Dear Members of the University Community,
Early this week, the University of Rochester joined the Association of American Universities (AAU), the American Council on Education (ACE), the Association of Public and Land-Grant Universities (APLU), and 12 of our peer research institutions in asking a federal court to block the sudden implementation of the NIH’s plan to place a 15% cap on what are known as Facilities and Administrative (“F&A”) costs affecting our research endeavor. Such a limit would replace grant terms that are negotiated by each institution according to its costs. In seeking a temporary restraining order and permanent injunction to prevent arbitrary adjustments, we took actions like those pursued by the Attorney General of New York and 21 other states—home to public and private research universities throughout the country—as well as the Association of American Medical Colleges (AAMC) and other higher education organizations.
As of late Monday, the US District Court for the District of Massachusetts has ordered the NIH to refrain from putting the cap in place in response to the AAMC suit. My leadership team and I are grateful that research universities and academic medical centers will have a chance to articulate why such a draconian limit on our research funding is detrimental to the future health of all Americans, destabilizes the economic and technological innovation of the country, and puts in jeopardy the nation’s position as the scientific and clinical research leader of the world.
Since World War II, universities like Rochester—and our public and private peers across the country—have been tasked with serving as the research engines of the nation’s economy. The United States, through federal agencies like the NIH, NSF, Department of Defense, and others, has relied on universities to advance knowledge in the public interest that can be translated to new treatments and cures, new technologies and scientific breakthroughs, and to develop an educated workforce. Because research that may lead to future applications has become more costly over recent decades, the role of nonprofit research institutions has become more important in advancing science. Universities like ours are well placed to bring to bear the necessary talent and teams that can explore ideas in depth and over longer periods of time, regardless of immediate expectations of profit or potential investment opportunities.
The US model is based on the understanding that conducting pathbreaking research takes place within the context of an advanced infrastructure and among well-educated professionals. The idea of “F&A costs” (also known as “indirect costs”) was established to help cover the expenses of such modern, research-focused workplaces. Those costs include the construction and maintenance of laboratories and other facilities, personnel, scientific research equipment, the record-keeping needed to ensure that we are compliant with federal regulations, including human subject safety and other mandated areas, insurance costs, and operational expenses for computing resources, telecommunications, libraries, and other shared resources.
The US model is also designed to ensure that all funded costs associated with our research endeavor are clearly stipulated, held within agreed-to limits by the federal agency that awards the grants, and are audited regularly. In fact, last fall, a team from the NIH was on campus conducting such a review and notified us last week of a well-reasoned, modest reduction to our average reimbursement rate, just one day before the national announcement slashing rates for all institutions. We continuously look for efficiency improvements and cost-saving opportunities while investing in endeavors that are consistent with our mission.
Despite that model for managing costs, the NIH announced the cap last Friday without warning or consultation and in disregard to our NIH-approved and negotiated grant terms. We estimate that if the 15% cap remains in place, the cost to the University will be at least $40 million a year, which will have serious ramifications on the University’s finances. We also expect that other research-funding agencies may follow the NIH in establishing such a cap, further eroding our research budget and potentially crippling our position as a research university.
While I understand that this situation will take a while to play out, both in the courts and at the federal level, I want everyone to know that we will make every effort possible to ensure that we remain a leading research institution, one that will build on our 175-year legacy well into the future. We know that we have incredible support from a wide swath of civic, business, educational, and political leaders, and we will continue to work closely with our colleagues and partners.
We will do our best to keep the community informed as the situation unfolds. In the meantime, thank you all for your outstanding work, your engagement, and your belief in Meliora.
Sarah C Mangelsdorf
President and G. Robert Witmer, Jr. University Professor