Reply to Schools most harmed and those most benefiting once NIH, DHS funding resumes?

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[quote=Anonymous]This is for all of you who have zero clue how to run universities and endowments, nor know anything about grants.

Points 1+2 are wrt grants.

1. Direct costs (ex: 250k): goes to the lab to pay for science (chemicals, reagents, test tubes, plastics, animals, petri dishes, etc) and scientist salaries (maybe or maybe not the professor’s salary though, some or even all of that might be covered by their teaching department. Or not, in hospitals it might all come from direct costs).

2. indirect costs: a percent that goes to the university to pay for things like: lab space, water, gas, freezers, electricity, veterinary care, chemical waste disposal, radiation safety etc). Indirects are a % ON TOP OF the direct costs, and vary by location (as space, gas, power, labor vary by location). So if the uni charges 30% indirects on 250k is 250k to the lab, that’s 75k to the university.

So if you have 100 labs each with on avg two 250k grants and a 30% indirects rate, the university gets 15 million in indirects.

Now if you cut indirects to 15% without warning, you now have a 7.5 million budget shortfall happen overnight, and stretch onwards for the foreseeable future.

Take it from the endowment you say!

[b]Ah but since this now an annual expense, we must have sufficient endowment for this for all future years going forward![/b]

A rule of thumb is you need 25X more endowment than your annual expense, so that drawing out a stable 4% a year leaves the value unchanged assuming 2-3% inflation and 6-7% growth.

So we need 188M/yr in endowment.

Situation is even worse if the indirect rate is higher. If you’re at 60% (close to what most Ivies pay) you now need to close a 22.5M shortfall, so you just need about $600M endowed.

Even more worse if you’re big. A place like Harvard or Penn or Hopkins with a few hundred labs and a high indirect rate would need to devote a cool 1-3 BILLION to cover the new policy. PER YEAR.

It’s not that Harvard et al can’t “survive” without indirects, it’s just that they can’t support research activities to the same level on a 15% rate. The practical effect of this would be a massive reduction in research activities at nearly every institution. R.I.P. USA university rankings. [/quote]

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