By SUSAN JONES
After the Trump administration proposed cutting indirect cost reimbursement for federal grants to 15% across the board — first for National Institutes of Health (NIH) grants and then from several other agencies — several national higher education groups got together to try to find a compromise.
The Joint Associations Group, or JAG, includes the Association of American Universities (AAU), the American Council on Education (ACE), and the Association of Public and Land-grant Universities (APLU). It recently announced its proposal — the “Financial Accountability in Research” (FAIR) model.
This plan would offer institutions two options to be reimbursed for expenses tied to a particular project: a line-item accounting, or a less-time-intensive “base option” that would put a fixed percentage of a project’s total budget toward certain costs, according to the Chronicle of Higher Education.
The University Times asked Pitt Research officials what this might mean for Pitt, and got responses from Rob Rutenbar, senior vice chancellor for research, and Mike Holland, vice chancellor for science policy and research strategies.
What was Pitt’s involvement in this process?
Pitt Research has been actively engaged with the Joint Associations Group on indirect costs throughout the full arc of its activities. The JAG itself is comprised of national organizations representing America’s academic, medical, and independent research institutions. While the University is not a member of the JAG, Pitt is a member of several national organizations on the JAG, including the Association of Public and Land-Grant Universities. Because Rob is chair elect of the APLU’s Committee on Research, he was fully briefed on APLU’s engagement with the JAG.
The JAG developed and tested its proposed FAIR (Financial Accountability in Research) model through an indirect costs subject matter experts (SME) team. That team included pre- and post-award experts from large and small universities, independent research institutions, hospitals, private foundations, and the private sector as well as the White House Office of Management & Budget’s former grants policy expert. Pitt Research engaged the SME team through its community-wide town halls and by submitting results testing with Pitt’s own data the financial impacts and administrative burden of two potential indirect cost recovery models.
The proposal, as I understand it, would require large research universities like Pitt to do a much more detailed line-item budget for each grant. How would that work and how time-consuming would it be? Would that be something that each PI would have to provide?
The JAG’s FAIR model is the starting point for a conversation with the government. We cannot answer this question with any precision until we know what model the government adopts and how it gets implemented through revisions to OMB’s Uniform Guidance (2 CFR Part 200).
Based on the limited information available to us and the two- to three-year transition period built into the model, our assessment was that the impact of the FAIR model on PIs was likely minimal in terms of their proposal development workflow once they’ve acclimated to new budget templates and new language in solicitations and agency proposal and award guides.
The other part of the proposal provides 15% for general research expenditures, such as payroll and benefits. How would this differ from what Pitt receives now? Would more of these costs have to be absorbed by the University?
The current divide between direct and indirect costs on federal awards is largely the result of convention devised in part for the auditing convenience of the government. The FAIR model would shift major categories of costs out of an undifferentiated lump of indirect costs to items with line-of-sight visibility on each proposal. The proposed general research expenditures category is what’s left over after the four line-of-sight categories (regulatory compliance and essential research performance facilities are two) are accounted for.
Currently, all “administrative” costs are capped at 26% by OMB’s Uniform Guidance circular. Under the proposed FAIR model, there would be no caps, and our hope is that fewer costs would have to be absorbed by the University while offering a more transparent, accountable and efficient system for policymakers.
Does Pitt like or agree with this proposal?
Pitt supports the JAG’s goal for the FAIR model to fund the actual costs of research, while increasing the transparency of the costs associated with research, promoting accountability, and preserving the auditability of those costs. We endorse the FAIR model’s flexibility for institutions to adopt one of two approaches for recovering indirect costs, much in the way taxpayers have the choice between claiming the standard deduction or itemizing deductions.
If the government agrees to the proposal, how would it impact funding for Pitt?
If the government were to adopt the FAIR model proposal without modification, Pitt would likely benefit from lower unrecovered indirect costs. That said, we are concerned by the administration’s FY 2026 budget proposal that would cut funding at NIH by 40%, National Science Foundation by 57%, NASA science programs by 47% with equally drastic funding cuts at other research agencies. Should those cuts come to pass, they would swamp any potential benefit of the new FAIR model.
What happens next?
The JAG has submitted the research community’s recommended FAIR model to both congressional appropriators and the White House. Pitt will remain actively engaged through the national associations and with the Pennsylvania delegation directly on this issue as Congress and the White House decide whether to accept or modify and then implement the research community’s recommendation.
Susan Jones is editor of the University Times. Reach her at suejones@pitt.edu or 724-244-4042.
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