if you're bleeding out at a base cost rate of $900/mo before you pay for staff, reagents, equipment or computers.

Research doesn't happen in a vacuum. Without an appreciation for the actual cost, and not just what comes out of the direct costs budget, this independent research ideal is hamstrung before the race even starts. Making improvements to the way we do research is an admirable goal, but strutting about like only morons can't see your new clothes already has a story.

43 responses so far

  • Anon says:

    My complaint about overhead is the misuse of those funds by university administrators who do not understand the research enterprise. For example, in my lab I have ~ $1million worth of equipment and NO SERVICE CONTRACTS. Why? because my university will not support service contracts. I'm somehow supposed to do this with my direct costs. So the bottom line is that I don't have them and I live on a prayer that things don't break, and if they do we all try to figure out how to fix them. What a HUGE waste of my time that could be spent writing more proposals and making scientific breakthroughs. This is but one example. University administrators are idiots at my institution. I'm already afraid to write some grants because I can't trust that my lab will actually be operational when/if I get the money in to do the next project. Basically the choices the administration is making will result in eventually (and probably sooner rather than later) shutting me down. Good thing I have tenure and can just sit on my arse like so many other (useless) professors when they finally force me to quit trying.

  • MCA says:

    "Each institution negotiates its own overhead rate with the Feds"

    I think what would help is to see the details of this. It's like my household budget. I look at it an say "oh, I've got X/month left over after these major expenses, that's tons of money", and before I know it all the 'little things' and occasional events have drained it dry.

    If we could actually see something like "We need X for building maintenance, Y for IT services, Z for startup funds, etc." then the 50% (or whatever) would be more understandable.

    Also, newb question - are the rates the same for all agencies? Or is the overhead a given school applies different for grant applications to the NIH vs NSF?

  • Anon says:

    MCA - the rates at my university are the same for all granting agencies (except for special projects off campus etc). The rates are determined mostly by square footage of university space devoted solely to research (not teaching). They vary from year to year as they change use of spaces or build new buildings. The more space = the higher the overhead rate.

  • babakubwa says:

    The disturbing trend for me is the rate of increase in overhead %. Universities are taking more than they used to. In just the past 3 years mine has increased from 47% to 52%.

    I think this is in part driven by an arms race between universities to build bigger, newer, fancier facilities. Who is at a university that is not currently constructing new buildings? Part of the global economic ponzi scheme that growth will solve all problems.

  • proflikesubstance says:

    I know some Deans who happily open the books and others who don't. But quite frankly, worry about your lab budget before you waste your time poking around the college/university budget.

  • DJMH says:

    I don't understand why overhead rate is tied to amount of research space. If a university builds a new building, it gets filled with new labs bringing in new direct and indirect costs. So then why do they need a higher *percentage* of the direct costs?

    Obviously they need more overhead in absolute terms, but I can't see why running HVAC on two buildings should be more than double the cost of running HVAC on one building. If anything, the reverse, as economies of scale kick in (not needing twice as many physical plant people etc.)

    Maybe we should just start decreasing overhead rates every time universities build a new complex. Ha ha ha no really.

  • proflikesubstance says:

    I can't verify Anon's O/H calculation formula. In fact, I find that hard to reconcile with the movements of my own Uni's O/H rate.

  • Anon says:

    A few years ago my university had serious concerns that our overhead rate was too low (~ high 40's %). So we were told to change the way we use rooms - e.g. not allow any teaching activities in labs - so that they could increase our overhead rate because it was directly tied to sq ft of space designated as research only. I'm sure though that the actual calculation probably takes other things into account too. This was my administrators method of bringing our number up into the 50's %.

