Indirect Cost Rate Survey

May 10 2014 Published by under Uncategorized

In a recent post, DrugMonkey pointed out an interesting analysis posted by regarding funding trajectories of a list of the top 50 (actually 49) institutions in terms of the level of NIH support.

This post reminded me that, some time ago, I had searched for a list of indirect cost rates (a.k.a. F&A rates) for a range of institutions in order to have a factual framework for some of the notions about the range of these rates that fly around the internet. Although I believe such a list used to be available online, I Googled in vain. I had started to compile such a list by searching for data from individual institutions but I never finished it. Motivated by the new post, I finished the list for these 49 institutions...

Institution                               Rate(%) Link

Johns Hopkins University     62.0    JHU

University of Pennsylvania   60.0    Penn

University of Michigan          55.5    UMich

UCSF                                         56.5    UCSF

University of Washington     54.5     UWash

Yale University                        66.0     Yale

UCLA                                         54.0     UCLA

Washington U.-St. Louis        52.0     WashU

University of Pittsburgh         52.5     Pitt

U. Wisconsin, Madison           53.0    Wisc

UC San Diego                            55.0    UCSD

Columbia University               60.0    Columbia

Stanford University                 60.5     Stanford

UNC-Chapel Hill                      52.0     UNC

Duke University                       57.0     Duke

University of Minnesota         52.0     Minn

Harvard University                  61.5      Harvard

Vanderbilt University              56.0     Vanderbilt

Mass General Hospital           74.0      MGH

Emory University                     56.0     Emory

Baylor College of Medicine     56.5     BCM

Case Western University        58.5      Case

U. Alabama at Birmingham    47.0      UAB

University of Rochester          53.5      Rochester

Scripps Research Inst.             89.5      N/A (see below)

Brigham-Women's Hosp.       76.5       BWH

New York University               69.5       NYU

UT Southwestern Med            59.0       UTSW

Northwestern U.-Chicago       54.5       Northwestern

University of Iowa                    51.0       Iowa

University of Chicago              58.0       UofC

University of Virginia              58.0       UVa

Boston University                    62.5        BU

U. of Colorado, Denver           54.5        CU-Denver

UC Davis                                   54.5        UCDavis

University of Utah                  49.0         Utah

Oregon Health-Science U.     54.0         OHSU

U. of Southern Cal.                 64.0          USC

UC Berkeley                             56.5          Cal

Univ. of Florida                       49.0          Florida

Ohio State University             53.5          OSU

U. of Maryland, Baltimore    53.5           UMd-Baltimore

Mt. Sinai School of Med.      69.5            MtSinai

Penn State University           49.5            PSU

Tufts University                     65.0           Tufts

UC Irvine                                 54.0           UCI

U. Mass. Med. Worcester     66.5            UMassMed

M.D. Anderson                       58.0           N/A (See below)

Mass. Inst. Technology         56.0           MIT

The rates were available online for almost all of the institutions, usually on the website of the institutional Office of Sponsored Projects. However, for a couple of institutions, I could not find the rates. However, a thoughtful colleague pointed out that such information should be deducible from data in NIH RePORTER by plotting indirect versus direct costs for a series of grants from a given institution. The success of this approach is shown below for R01 data from FY2013 for the University of Pittsburgh.Pitt-2013-R01 plot

The data show a clear limiting line that corresponds to the published rate of 52.5%. The points with lower overall indirect cost rates presumably reflect grants with equipment costs excluded from indirect costs. The small number of points with higher overall indirect costs presumably reflect the impact of subcontracts.

Having validated this approach, I was able to determine the indirect cost rates for Scripps Research Institute and M.D. Anderson Cancer Center which I could not find online. The relatively high indirect cost rate of 89.5% for Scripps compares with other independent research institutes such the Salk Institute (90.0%) and Cold Spring Harbor Laboratory (88.5%).

Note that these rates are not determined by NIH. Instead, they are the product of elaborate negotiations between each institution and the "cognizant federal agency" according to an Office of Management and Budget document, Circular A-21. The cognizant federal agency is often the Department of Health and Human Services, but it can also be other agencies such as the Office of Naval Research. The indirect cost rate is calculated based on 9 "cost pools."  These include 5 facilities pools (building depreciation and use allowances, interest on debt associated with selected equipment and buildings, equipment depreciation, operations and maintenance expenses, and library expenses) and 4 administrative pools (general administration, departmental administration, sponsored projects administration, and student services and administration). The administration component has been capped at 26% for a number of years. For those with severe insomnia, the University of Cincinnati website has a relatively clear description of their indirect cost calculation and allocation.

My impression is that the portion of the NIH budget going to indirect costs has increased slightly over the past decade, but only slightly. Although I have requested such data from NIH, they do not appear to have been compiled. A project for another day...


23 responses so far

  • EATTE THE RICH!!1!!!11!!1!!

