In his testimony before the House Subcommittees on Research and Technology and Oversight, James D. Luther, Associate Vice President of Finance at Duke University, discusses the critical role and financial mechanisms of the federal-university research partnership, focusing particularly on the overhead or facilities and administrative (F&A) costs of research. Luther emphasizes that universities and the federal government have long collaborated to advance the United States’ leadership in science and innovation, with the federal government providing over half of the funding for academic research. He explains that F&A costs, which support essential research infrastructure and compliance requirements, are necessary complements to direct research expenses and are strictly regulated and audited. The variation in F&A rates among institutions reflects differing research intensities and regional costs, with more F&A-intensive research, such as biomedical or technological fields, requiring advanced and costly facilities.
Luther argues that, despite perceptions, universities are not fully reimbursed for the real costs of supporting federally sponsored research, often absorbing substantial unreimbursed expenses, especially as regulatory demands increase. Comparisons to the rates accepted from private foundations are addressed, noting that foundation-funded projects are fewer, more targeted, and do not adhere to the same federal cost accounting standards. Additionally, Luther underscores the significant financial contributions universities themselves make toward research, covering a quarter of all expenditures and bearing the brunt of rising costs due to capped administrative reimbursements and proliferating federal regulations. He warns that any reduction in federal support—including F&A reimbursements—risks undermining scientific progress, the training of future researchers, and the continued global leadership of the United States in science and technology. Stable and full funding of both direct and infrastructure-related research costs is deemed essential to the sustainability and success of the national research enterprise.
