Southern California institutions could lose out on hundreds of millions of dollars in funding if the Trump administration‘s proposed cuts to overhead for biomedical research move forward.
The National Institutes of Health announced on Friday, Feb. 7, that it would cap funding for overhead costs for research at 15% beginning this week. By Monday afternoon, a U.S. district court judge temporarily blocked the cuts in response to a lawsuit filed by attorneys general from 22 states, including California.
It’s unclear whether the cuts will ultimately happen or be blocked permanently. NIH has until Friday, Feb. 14, to respond to the lawsuit, with a hearing set for Feb. 21.
Amid the legal limbo, several Southern California research institutions are worried they’d be plunged into financial turmoil.
While NIH’s grant funding cap applies only to overhead or indirect costs — covering essential research expenses, including lab equipment, administrative support and utilities — some public and private universities said the cuts would deliver a devastating blow to the country’s research and innovation efforts.
Indirect costs are negotiated between the NIH and research institutions every three to four years and are then added to the direct research costs, said Declan McCole, a professor of biomedical sciences at UC Riverside.
According to the NIH, indirect cost rates have “averaged between 27% and 28% over time,” but many institutions charge over 50%, with some exceeding 60%.
In fiscal year 2024, these institutions were involved in more than 4,600 NIH-funded projects worth over $2.5 billion, including both research and overhead costs. These projects span research in areas such as immunotherapy, vaccines, Alzheimer’s disease and aging.
Should the cuts happen, hundreds of millions of dollars in indirect funds could be lost by local research institutions in Southern California.
One UC Irvine-led project focuses on people aged 90 and older to study factors that impact longevity and reduce dementia risk.
Another project, led by Hoda Anton-Culver, a professor of medicine at UCI, aims to collect data from over 1 million Americans to accelerate medical breakthroughs. Since 2018, nearly 28,000 participants in Southern California have contributed their electronic health records, physical measurements and DNA.
The Beckman Research Institute at City of Hope, which received over $77 million in NIH money in fiscal year 2024, is conducting various cancer and health-related research projects, including how extreme weather and air pollution are related to stroke among aging females.
David Tirrell, a provost who teaches chemistry and chemical engineering at Caltech in Pasadena, said the school received about $80 million in NIH research grants in 2024. Approximately $24 million of that paid for indirect costs. Based on those numbers, he estimated the school would lose about $16 million under the guidance that NIH issued last week.
“It would be damaging to the research enterprise,” said Tirrell. “There would have to be a scaling back of research enterprise overall. Which of the particular research projects would have to be scaled back is very difficult to say at the outset.”
Caltech operates a major research center in neurobiology and neurodegenerative diseases, such as Parkinson’s disease, Tirrell said. In addition, he said Caltech conducts research in infectious diseases and how antibodies — including those that fight against COVID-19 and HIV — work.
On Monday, Caltech, along with the UC Board of Regents and nearly a dozen other colleges or universities throughout the country, joined a lawsuit filed by the Association of American Universities, the American Council on Education and the Association of Public and Land-Grant Universities in response to the NIH guidance. The lawsuit is separate from the one filed by the attorneys general.
“Cutting-edge work to cure disease and lengthen lifespans will suffer, and our country will lose its status as the destination for solving the world’s biggest health problems. At stake is not only Americans’ quality of life, but also our nation’s enviable status as a global leader in scientific research and innovation,” the lawsuit said.
With the NIH funding in limbo, some higher education institutions are advising researchers to forge ahead with their work — for now.
“Please continue your important research without interruption,” USC posted online, saying it was working to fully understand the impact of the NIH guidance.
On Monday, the UC Office of the President said in a news release that the NIH is the largest source of funding for UC research, contributing $2.6 billion the last academic year to schools around the entire state. If the cuts go through, the release said, UC’s funding could be slashed by hundreds of millions of dollars annually. The average overhead rate for UC schools is more than 57%, said spokesperson Stett Holbrook, significantly higher than the proposed 15% cap.
In fiscal year 2024, three UC schools in Southern California — UC San Diego, UCLA and UCI — ranked among the top 10 NIH-funded institutions in the state, both public and private. UCSD and UCLA also made the top 20 of all NIH-funded institutions that year.
However, the NIH said many private foundations provide little to no funding for indirect costs, with some of the largest research funders, like the Bill and Melinda Gates Foundation, capping indirect cost rates at 10-15%.
Republican lawmakers have criticized institutions for allegedly misusing taxpayer money, citing cases such as the 2020 settlement in which the Scripps Research Institute agreed to pay $10 million for improperly charging NIH-funded research grants for time spent by researchers on non-grant related activities.
“The United States should have the best medical research in the world. It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead,” the NIH said in its guidance.
But public universities like UCR don’t have the same funding resources as private universities and institutions, said McCole, the UCR professor whose research focuses on intestinal inflammation, specifically inflammatory bowel disease, Crohn’s disease and ulcerative colitis.
“Most of the UCs do not have anywhere near comparable endowments to that, so we’re not in the same ballpark with respect to access to private funds,” he said.
Members of the research community are worried that potential funding cuts could shift costs onto individual researchers and lead to job losses if support isn’t available, McCole added.
UCR received $41 million in NIH funding for 2024 and could lose almost $10 million if the proposed cuts are approved, said spokesperson John Warren.
Meera Nair, associate dean for biomedical research, received a $3.7 million NIH grant in January. An expert in immunology, she studies immune mechanisms in infections and chronic inflammatory diseases with the ultimate goal of providing better diagnosis and treatment for these diseases.
The funding is distributed over several years, with $700,000 allocated for the first year. Nair said the grant covers both direct and indirect costs, and any cuts to indirect funding would significantly impact her budget. Indirect costs support essential infrastructure, including training, safety measures and basic operational expenses like keeping the lights on.
“That infrastructure is also training for my students and the researchers that are funded in my NIH research projects, so it ensures that they’re safe and that they have the appropriate training to conduct” research, Nair said.
McCole compared the impact of indirect costs to the resources needed to fight fires. He likened direct costs to firefighters’ salaries, while indirect costs cover essential support such as training, safety gear, fire truck maintenance and utilities at the firehouse.
“All of these things are essential for them to do their job safely and effectively,” McCole said. “And that’s analogous to how a direct cost supports scientific research at universities.”