The report by the Council on Governmental Relations (COGR) examines the rising incremental compliance costs faced by U.S. universities in response to new and expanding federal regulations pertaining to research activities, as measured from 2000 to 2005. Despite the need for sophisticated compliance infrastructures to uphold federal requirements—such as protections for human subjects, environmental safety, Medicare billing, the Health Insurance Portability and Accountability Act (HIPAA), and homeland security measures—the administrative cost recovery for universities is significantly limited. The report documents that these institutions incur substantial under-recovered costs, with administrative expense reimbursement capped at 26% and agency-level restrictions often limiting cost recovery even further. For FY 2000 alone, the under-recovery for all universities due to these limits is estimated at over $1 billion. In a sample of 25 institutions, incremental compliance expenditures were projected at $411 million over six years, with extrapolations for the top 100 research universities indicating costs exceeding $1.2 billion. These increases forced universities to divert significant funds away from research and into compliance, threatening the sustainability of their research enterprises especially in the context of constrained resources and declining revenues.
The report details both the methodology of the cost study and the specific areas where compliance burdens have intensified, including comprehensive case studies on HIPAA implantation, select agent compliance following the PATRIOT Act, environmental health and safety audits, space surveys for facilities cost allocation, and the operation of institutional review boards (IRBs). The findings underscore that compliance-related costs are escalating at a rate that outpaces both the growth of research activity and the capacity of capped administrative reimbursements, with compliance initiatives requiring considerable unrecognized faculty and staff time in addition to financial expenditures. The report emphasizes that the regulatory and cost reimbursement environment for universities is inconsistent with that faced by other federal research fund recipients, such as non-profit research institutes and commercial entities, which do not face similar caps. The Working Group advocates for a recalibration of reimbursement policies, recommending the removal or adjustment of the 26% cap, consistent payment of full negotiated F&A rates, and the establishment of a new, uncapped compliance cost pool. The report calls for an interagency and university collaboration to streamline compliance procedures, reduce unnecessary regulatory burdens, and ensure fair federal support for mandated compliance costs vital to societal and scientific objectives.
