Looming Cuts Threaten U Research
Daily Utah Chronicle | Anjali Iyer
As federal agencies move to limit research funding in higher education, the University of Utah could lose up to $110 million annually if a federal cap on indirect cost recovery is enacted — a shift that would significantly cut back the amount of research conducted on campus.
Federal funding
The United States federal government is the largest source of academic research and development funding in the USA. There are two types of costs when it comes to federal funding of research projects:
Direct funding: Costs that are readily identified with a specific research program, such as salaries and laboratory supplies.
Indirect funding: Costs that can not be readily identified to something specific but are still necessary to conduct research, such as utilities, library costs, depreciation of building costs and research administration.
According to the NIH Office of Extramural Research, direct funding is determined by the specific items outlined in a grant proposal, such as travel expenses, equipment and project-related supplies.
Unlike direct funding, indirect cost rates are negotiated with the federal government to cover expenses that apply to multiple projects. As stated to the Congressional Research Service, as of May 2025, these rates typically range from 30% to 70% and vary by institution, based on pre-negotiated agreements. As of June 2024, the University of Utah has a federally negotiated indirect cost rate of 54%.
According to the Office of Sponsored Projects, these “facilities and administrative (F&A) rates” are used to reimburse the university for infrastructure and overhead costs tied to sponsored research. F&A rates, also known as indirect cost rates, are calculated as a percentage of a project’s direct costs and help support essential services like building maintenance, utilities and administrative support.
In May 2025, the U.S National Science Foundation (NSF), along with other federal research agencies, announced the implementation of a standard 15% indirect cost rate, in a move to “streamline funding practices, increase transparency and ensure that more resources are directed toward direct scientific and engineering research activities.”
However, in June 2025, the U.S. District Court in Massachusetts ruled to cancel the NSF’s 15% indirect cost cap policy, making the NSF and other agencies unable to enforce this policy for the time being.
Implications of the indirect cost rate cap
Although a national cap has not been enacted, research grants have already been impacted. As of July 26, 2025, 15,488 research grants had been terminated by the Department of Government Efficiency (DOGE), with the total continuing to increase weekly.
A federal cap on indirect cost rates could impact the University of Utah’s research operations, particularly given its ranking among the top 25 public research universities in the U.S. According to the University of Michigan, indirect costs represent real operational expenses associated with conducting research. These include:
Research laboratory facilities
Computing infrastructure and data processing
Safety and regulatory compliance programs
Hazardous waste disposal
Administrative staff support
Utilities and building maintenance
Changes to how these costs are reimbursed may influence how universities manage and support federally funded research. To better understand the local impact, The Daily Utah Chronicle spoke with Dr. Erin Rothwell, vice president for research at the U.
According to Rothwell, recent reductions in research funding were largely driven by decisions made by federal agencies.
“The primary drivers behind recent research funding reductions at the University of Utah stem from federal agency decisions,” Rothwell said. “Some of the reasons included are that the affected grants no longer meet the program goals or agency priorities, lacked immediate, mission-critical alignment and were classified as basic exploratory work, not offering the immediate energy national security, or economic returns emphasized in Department of Energy’s (DOE’s) current funding agenda.”
In another interview, Rothwell noted the potential future effects of such funding changes.
“As it is proposed, we would not be able to conduct research as we have today,” she said. “We would significantly lower the amount of research we could conduct.”
Next steps
In September 2024, the University of Utah secured $691 million in research funding. However, under the current administration, a reduction of $15.5 million is projected for this year, with an additional $12.9 million in expected losses in future years. If a 15% cap on indirect cost recovery were implemented, up to $110 million in annual funding could be lost by the university.
As Rothwell noted, “Under OMB regulations (2 CFR Part 200), universities may only recover costs directly related to federally sponsored research, not education or other activities, and even then, only within certain limits.”
She added that a cap imposed by the federal government will restrict university reimbursement for administrative and compliance-related expenses.
“As a result, the University of Utah, like other research institutions, invests significant additional funding to sustain its research enterprise,” Rothwell said.