    • datahound says:

      I had no particular agenda in collecting these data other than to assemble some facts (as opposed to impressions) for future discussions. Then we can decide what to do with the rich.

  • eeke says:

    Do indirect cost rates ever decline? Do you know how often these rates are negotiated? I don't know if this is possible for you (or anyone), but I am curious as to how frequently these indirects change, whether the rate of change is disproportionate for some institutions, and whether this is something that can be controlled.

  • drugmonkey says:

    Yes, they change. I've seen up and down by maybe 1-5 % with no particular trends apparent. That's over maybe a 15 year span that I've paid any attention. Renegotiation can be every couple of years, maybe annually in so e cases?

    Too bad that old research crossroads site had a big data set on this.

  • drugmonkey says:

    "Controlled"? I suspect that would take Congressional intervention.

  • datahound says:

    eeke: In principle, indirect cost rates can decline and they do on occasion. They are typically negotiated every 4 years, I believe. Each negotiation is independent so that if an institution has increased interest or equipment depreciation costs because the institution has borrowed money for buildings or bought expensive equipment, then the rate is likely to go up. Some of the links about lead to information about historical rates. For example, for Penn the rate was 63.5% in 1996, 57.0 in 2006, and is 60% at present. The major control that is in place is the cap on the administrative component at 26%. Many institutions spend more than this on administration, so that this is limiting growth. The major way that this could be controlled would be to revise Schedule A-21 to adjust what costs are allowable. However, the leaders of many institutions believe that the rates should go up to come closer to covering the real costs of research and I believe that they have an argument to make (although this is fundamentally an accounting issue so the conclusions depend strongly on the assumptions). On the other hand, most faculty would prefer that the rates decline so that the NIH appropriation (and those of other agencies) could pay for more grants or grants with larger direct cost budgets. The faculty, of course, assume that this would not affect libraries, electricity, etc. on which they depend.

    The bottom line for me is that these costs are substantial but I do not believe that they have been changing enough over time to have contributed much to the present climate. From my perspective, the present situation is driven primarily by two factors: (i) an increase in the number of investigators competing for (and dependent only) grant funds and (ii) NIH budgets that have been essentially flat for a decade and have, therefore, lost 20% or more in buying power.

  • drugmonkey says:

    The faculty, of course, assume that this would not affect libraries, electricity, etc. on which they depend.

    Most faculty are entirely deranged about IDC rates. They are willingly blind to the real costs of their research operation, and comically deluded about magic unicorn fairy money that is out there waiting to pay for everything (from hard money salaries and mouse husbandry).

  • DJMH says:

    Not deluded, DM, just wondering why, if Wash U can get its science done with 52% overhead, the NIH should fund any science at say Scripps or Salk, where it pays another 40% in overhead with no appreciable increase in the quality of the output.

  • another lurker says:

    Sally Rockey spoke at the American Association of Immunologists meeting last week in Pittsburgh. During the question and answer period someone asserted that indirect cost rates had gotten out of control and were taking up too big a portion of the extramural grant money. This was the one time that she got a little riled up, and she vehemently denied that this was the case, and also staunchly defended the purpose of indirects. However, given that the schools on that are increasing their share of R01's also have the highest indirect rates, a bigger piece of the NIH pie must be increasingly going to indirect costs. Am I missing something?

  • datahound says:

    AL: I believe that your logic is correct, but I am not sure of the magnitude of the effect. I do not believe that indirect cost rates have changed much over the past decade and the shifts in institutions funded has also been relatively modest. I have been trying to get the data from NIH about the percentage of the NIH budget (or RPG budget) going to indirect costs, but have not succeeded in getting these data. I will share what I have soon. In any case, I do not believe that this effect has much to do with the present state which is largely driven by too many investigators competing for budgets that have not kept up with inflation for over a decade.

  • AcademicLurker says:

    Any idea what % of IDCs are going to construction costs? When Bruce Alberts published his piece in PNAS recently, I thought the suggestion to restrict how much NIH will subsidize construction was an excellent one. It seems to me that the mania for shiny new biomedical research buildings has been a significant contributor to the problem of unsustainable growth.

    Great blog, by the way.

    • datahound says:

      Overall, I do not know. However, in the link to the University of Cincinnati primer in the post, they indicate that of their 57% IDC rate, the building depreciation component is 7.0% and the interest component is 3.3% (page 9 of report). Taken together, these account for 10.3%/57% or a bit over 1/6th of the overall IDCs. Of course, how much of this is new construction versus older buildings, I do not know. It is difficult to do research without research space.

      With that said, with the NIH budget doubling, many institutions did build new buildings with the business plan that they would fill the space with active, funded researchers. With many new hires and a budget that has not kept up with inflation for a decade, this plan has revealed its shortcomings. The building depreciation calculation depends on space utilization so IDC rates may fall if research activity declines.