  • eeke says:

    It's easy to understand that indirect costs are needed. However, if you do a bit of googling, there are number of statistics out there that show that the size of university administration has ballooned at a rate that far out-paces faculty growth rates. The state university that I was at had a 70% growth in administration within a 10-year time frame. The faculty pull in the money, but more and more if this is going toward well-paid administrators who do fuck all. I don't know whether universities have down-sized their administration to accommodate the economic down-turn, but there should also be a re-negotiation of indirects to match this down-sizing, if any. I'm happy to have a chunk of my grant money pay for the roof over my ahead and the necessary infrastructure to keep it going, but not to pay for useless over-paid fuckwits who provide "services" to the university that I (or anyone else) do not have access to.

  • proflikesubstance says:

    I'm not justifying every overhead expenditure, but the idea that it is pure profit for institutions is woefully out of touch.

  • Anon says:

    Regarding the University's (administrators) use of funds - I wouldn't worry about it if it at least appeared to be used fairly. My issue is that I bring in significantly more money than any other person in my dept, and yet NONE of my equipment has service contracts, YET other (they happen to be male and I'm female) faculty have labs and THEIR equipment gets service contracts funded by the university! They also get state-supported lab technicians and I don't. So basically I work really hard to bring in the overhead that goes directly towards supporting them. This is why I care about the university's budget. If it didn't affect in me in such negative ways I wouldn't care. Or if it at least appeared that everyone was treated equally no big deal. This is my frustration - they pick and choose how and where to use their overhead and it isn't transparent and it often appears to be used in a manner that does not encourage or support research but supports bloated and increasing numbers of administrators.

  • M says:

    I'm in the same position as Anon at 1:51. Our lab brings in the most money in the department, and a relatively high percentage of the money for the college, but yet, we don't see the same proportion of the overhead returned to us. Our department does a pretty good job of funneling as much money as possible back to us, and the research office does a pretty good job of helping us out when possible, but it's the college that ends up taking a big chunk of the overhead and sending it elsewhere. So, we're definitely losing more than we're gaining. Part of the problem is that we're not at a major research institution, so it's just not the university's top priority to ensure flourishing research programs.

  • Doesn't that $900/mo number have a profit margin built in for the incubator? Also I'm sure being in San Francisco, one of the most expensive real-estate markets in the US, doesn't help.

  • DrugMonkey says:

    A more subtle issue is that different kinds of research require different support costs which are amortized across the IDC rate. Pure bench-only stuff tends to be cheap. Big ticket gee whiz is expensive. Animals are expensive.

    So yeah, you just might be subsidizing Joe on a per grant basis....but then Joe probably brings in more cash per office square foot.

  • Anon says:

    DrugMonkey

    Totally true. However in my case, I bring in more money per sq ft as I have smaller lab space (utterly overcrowded) but bring in more money compared to those individuals who receive the university support (some have huge empty rooms in their labs). But my case is only a singular example.

    Definitely all of these important facts come into play (or should come into play) when making good administrative decisions.

  • I totally agree that the universities aren't keeping the lights on for nothing. However, at Snooty U (65% overhead), the bio labs all paid for their own freezers, centrifuges, microscopes, EMs, service contracts, and live-animal maintenance. The university provided 5 autoclaves for a 12-story building and about 6 lab dishwashers (staff not included). The only core facility had two 40-year-old EMs (they only took film). My lab - with the head of the department! - got 1/12th of a secretary, plus some portion of the 20 people upstairs who handled all the department's business. So they were paying for the building, the electricity, and physical repairs, along with about 25 staff.

    Basically what I'm saying is I have a really hard time believing they weren't using at least half of the overhead money as a giant slush fund.

  • proflikesubstance says:

    Slush fund for what? Start-up? Equipment repairs? Bridge funds? HOW DARE THEY!

  • Dave says:

    The idea that IDCs are fairly set and, therefore, off the table is laughable. Sorry. DM has been spouting this chat for a while now, but I've never seen any data on what "the real cost of research is". Using the 900/month figure from Perlstein as a starting point is pure comedy. Even if it were true, it is hardly relevant to a non-profit scenario now is it?

