The Federal Role in University Research: Part 1

A little more than a year ago, my wife and I retired from our university jobs (November 21, 2023). Our retirement took place in the middle of some critical transitions in higher education throughout the US. One element of these transitions is driven by declining enrollment, which is rooted in part in declining fertility (see the January 7, 2025 blog). The declining fertility is a global situation that already impacts almost all developed countries and is starting to penetrate developing countries.

A month ago, the Trump administration was inaugurated in the US. In a short time, the new administration added new concerns to educational institutions that seem to have a much more immediate impact than the fertility decline. Previous blogs have focused on the role of the advocated changes in the DEI (diversity, equity, and inclusion) policies at various universities (February 11, 2025). The next three blogs will be focused on research in colleges and universities. This blog will focus on the broad aspects of funding for research. Next week’s blog will focus on the impacts of the new policies on some major funding organizations, while the third blog on the topic will focus on the importance of research in teaching higher education. Throughout the 13 years that I have been writing this blog, I have associated research with attempts to secure the future of the next generations. So, productive research means collective work to better the lives of the next generations. Very little has been written on the importance of research in academia in preparing our students for productive life after school. I hope to rectify this oversight in the third blog in this series.

Figure 1 shows that the US is lagging (compared to its wealth) in our government’s funding of university research.

Figure 1 – List of countries that spend the most on research universities (Source: Statista via World Economic Forum)

Figures 2 and 3 (from Wikipedia) show the distribution of agencies that fund federal support for research and the declining role that the federal government is playing in supporting research.

Figure 2

Figure 3

The expectation is that with the inauguration of the new administration, federal support for university research will further decrease at an accelerated rate but that it will not be applied uniformly. Here is what Nature wrote about the expected trend:

The incoming US president is expected to gut support for research on the environment and infectious diseases, but could buoy work in artificial intelligence, quantum research and space exploration.

What can universities do about it?

University researchers rely on billions of dollars of federal funding—from agencies such as the National Institutes of Health and the National Science Foundation—to develop the technological and medical advances that have built the United States’ reputation as a wellspring of innovation. Congress, which has the final say on spending, ultimately didn’t support those proposed cuts during Trump’s first term.

“The most important thing we are telling our member universities to do now is to educate the new members of Congress and new administration officials about just how important the work of research universities is for our country’s success,” Tobin Smith, senior vice president for government relations and public policy at the AAU, said in an email. “America’s research universities have been the world’s envy for decades. Why? Because the education we provide and the research we conduct on behalf of the federal government help make America stronger, safer, healthier and more prosperous.”

Most research universities require external support. The support comes largely from grants with competitive applications. Typical grant applications constitute direct and indirect requests for supporting funds. Direct support covers specific expenses that the proposed research entails. The nature of an indirect request for support is summarized by AI (through Google) below:

An indirect cost rate is a percentage that allocates an organization’s indirect costs to its programs. It’s a standardized way to charge programs for their share of general management costs.

“Indirect costs” in the context of NIH funding typically include expenses related to the operation and maintenance of research facilities, administrative support functions like accounting and personnel, utilities, equipment depreciation, and other overhead costs that are not directly tied to a specific research project but are necessary for conducting research, often referred to as “facilities and administration (F&A)” costs.

Usually, the indirect funding is negotiated between the funding institution and the university. Figure 4 shows a typical distribution of the ratio between indirect and direct funding.

Figure 4 (Source: Bar Harbor Story)

Below is a recent development on the research funding front:

The Office of the Director of the NIH announced Friday that the agency will reduce federal funding for “indirect costs,” in research, specifically calling out institutes of higher education (IHEs) — including Stanford — as those who will be impacted. On average, 26% of NIH spending goes towards these indirect costs. Now, the NIH will limit the funding of indirect costs to 15%.

The cap on the indirect cost of research proposals is not a single threat that is now being imposed on research activities. Below is a summary of the general mood that will most likely have a major impact in decreasing government support for academic research as shown in Figure 1:

President Donald Trump’s return to the White House is already having a big impact at the $47.4 billion U.S. National Institutes of Health (NIH), with the new administration imposing a wide range of restrictions, including the abrupt cancellation of meetings such as grant review panels. Officials have also ordered a communications pause, a freeze on hiring, and an indefinite ban on travel.

The moves have generated extensive confusion and uncertainty at the nation’s largest research agency, which has become a target for Trump’s political allies. “The impact of the collective executive orders and directives appears devastating,” one senior NIH employee says.

Public universities rely much more on public support than do private universities. Meanwhile, not all colleges and universities engage in research. The Carnegie Classification splits university engagement in research into the following categories:

Research 1: Very High Spending and Doctorate Production

On average in a single year, these institutions spend at least $50 million on research & development and award at least 70 research doctorates.

Research 2: High Spending and Doctorate Production

On average in a single year, these institutions spend at least $5 million on research & development and award at least 20 research doctorates.

Research Colleges and Universities

On average in a single year, these institutions spend at least $2.5 million on research & development. Institutions that are in the R1 or R2 categories are not included.

As I said, my wife and I recently retired from working at CUNY, the largest urban university in the country. CUNY is a federated university that was described in earlier blogs. The general structure is given below:

The City University of New York (CUNY) has 25 campuses, including 11 senior colleges, 7 community colleges, and 7 professional schools. CUNY is the largest public university system in the United States.

My wife and I were members of both one senior college (Brooklyn College) and the Graduate Center of CUNY. The Graduate Center is classified by Carnegie as an R1 Research Institution, while 9 more CUNY colleges (including Brooklyn College) were designated as leading research institutions.

An extended list of colleges and hospitals that were directly hit by the new regulations is given by the NYT.