Mr. James D. Luther, Associate Vice President of Finance at Duke University and Board Chair for the Council on Governmental Relations, presented an oral testimony before the House Subcommittee on Research and Technology and the Subcommittee on Oversight regarding the overhead costs—known as Facilities and Administrative (F&A) costs—incurred in federally funded academic research. He emphasized the critical and longstanding partnership between universities and the federal government, highlighting how this collaboration has positioned the United States as a global leader in scientific innovation, medical advancement, and national security. Luther articulated that federal subsidies typically cover only a portion of the total research cost, including both direct and F&A costs, the latter of which are essential for providing infrastructure, utilities, compliance, and safety.
Luther further explained that F&A rates have stayed steady for decades despite a substantial rise in regulations and compliance requirements, many of which universities must absorb beyond the capped federal reimbursement. This has led to significant financial commitments by universities themselves, with institutions often covering unreimbursed F&A costs—a figure he cited as $4.8 billion out of $16.7 billion in university contributions for fiscal year 2015. He warned that declining state and federal funding, coupled with rising regulatory requirements and static F&A reimbursements, threatens the sustainability of this research enterprise. Reductions in such support, he indicated, would likely diminish research output, slow progress, reduce job creation, and negatively affect educational opportunities for students. The testimony called for recognition of F&A as a real and necessary cost, equating its importance to basics such as maintaining facility utilities for effective research and legislative operations.