      I would hope that discussions of sustainability spurred by the Alberts et al. article and others stimuli would include an examination of how IDC policies promote "good" versus "bad" behavior from the perspective of a sustainable research enterprise.

      I am glad you are enjoying the blog. Suggestions for topics always welcome.

  • Ola says:

    An interesting observation is to compare state vs. private institutions. Leaving off a couple of outliers (scripps etc), there really doesn't appear to be much difference between the two sets. One could argue the state schools should charge less because some of their infrastructure costs are likely offset at the state level. On the other hand, the privates have big endowments that should be used to offset similar costs, so it's a wash overall.

    A more troubling trend (and elucidated by digging deeper into some of the PDFs linked to) is fringe benefit rates, which HAVE been creeping up over the years. Part of this is the lobbying to get fellows (rightly so) recognized as full employees with benefits rather than simply trainees for whom a nominal "health fee" suffices. But, the bigger trend (at my institution) has been the increase in fringe rates on salaries for technicians, RAPs and full faculty. It would be nice to say this was accompanied by decreased out-of-paycheck expenses for healthcare, parking etc. (suggesting that the fringe was actually covering some of these costs), but unfortunately those deductions have all gone up too, which begs the question where the money is going.

    A simple example...
    Late '90s - post-doc' = $26k + $2k benefits (28k total)
    Early '10s - post-doc' = $42k+$14 benefits (56k total)
    In little over a decade (during which the NIH modular 250k budget remained flat) the cost of a post-doc' has doubled.

    • datahound says:

      Ola: I do not have data regarding the fringe benefit issue (although they probably do exist somewhere), but anecdotally the major driver is likely health care costs (as it is in many other sectors of the economy). Fringe benefits allow institutions to cover some health insurance costs with the remainder covered by the faculty and staff members. Since health care costs have generally exceeded overall inflation, these costs have been rising and institutions have increased fringe benefit rates. For postdocs the fringe benefits package has also increased in terms of what is covered at many institutions over this period.

      You are correct that the ability of NIH grants to cover this costs has been decreasing over time. NIH must balance making fewer larger grants that more fully cover these costs or making a larger number of grants that support less or require co-funding from various sources. With the increased number of proposals and investigators competing for funding, it is challenging to find the right balance. In general, NIH has tried to maintain the success rate to some extent by cutting budgets of new and competing grants and, more recently, taking substantial cuts from non-competing grants.

  • In general, NIH has tried to maintain the success rate to some extent by cutting budgets of new and competing grants and, more recently, taking substantial cuts from non-competing grants.

    What is complete lunacy is that at the same time that NIH has used these approaches to slash awarded grant budgets, it has inexorably driven the grad student and post-doc stipend pay scale into the stratosphere. Anecdotally, the vast majority of the institutions on your list require that grad students and post-docs paid from any sources--including federal RPGs--make at least the NRSA pay scale for their years of experience. The end game to all of this is that post-docs paid on RPGs will just be sitting there playing Angry Birds, because there isn't going to be a penny left in RPG budgets to do anything but pay the ever-inflating salaries of students and post-docs.

  • Jessica Tollkuhn says:

    I suspect that the increase in fringe costs over the last 20 years is comparable to that in other types of employment. Crazy healthcare costs, for example.

  • […] a recent post, I surveyed indirect cost rates across 50 institutions. In the course of the data analysis related […]

  • DrugMonkey says:

    By your logic, DJMH, all research should be at UAB. Certainly the private Universities should be ruled out. Heck, we'd probably get a decrease in the fraud rate and kill off the Glamour Mags in the bargain. An increase in quality!

  • LifeScientistAdministrator says:

    A fascinating survey. UW Madison's IDCs are up 2.5 percent according to your data from when I was there in 2010-2013 when they were set at 50.5%. Your report for Harvard's IDCs seems far lower than the media reports. One wonders, given that many projects at the Boston hospitals you mention are done by Harvard researchers whether NIH and other agencies should require that the grant be managed and actual work done, through the institution to which a PI has a connection with the lowest IDCs. MGH's physical plant is enormous and your reported differential (even if Harvard is getting 69% on indirects as I have seen via the media and in some reports from the University as opposed your lower figure)may help explain why this is so given the enormous incentive the hospital has to pull in cash in a business environment that is the same as MIT's and which can't be that much more expensive than, say, New York, given higher land costs in NYC and consequent higher costs for many other non-salary support costs.

  • Interested Reader says:

    You may be interested in this GAO study from last year that both collects a lot of the same information and provides some context (historical and forward-looking) about the implications:

  • […] has written about surreptitious costs that come along with grants and admits a use of a supports has been controversial. But he combined […]

  • NK says:

    For University of Georgia, the indirect cost is 50% from 2015

  • Gita says:

    I saw someone registered for a while, was that for search engine optimisation?
    Indirect Cost Rate Survey - The latest addition to my RSS

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