Once of the most challenging and contentious issues that is faced by the leadership of NIH institutes and centers involves policies about cutting requested budgets for R01 grants. Once the amount of funds available for new and competing grants is known, the first question is how to divide the pie.
One side of the argument is that making as many awards as possible is crucial since having a funded grant can be the difference between facilitating the launch of a promising career for a new faculty member or shutting down a lab even if it is productive.
The other side of the argument is that requested budget reflect the real costs of the proposed research and that cutting requested budgets substantially can result in systematically underfunded grants for which the budget cannot support the necessary research efforts. This situation may be exacerbated by the modular cap which has remained unchanged since it was created and evidence indicates that PIs may be requesting $250K at the cap rather than requesting a larger budget and running the risk of suggested budget cuts from the study section.
Some policies come into play. First, NIH policy requires that a PI be allowed to modify his/her specific aims if the budget is cut by more than 25%. This plays a role in limiting the size of cuts and also has led to a large number of R01s awarded at the level of $188K (since $250K (modular cap) X .75 =187.5K. Second, Congress often includes language associated with appropriations bills that indicates that, for example, average grant sizes must be the same as in the previous year. This can limit flexibility within NIH institutes and centers.
As the "NIH Doubling" ended, it was easier to make the case that cutting grant sizes a bit while keeping more labs funded made sense since hope sprang eternal that budget increases larger than BRDPI were coming soon. However, as the decade of flat budgets continued, followed by the sequester, this became more problematic. The net results was that the buying power (size increase corrected for BRDPI) of the median R01 grant fell by 18% from 2003 to 2013.
What steps should be taken now? Should the modular cap be increases (or dropped altogether)? Should cuts to grants when they are awarded be minimized? Should cuts to non-competing grants be discontinued? Other suggestions? Bear in mind that the laws of arithmetic still apply and any increase in average grant size will result in a decrease in the number of grants that can be funded.