    And for crying out loud, stop using the "deans driving Maserati's" bollox to mock those who complain about IDCs. We all know that's a gross over-simplification of the real story and I don't think anyone these days really doubts that rising admin costs are a major problem and a threat not just to research, but to education as a whole.

    But If you can show me data that proves that the rising cost of admin DOES NOT outpace the growth in faculty/research, and if you can provide data that demonstrates IDCs baaaarely cover the costs of research, then I will be the first to drop the issue. But, the fact is, I know that you cannot do either, so this is just another condescending lecture telling people to stop "whining".

  • Driving By says:

    My university has 50.5% overhead, but it is not going towards what the federal agencies expect it should.
    Here's an example. We were recently informed that we are not supposed to be charging paper or toner or purchase computers or any of the tables/chairs for self or students on federal grants; apparently, we haven't been able to do that for a while now, but people were lax. Now, due to everything being online it's much easier to monitor or audit, and the department and college don't want to get in trouble. So I am not supposed to buy paper or toner or computers or chairs or desks for my students because that's what federal agencies expect the overhead to be for. Well, we were told tough luck because the overhead funds have being spoken for in terms of new buildings and whatnot, and the department is on a shoestring budget; so we can't use grants to cover basic operations while the university shrugs and says "well we spent the overhead, sorry." I have to use my discretionary funds (which are very hard to come by) to cover the basic operations of my group. If I wait for the department to give my students chairs and desks, they sit in 20-year-old chairs that housed far too many student bottoms already and at long decommissioned army surplus desks.

    I understand it costs money to keep the lights on and all that, but all I see is that I am in a bind and that what is supposed to be coming back from overhead certainly isn't. I am not sure overhead funds startups either, as we are having a very difficult time getting approved for any sizeable startup, which hurts our ability to hire. In the meantime, there is a lot, A LOT, of building going around.

    All I want is to not have to worry how I pay for fucking toner or how I will buy a computer for a new student, because it's not that I don't have the money, it's that I am not allowed to use it and nobody actually gives a fuck what people doing actual research need. All I see are stupid, pointless roadblocks.

  • AP says:

    Agree with 'driving by' and 'dave' completely.

  • proflikesubstance says:

    Using the 900/month figure from Perlstein as a starting point is pure comedy. Even if it were true, it is hardly relevant to a non-profit scenario now is it?

    Um, not relevant in which way exactly? I assume from your rant that you must have a better estimate for bench cost than this free market quote. That's what it costs to rent a bench free of all the academic tyranny. Have at it.

  • Dave says:

    It's not relevant because 1) it is in the private sector, 2) it comes from Perlstein and, 3) nobody knows what that figure really means or even how reliable it is.

    But anyway, for fun lets say it is true and relevant. That's 900/month for a bench in a university lab. Presumably that includes rent, utilities etc so you would first have to buy equipment. Now, last time I checked most academic equipment is paid for from grants. You would need fridges, freezers, centrifuges, pipettes. Admin doesn't pay for any of that. You will also need lab staff, right? Last time I checked, lab staff are paid for from grants. So now I'm down only 12K a year so far for the bench with the rest coming from my own pocket/grant. That's a lot cheaper than current IDCs. The big question PLS is do you now need 12 MBA accountants, 5o vice deans for fuck knows what, 100 assistant vice deans, 100 grants management specialists and 50 secretaries?

    But as I said in my post, I don't know the real numbers and NEITHER DO YOU. That's my whole point!!!!

  • proflikesubstance says:

    Buying equipment..... when does that happen? Oh right, usually most of it is bought of start-up (at least for those pre-tenure). I wonder where that start-up money came from. Just can't put my finger on it.....

