University Statements

Dear Cornell community,

We write in response to the May 2 National Science Foundation (NSF) announcement of significant across-the-board reductions in indirect costs for research funding to institutions of higher education under awards made on or after Monday, May 5. This NSF action is similar to the February announcement from the National Institutes of Health (NIH) and the April announcement from the Department of Energy (DOE), except that the NSF cap does not apply to existing awards.

In each case, the proposed 15% indirect cost cap is far less than the agreed-upon rate negotiated by the government and the university. An NSF cut of this magnitude would imperil Cornell’s ability to support research discovery. When the NIH and DOE announced similar cuts to indirect costs, Cornell joined other universities and associations in legal action. We have been successful thus far in achieving federal court orders enjoining the implementation of those onerous caps. And yesterday evening, Cornell joined 12 other universities as a plaintiff in a lawsuit (PDF) filed by the Association of American Universities, the Association of Public and Land-grant Universities, and the American Council on Education challenging the new NSF policy.

Indirect costs are an essential component of the decades-long partnership between the federal government and universities to conduct research that contributes to national security, advances innovation, fuels the economy, and saves lives. The government sets research priorities and invites researchers to submit proposals. Agencies award grants in a merit-based review process, selecting the researchers and institutions with the most promising proposals and awarding multi-year contracts. Indirect costs cover operating expenses only for competitively funded proposals, paying for facilities, utilities, libraries, financial administration, and safety programs that enable research to be responsibly conducted. Indirect costs are an essential part of this contract that the government enters into with universities. The rates for each institution are determined pursuant to federal regulations and the underlying costs are heavily scrutinized by the federal government as part of the approval process.

What many may not know is that even at the full negotiated rate, Cornell must still use institutional funds to subsidize indirect costs to ensure the successful undertaking of federally-sponsored research. If the NSF’s established rate were to drop to 15%, the university would have to divert significant other funds to increase that level of subsidy to continue the research the federal government has selected us to perform. This would compound existing and looming financial challenges such as cuts to federal financial aid, stop-work orders, and grant terminations, and the potential imposition of an endowment tax.

As with other challenges, we must work together to confront this as a united community. Accepting lower indirect cost rates on future NSF awards would harm the university’s ambitious research enterprise. We must carefully evaluate this rapidly changing environment and make decisions so the university as a whole can continue “to do the greatest good.”

With thanks and appreciation,

Michael I. Kotlikoff
President

Kavita Bala
Provost

Robert A. Harrington
Provost for Medical Affairs