White House Caps Billings by Universities

The White House on Wednesday extended its clampdown on how colleges bill the government for research by capping the amount institutions may collect in reimbursement for indirect administrative costs.

Responding to continuing tales of excess research billings that originated in a controversy at Stanford University, the Administration proposed to cap indirect administrative billings at 26% of total research costs. Such hard-to-track administrative costs are the most widely abused area of research reimbursements, officials said.

The move would cost 75 U.S. universities between $75 million and $100 million in reimbursements, said Robert Rosenzweig, president of the Assn. of American Universities. Last month, the White House took a first step in tightening billing rules by setting guidelines that prohibit reimbursements for university officials’ housing, entertainment and club expenses, among other things.

These indirect costs are what universities add to grant billings to cover overhead.

Last month, the government sharply dropped Stanford’s overall reimbursement rate for indirect costs to 55%, from the 74% the school received last year. Stanford, the first school to be thoroughly investigated on the research costs issue, is expected to lose $23 million a year because of the change, although the school is seeking to reverse the decision.

White House officials said that the nation’s highest rate was for Howard University in Washington, which has a total indirect rate of 78% and an administrative component of 45%.

In Southern California, the rule would apparently fall hardest on USC, which government officials said has a total overhead rate of 63%, with an administrative component of 37%. UCLA, which receives considerable state funds, has a rate of 48%, with an administrative component of 27%, White House officials said.