  • I'm not saying it's *wrong* to take startup out of a slush fund, and yes, I know that repairing an autoclave isn't cheap, and they have to pay the plumbers. I'm not arguing that overhead should be magically vanished so that money can go to grants. I am, like others, saying that the average person can calculate how much things cost for their specific institution, look at the overhead they're taking, and come up with two very different numbers. Probably the money was going to providing training for students who couldn't be put on training grants (non-US citizens, for example), or subsidizing the cookies at seminars, or allowing the department to teach an EM course to undergrads, or whatever. The reality of university funding is, they take it where they can get it. I think the question Dave asks is the same one I have: if it's public money, doesn't the public have some right to know where it's going? Does the NIH have a right to some say in how it's used, or do they want universities to do whatever they want with it, or is that just how it's turned out?

  • proflikesubstance says:

    Where did I say that I was against the public being shown what happens with overhead money? I think it would shock many of the "destroy the overhead" crowd to realize how much is supporting what they do.

    So what goes into your calculation of "how much things cost for your specific institution?" Grant support staff? Accounting staff that handle grant purchasing? Keeping their lights on? When you think of what it costs per bench, are these people factored in? Animal care facilities? Etc. etc. etc.....

    Since people seem to be missing my central point, I'll reiterate: Overhead, by and large, supports the research enterprise as a whole. Just because all you see is your lab, don't fool yourself into thinking all you need to cover is the electricity bill.

  • DJMH says:

    Just because all you see is your lab, don't fool yourself into thinking all you need to cover is the electricity bill.

    Great, but this doesn't explain why overhead rates increase over time (they have at my uni) or why they are so wildly variant even among institutions in similar locations. (Leaving aside the whole private/public issue, for the moment).

  • proflikesubstance says:

    Sure, because everything else is totally standardized between institutions.

  • Dave says:

    Buying equipment..... when does that happen? Oh right, usually most of it is bought of start-up (at least for those pre-tenure). I wonder where that start-up money came from. Just can't put my finger on it

    hahahaha the TT/tenure bubble must be pretty comfortable.

  • Dave says:

    Since people seem to be missing my central point, I'll reiterate: Overhead, by and large, supports the research enterprise as a whole.

    We are missing it because that is not your point at all. Your underlying point is that the overhead rate is inherently fair and that we should all be grateful that we do not pay more. Don't run away from it.

  • rs says:

    it is blind and stupid not to see inflated salaries of administrators.

    You will be full grey before you even come close to those salaries (oh, on the name of tenure, but when big part of the faculty these days is either soft money or adjuncts, does it still make sense not to pay to faculty but to MBAs on the name of grant management?). where does it come from?

  • DJMH says:

    Sure, because everything else is totally standardized between institutions.

    Why should it be the federal government's problem to solve those inequities?

  • proflikesubstance says:

    Dave, I love the evolution of your comment threads. 1) snark, 2) demand data while producing none, 3) redefine the question. You've really got it down.

  • drugmonkey says:

    . Your underlying point is that the overhead rate is inherently fair and that we should all be grateful that we do not pay more.

    My underlying point is that people ranting about overhead have never sat down and penciled out ALL the costs for their own work and looked at trying to replace that on the local free market. Nor made a reasonable stab at figuring out whether their work is on the low end, middle or high end of all that a University supports.

    Once you do that, your viewpoint changes. My answer to DJMH's question is that money is fungible, even IDC rates of 100% don't always foot the whole bill and the consensus public U rate of about 55% is clearly an under payment. The money is coming from somewhere. So differences in negotiated IDC may depend on whether there is endowment, how Us include real estate / buildings that they own versus being built on bonds, etc.

    if you want "fair" IDC rates then it is going to be closer to 100% than it is to 55%. somehow all you IDC warriors assume "fair" means "lower". I don't know where you get that idea. Care to expand?

  • lylebot says:

    A more subtle issue is that different kinds of research require different support costs which are amortized across the IDC rate. Pure bench-only stuff tends to be cheap. Big ticket gee whiz is expensive. Animals are expensive.

    Some parts of computer science are super-cheap. We don't even need "benches" whatever those are! I know it doesn't cost 0.5*(pay+benefits) to administer my grad students and my summer support, particularly since we all work from home most of the time, but those two items along with overhead are almost the entirety of every grant proposal I write.

