The Hidden Costs of Research

Oregon State's rate for "overhead" is quite low
Spinrad,Rick

Rick Spinrad, vice president for research at Oregon State

Imagine for just a moment that you: 1) are independently wealthy; 2) are a genius, and; 3) have a brilliant idea for a research project (for those readers who already satisfy all three criteria, please indulge me a bit of editorial whimsy). You begin your project with every intention of following the scientific method. You design the experiments, determine whom you need to hire, and start to build a budget. After accounting for the usual expenses (salaries, benefits, supplies, travel, equipment, etc.) you realize there are some other things you’re just taking for granted.

You’ll need a place to conduct the research. It will have lights, heat, water, sewer and so forth. You realize that the facility will be insured against unforeseen circumstances. And of course someone will do maintenance — mow the lawn, clean the windows, repair the stairs. You suddenly see that for every precious dollar that you’ve budgeted directly for research, you need another big chunk of change just to keep the operation running. Since you’re independently wealthy, however, you just bite the bullet and dig a bit deeper into your pocket.

Now imagine you’re a university researcher and also a genius with a brilliant idea. The situation is no different, except now you need to find a fair way to convince someone else to support your work and pay the costs of the project: the “overhead.” And those costs mount up. For example, consider one of our successful endeavors, the Center for Sustainable Materials Chemistry, led by Oregon State professors Doug Keszler and John Wager. It was recently awarded a five-year grant from the National Science Foundation. This research will provide new understanding and novel materials for use in a wide range of products, such as commercial electronics and health care equipment. But by standard negotiation with the federal government, no less than $2,479,359 will go to “overhead.”

Last year, Oregon State University spent $4.8 million on electricity alone! It’s virtually impossible to know exactly how much of that is directly attributable to research, but rest assured, it’s a very large number. The same is true for all of the other categories of administrative, maintenance and infrastructural costs needed to keep the research enterprise running.

Today, we have an officially negotiated federal overhead rate of 46 percent. That is, for every dollar of modified direct costs – salaries, benefits, supplies and equipment, minus major equipment purchases and agreements with other universities – we are required to charge the federal agency an additional 46 cents. And our rate is quite low. Some institutions charge more than 100 percent for overhead. These rates are renegotiated every few years and are based on how much was spent previously.

OSU-ResearchAnnualReport-Cover2_Page_1

Click on image to download a PDF of the 2013 Annual Report of Research.

Just for reference, OSU’s rate 30 years ago was 31 percent. Some sponsors insist on lower overhead rates — a challenge, since those electric bills and maintenance charges still have to be paid by someone. It can get very complicated very quickly.

The costs of doing research are high and continue to increase. The supplemental costs of supporting that research are also rising. Download the 2013 Annual Report of Research to see a breakdown of our research operations. And keep in mind, that unless you are an independently wealthy genius, you need to know the true costs of supporting research.

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