PENN ON THE HILL: Research could suffer from indirect cost cuts

Millions of dollars are at stake in the battle over the allocation of federal resources for government-sponsored university research. Cuts in funding for indirect costs could result in the loss of funding for research universities. According to David Morse, assistant vice president for policy planning, what have traditionally been labeled indirect costs are "really the costs of infrastructure." Included among these are costs for the construction and maintenance of buildings and salaries for technicians and other assistants. Vice President for Community and Government Relations Carol Scheman, an administrator who rejects the term "indirect costs," argues that the term minimizes the importance of money used for purposes essential to research. "The issue has always been and continues to be how you reimburse a university for costs incurred," she said, adding that costs are retroactively reimbursed. Scheman said an enormous portion of costs incurred by universities is due to federal regulations. As a result, a deduction in reimbursements constitutes an unfunded mandate. One plan, proposed last year by current House Budget Committee Chairperson John Kasich (R-Ohio) as part of his budget proposal, asked for savings of $1.6 billion in indirect costs. Kasich proposed accomplishing this by putting a 46 to 50 percent cap on indirect cost rates or a 10 percent reduction in indirect costs across the board. Morse said the former would have meant $6 to 7 million in lost funds to the University's $230 to 250 million research base, while the latter would have resulted in losses of $14 to 17 million. In addition, last year the Clinton administration proposed entirely capping all money for infrastructure. Morse said cuts in federal research funding would have a "dramatic impact" on facilities. "If one of these very important tools is removed or dramatically reduced, it makes it all the more difficult for us to maintain the quality of our research program," Morse said. He said half the University's research base is concentrated in the Medical School, so that area would probably be hit hardest by the cuts. Scheman stressed the importance of the issue of indirect costs to the University, while at the same time explaining why it is not more widely discussed. "It is for the University in this appropriations cycle one of the most important issues," Scheman said. "It is also genuinely boring."