  • Dave says:

    My underlying point is that people ranting about overhead have never sat down and penciled out ALL the costs for their own work and looked at trying to replace that on the local free market.

    What the hell are you talking about? Comparing it to anything on the "free market" (whatever the fuck that is in this context) is like comparing apples to oranges. It's a worthless comparison.

    My point is that none of us know what the cost of research is so stop "whining" about how everyone is "whining" about IDCs. It's a valid discussion. All I know is that in my little soft-money hungry place, almost everything is paid for directly from grants, not the IDC component, the direct component. Equipment, salaries, service contracts, benefits, you name it. So I have a hard time believing IDCs barely cover the "true cost of research". And as for start-up packages, what are they?

    Fair means exactly that LOL. Figure out exactly how much money is needed to administer a single grant, and charge that. Simple.

  • ProfBC says:

    Overheads make sense but the extent of the indirects doesn't always. When I was at Grad U, the university was audited. The university was charging the directs of the grants for costs that the overhead was supposed to cover (Photocopies, internet access, etc.). The audit also came down on the school for not enforcing split charges between grants. Fun to deal with after the fact. The main thing to come out was a new VP for GradU with a staff to insure compliance for spending on grants and paying an outside company to run an online system for ordering that allowed split charges. The online system prices for supplies was higher than what was being paid previously. Evidently there was enough overhead money to pay for a new VP, staff, and an online system.

    Service contracts & repairs on equipment other than autoclaves & dishwashers were paid from directs on the grants. It was 65 % on everything except equipment purchases over $5,000. Needless to say, when we bought a computer it was maxed out with RAM. My advisor's grants were bringing in $600,000 in overhead/year. His

  • iGrrrl says:

    So, I don't get the impression that anyone on this thread has had to go through the exercise of calculating overhead, but for a small business with federal grants, the process is pretty straightforward. What are the total costs (people's time at the bench vs. time administering salaries or requirements of having federal funding, rent for the building, hazardous waste disposal, supplies, etc. etc.) of doing research? How much of that cost is directly attributable to research, as compared to other necessary stuff, like payroll and the costs of dealing with federal regulations? Get the numbers, and do the math.

    The company's overhead rate--calculated by an accountant and agreed to based on a completely above-board negotiation with the feds--was 65%. And there were no deans, no student stipends, no seminars, no nothing. Just research in a relatively inexpensive real estate market. 65% overhead.

    The 'cut the ICR' argument is based on ignorance. Anyone who starts to answer this with, "Yes, but..." means they want to cling to their misconceptions in the face of the broader facts.

    Are there bad actors? Yes. Is it perfect? No. Will more research get done if the overhead is cut? No, because the university will have to start directly charging your grants for things like hazardous waste removal.

  • Alex says:

    I can't speak to all of the uses of overhead, but ProfBC's story is one where I'm actually a tiny bit sympathetic to the universities.

    Compliance is not cheap, in practice. OK, in principle it could be. Somebody could read the relevant documents and say "OK, we're not charging photocopies to grants." But the outside world is never satisfied with the existing admin staff simply being more careful about doing things right. They want a VP For Doing Things right. That sort of thing shows that the university is Taking This Seriously.

    I still think that they should have found a cheaper way to not charge photocopies to grants, but bureaucracies are always impressed when other bureaucracies appoint an Official Coordinator for something.

