No Subsidies for Wealthy Universities ActThis bill limits the indirect costs that are allowable under federal research awards to institutions of higher education (IHEs) with endowments above specified thresholds. (Generally, indirect costs represent expenses that are not specific to a research project but are needed to maintain the infrastructure and administrative support for federally funded research.)Specifically, the National Center for Education Statistics (NCES) must annually collect information regarding the endowments of each IHE that has entered into a program participation agreement with the Department of Education.With this collected information, NCES must identify and make lists of (1) each IHE with an endowment of more than $5 billion, and (2) each IHE with an endowment of more than $2 billion (but not more than $5 billion). NCES must submit these lists to the Office of Management and Budget, which must then distribute the lists to federal agencies, Congress, and the public.The bill establishes the following limits on the indirect costs allowable under federal research awards:for an IHE with an endowment of more than $5 billion, the IHE is prohibited from using these awards for indirect costs;for an IHE with an endowment of more than $2 billion (but not more than $5 billion), the IHE is limited to an indirect cost rate of 8%; andfor all other IHEs, an indirect cost rate of 15%.The Government Accountability Office must annually report to Congress on indirect cost reimbursement on federal research awards for IHEs.
The proposed legislation is designed to increase transparency and accountability regarding how federal funds are utilized in higher education, particularly in terms of administrative expenditures. By imposing these limits, the bill intends to ensure that federal research funding is directly supporting research activities rather than being absorbed by overhead costs. This could significantly affect larger institutions that may rely heavily on indirect costs to support their operations, creating a shift in how these universities approach funding and budgeting for research projects.
House Bill 422, titled 'No Subsidies for Wealthy Universities Act,' seeks to establish limits on the reimbursement of indirect costs associated with federal research awards for institutions of higher education. Specifically, the bill aims to curb the use of federal funds for indirect costs at institutions with substantial endowment funds, defined as those having totals exceeding $5 billion and between $2 billion and $5 billion. For the latter, the bill allows an indirect cost rate not to exceed 8 percent, while those with higher endowments would not be permitted to use any federal funds for such costs.
There are notable points of contention surrounding HB 422, particularly regarding perceptions of equity in funding among different types of institutions. Critics argue that limiting indirect costs may disproportionately impact universities that serve larger student populations and require more substantial administrative support. Supporters, however, assert that this measure is necessary to prevent wealthier institutions from using federal research awards to subsidize administrative overhead, which they see as a misuse of taxpayer funds. The debate centers on balancing the need for efficient fund allocation without undermining the support infrastructure essential for diverse educational institutions.