    I'm at a more teaching-oriented institution, and similar considerations apply. The state and the federal financial aid programs give us money to teach students. They notice that costs are going up. (Some of it because of waste, some of it because health benefits ain't cheap.) So they say "Show us that you're doing a better job with this increasing pot of money!" So Assessment Committees get formed, with release time for some of the members. New Deputy Associate Vice Presidents get hired to oversee assessment and compliance processes. They get a staff. Then the outside world says "Hey! You're still spending a lot of money! We want EVEN MOAR reports showing that this money is well spent." So a Graduation Rate Initiative is started. And the Coordinator gets release time. They organize retreats and events. To impress the outside world that we are Taking This Seriously, we organize Symposia to showcase efforts to improve teaching. We raise tuition, but we label the increase as a "Student Achievement Fee." (I've slightly changed the name to maintain a figleaf of anonymity about what university I teach in.) And rather than just spending the "Student Achievement Fee" on running more sections of bottleneck courses and whatnot, we form a Committee to oversee this. The committee doesn't get release time (AFAIK) but they get assistance from various administrative offices for compiling data, preparing reports, etc. And we wonder why those offices balloon in the number of staff.

    I'm not saying this is the best way to run the university. There are leaner ways that one could teach students, and a deft person could find a way to do those leaner things and still appease the outside world. But that model would require threading a lot of needles. This model is costlier, but it requires less of a deft touch, so it's more robust against mistakes. Because it has inertia and can lumber on. So here we are.

  • Anon says:

    That $900/bench/month estimate probably is an overestimate for public institutions that are tax exempt.

    Plus most (all?) of these public institutions received their land originally from the state free of charge, built the many (all?) of the buildings from state funds or donated funds, so their actual costs should be much less than a for-profit company that is leasing space and pays taxes and has ALL of their employees that are soft-funded.

    Whereas many public institutions (depending on the scientific field and the institution) are state employees who's jobs include teaching and service and have hard-wired salaries. In these cases, the universities do make money on the research overhead. Many of those people who are doing the administrative/secretarial jobs are also state-funded and must absorb the duties of dealing with these grants (purchasing, etc.) whether PIs are successful or not. They just work harder or work less depending on the success of those in their groups. So what I see happening is that this overhead money gets sucked up to pay start up funding for new profs (a perfect use), gets used for lab renovations and service contracts (a good use if done fairly but in my institution there is much evidence that those in the good-old-boy network get preference), and gets used inappropriately for administrative bloating.

  • Dave says:

    That $900/bench/month estimate probably is an overestimate for public institutions that are tax exempt.

    Plus most (all?) of these public institutions received their land originally from the state free of charge, built the many (all?) of the buildings from state funds or donated funds, so their actual costs should be much less than a for-profit company that is leasing space and pays taxes and has ALL of their employees that are soft-funded.

    Exxxxxactly.

  • ecologist says:

    Our university overheads are 107%, which is pretty standard for universities in NZ. Start up packages essentially do not exist.

  • [...] rates make it harder for grants to be funded and result in smaller budgets. A good rebuttal comes from Prof-Like Substance. He points out that a lot of complaints about overhead are overblown, and no matter how you slice [...]

  • rschadmin says:

    The rate is constructed by adding up all of a university's indirect costs and dividing that by all its direct costs. The indirect cost pools are General Administration (President, VP and Provost office), Department Administration (Department staff, heads, academic deans and offices), OSP, Building Depreciation (hence all the focus on space in this discussion), Equipment Depreciation, Interest (debt-financed research facilities paid to third parties), Operations/Maintenance (lights, physical plant operations and staff, grounds and building maintenance), Library/ies (books and staff salary), and Student Services. So these cost pools are also where all the recovered F&A goes--obviously, almost all will not directly support research, but that's why it's called "indirect" and why the federal government doesn't want to see items from those categories in their budgets (office supplies, administrative and clerical support, etc.)--they can't directly be allocated to the support of a specific project, but indirectly support many projects, federal or not, or even instruction.

    The very calculation demonstrates that F&A wasn't designed to be returned proportionally to those who earn it--as harsh or unfair as it may seem. Unfortunately or not, it was designed to support those costs that aren't easily accountable or allocable to one task but that support the greater mission of the university: teaching and research. Of course, that's the debate, isn't it--whether those things are all a good return on investment.

    Also, consider that universities actually recover much less than their actual F&A rate because a good chunk of sponsored research comes from private foundations and states that reduce or refuse indirect costs altogether.

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